AGREEMENT AND PLAN OF MERGER BY VICTOR INDUSTRIES, INC., AN IDAHO CORPORATION AND ETHOS ENVIRONMENTAL, INC., A NEVADA CORPORATION
BY
XXXXXX
INDUSTRIES, INC.,
AN
IDAHO CORPORATION
AND
ETHOS
ENVIRONMENTAL, INC.,
A
NEVADA CORPORATION
EXHIBITS
Exhibit
A—Agreement Regarding Continuity of Shareholder Interest
Exhibit
B—Articles of Merger
Exhibit
C—Form of Letter of Transmittal
Exhibit
D—Omitted
Exhibit
E—Form of Opinion of Targets Counsel
Exhibit
F—Form of Opinion of Buyers Counsel
Disclosure
Schedule—Exceptions to Representations and Warranties
This
Merger Agreement (“Agreement”) is entered into as of this 20th
day of
April, 2006, by and between Xxxxxx Industries, Inc., an Idaho corporation
(“Buyer”),
and
Ethos Environmental, Inc., a Nevada corporation (“Target”).
Buyer
and Target are referred to collectively herein as the “Parties.”
RECITALS
A. The
Boards of Directors of Buyer (the “Buyer Board”) and Target (the “Target Board”)
deem it advisable and in the best interests of each corporation and their
respective shareholders that Buyer acquire Target in order to advance the
long-term business interests of Buyer and Target.
B. The
Buyer
Board and Target Board have determined that a business combination between
Buyer
and Target merging their respective businesses is in the best interests of
their
respective companies and stockholders and presents an opportunity for their
respective companies to achieve long-term strategic and financial benefits,
and
accordingly have agreed to effect the merger provided for herein upon the terms
and subject to the conditions set forth herein.
C. The
respective Buyer Board and Target Board deem it advisable and in the best
interests of their respective shareholders to consummate the Agreement on the
terms and conditions set forth in this Agreement.
D. The
parties intend that this Agreement qualify as a non-taxable reorganization
pursuant to Sec-tion 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended.
E. The
parties hereto intend that this Agreement be ex-empt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Section
4(2)
of the Act and the rules and regulations promulgated thereunder and exempt
from
the registration requirements of the applicable states.
F. Buyer
is
a reporting company registered with the Securities and Exchange Commission
and
is current with all of its filings with the SEC, whose stock is quoted on the
OTC Bulletin Board under the symbol VICI.OB.
G. As
a
condition precedent to Closing, Buyer shall have effectuated a redomicile to
the
State of Nevada and a reverse stock split based on a ratio of approximately
1:1000. The terms and conditions of this Agreement expressly assume that these
pre-Closing conditions have been completed, with the understanding that this
Agreement shall Close only after the happening of same.
H. For
purposes of this Agreement, Buyer agrees to be bound by, and to comply with,
all
applicable laws for the State of Idaho and the State of Nevada, notwithstanding
any specific references to only one jurisdiction.
I. The
foregoing recitals express the true intentions of the Buyer and Target and
are
hereby incorporated by this reference into the Agreement.
NOW,
THEREFORE,
in
consideration of the representations, warranties and covenants set forth in
this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and subject to the conditions set
forth herein, the parties hereto agree as follows:
1. Definitions.
1.1 “Affiliate”
has
the
meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.
1.2 “Buyer”
has
the
meaning set forth in the preface above.
1.3
“Buyer-owned
Share”
means
any Target Share that Buyer owns beneficially.
1.4 “Buyer
Share”
means
any share of the common stock, $0.0001 par value per share, of
Buyer.
1.5 “Certificate
of Merger”
has
the
meaning set forth in 2(c) below.
1.6 “Closing”
has
the
meaning set forth in 2(b) below.
1.7 “Closing
Date”
has
the
meaning set forth in 2(b) below.
1.8 “Confidential
Information”
means
any information concerning the business and affairs of Target and its
Subsidiaries that is not already generally available to the public.
1.9 “Conversion
Ratio”
has
the
meaning set forth in 2(d)(v) below.
1.10 “Definitive
Buyer Proxy Materials”
means
the definitive proxy materials relating to the Special Buyer
Meeting.
1.11 “Definitive
Target Proxy Materials”
means
the definitive proxy materials relating to the Special Target
Meeting.
1.12 “Disclosure
Schedule”
has
the
meaning set forth in Section 3 below.
1.13 “Dissenting
Share”
means
any Target Share held of record by any stockholder who or that has exercised
his, her, or its appraisal rights under the Nevada Revised
Statutes.
1.14 “Effective
Time”
has
the
meaning set forth in 2(d)(i) below.
1.15 “Exchange
Agent”
has
the
meaning set forth in 2(e) below.
1.16 “GAAP”
means
United States generally accepted accounting principles as in effect from time
to
time, consistently applied.
1.17 “Xxxx-Xxxxx-Xxxxxx
Act”
means
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
1.18 “IRS”
means
the Internal Revenue Service.
1.19 “Knowledge”
means
actual knowledge after reasonable investigation.
1.20 “Lien”
means
any mortgage, pledge, lien, encumbrance, charge, or other security interest,
other than (a) liens for Taxes not yet due and payable, (b) purchase money
liens
and liens securing rental payments under capital lease arrangements, and (c)
other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
1.21 “Material
Adverse Effect”
or
“Material
Adverse Change”
means any
effect or change that would be (or could reasonably be expected to be)
materially adverse to the business, assets, condition (financial or otherwise),
operating results, operations, or business prospects of Target and its
Subsidiaries, taken as a whole, or to the ability of Sellers to consummate
timely the transactions contemplated hereby (regardless of whether or not such
adverse effect or change can be or has been cured at any time or whether Buyer
has knowledge of such effect or change on the date hereof), including any
adverse change, event, development, or effect arising from or relating to (a)
general business or economic conditions, including such conditions related
to
the business of Target and its Subsidiaries, (b) national or international
political or social conditions, including the engagement by the United States
in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack upon the United
States, or any of its territories, possessions, or diplomatic or consular
offices or upon any military installation, equipment or personnel of the United
States, (c) financial, banking, or securities markets (d) changes in United
States generally accepted accounting principles, (e) changes in laws, rules,
regulations, orders, or other binding directives issued by any governmental
entity, and (f) the taking of any action contemplated by this Agreement and
the
other agreements contemplated hereby.
1.22 “Merger”
has
the
meaning set forth in 2(a) below.
1.23
“Nevada
Revised Statutes”
means
the General Corporation Law of the State of Nevada, as amended.
1.24 “Ordinary
Course of Business”
means
the ordinary course of business consistent with past custom and practice,
including with respect to quantity and frequency.
1.25 “Party”
has
the
meaning set forth in the preface above.
1.26 “Person”
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other business entity, or a governmental entity.
1.27 “Prospectus”
means
the final prospectus relating to the registration of the Buyer Shares under
the
Securities Act.
1.28 “Requisite
Buyer Stockholder Approval”
means
the affirmative vote of the holders of a majority of the Buyer Shares in favor
of this Agreement and the Merger.
1.29 “Requisite
Target Stockholder Approval”
means
the affirmative vote of the holders of a majority of the Target Shares in favor
of this Agreement and the Merger.
1.30 “SEC”
means
the Securities and Exchange Commission.
1.31 “Securities
Act”
means
the Securities Act of 1933, as amended.
1.32 “Securities
Exchange Act”
means
the Securities Exchange Act of 1934, as amended.
1.33 “Special
Buyer Meeting”
has
the
meaning set forth in 5(c)(ii) below.
1.34 “Special
Target Meeting”
has
the
meaning set forth in 5(c)(ii) below.
1.35 “Subsidiary”
means,
with respect to any Person, any corporation, limited liability company,
partnership, association, or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
to
vote in the election of directors, managers, or trustees thereof is at the
time
owned or controlled, directly or indirectly, by that Person or one or more
of
the other Subsidiaries of that Person or a combination thereof or (ii) if a
limited liability company, partnership, association, or other business entity,
a
majority of the partnership or other similar ownership interests thereof is
at
the time owned or controlled, directly or indirectly, by that Person or one
or
more Subsidiaries of that Person or a combination thereof and for this purpose,
a Person or Persons own a majority ownership interest in such a business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of such business entity’s gains or losses or shall be or control any
managing director or general partner of such business entity. The term
“Subsidiary”
shall
include all Subsidiaries of such Subsidiary.
1.36 “Surviving
Corporation”
has
the
meaning set forth in 2(a) below.
1.37 “Target”
has
the
meaning set forth in the preface above.
1.38 “Target
Share”
means
any share of the common stock, $0.001 par value per share, of
Target.
1.39 “Target
Stockholder”
means
any Person who owns or holds any Target Shares.
2. Basic
Transaction.
(a)
The
Merger.
On and
subject to the terms and conditions of this Agreement, Target will merge with
and into Buyer (the “Merger”)
at the
Effective Time. Buyer shall be the corporation surviving the Merger (the
“Surviving
Corporation”).
(b)
The
Closing. The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place at the offices of SteadyLaw Group, LLP in San Diego, CA, commencing
at 9:00 a.m. local time on the third business day following the satisfaction
or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby, other than conditions with respect to actions
the respective Parties will take at the Closing itself, or such other date
as
the Parties may mutually determine (the “Closing
Date”);
provided,
however,
that
the Closing Date shall be no earlier than May 17, 2006.
(c)
Actions
at the Closing. At
the
Closing, (i) Target will deliver to Buyer the various certificates, instruments,
and documents referred to in 6(a) below, (ii) Buyer will deliver to Target
the
various certificates, instruments, and documents referred to in 6(b) below,
(iii) Buyer and Target will file with the Secretary of State of the State of
Nevada the Articles of Merger in the form attached hereto as Exhibit B (the
“Certificate
of Merger”),
and
(iv) Buyer will deliver to the Exchange Agent in the manner provided below
in
this Section 2 the certificate evidencing the Buyer Shares issued in the
Merger.
(d)
Effect
of Merger.
(i)
General. The Merger shall become effective at the time (the “Effective
Time”)
Buyer
and Target file the Certificate of Merger with the Secretary of State of the
State of Nevada. The Merger shall have the effect set forth in the Nevada
Revised Statutes. 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 Buyer or Target in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii)
Articles of Incorporation. The articles of incorporation of Buyer in effect
at
and as of the Effective Time will remain the articles of incorporation of
Surviving Corporation without any modification or amendment in the Merger,
except with respect to the Surviving Corporation changing its name to “Ethos
Environmental, Inc.”
(iii)
Bylaws. The bylaws of Buyer in effect at and as of the Effective Time will
remain the bylaws of Surviving Corporation without any modification or amendment
in the Merger.
(iv)
Directors and Officers. The directors and officers of Target in office at and
as
of the Effective Time shall be appointed the directors and officers of the
Surviving Corporation, with each to hold office in accordance with the articles
of incorporation and by-laws of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified, and
thereafter the directors and officers of Buyer serving immediately prior to
the
Closing Date shall immediately resign.
(v)
Conversion of Target Shares. At and as of the Effective Time, (A) each Target
Share (other than any Dissenting Share or Buyer-owned Share) shall be converted
into the right to receive one Buyer Share (the ratio of one Buyer Share to
one
Target Share is referred to herein as the “Conversion
Ratio”),
(B)
each Dissenting Share shall be converted into the right to receive payment
from
Surviving Corporation with respect thereto in accordance with the provisions
of
the Nevada Revised Statutes, and (C) each Buyer-owned Share shall be canceled;
provided,
however,
that
the Conversion Ratio shall be subject to equitable adjustment in the event
of
any stock split, stock dividend, reverse stock split, or other change in the
number of Target Shares outstanding. No Target Share shall be deemed to be
outstanding or to have any rights other than those set forth above in this
Section 2(d)(v) after the Effective Time.
(vi)
Buyer Shares. Each Buyer Share issued and outstanding at and as of the Effective
Time will remain issued and outstanding.
(e)
Payment
Procedure.
(i)
Immediately after the Effective Time, Buyer will cause Action Stock Transfer
Corporation (the “Exchange Agent”) to mail a letter of transmittal in the form
attached hereto as Exhibit C to each record holder of outstanding Target Shares
for the holder to use in surrendering the certificates that represented his,
her, or its Target Shares in exchange for a certificate representing the number
of Buyer Shares to which he, she, or it is entitled.
(ii)
Buyer will not pay any dividend or make any distribution on Buyer Shares (with
a
record date at or after the Effective Time) to any record holder of outstanding
Target Shares until the holder surrenders for exchange his, her, or its
certificates that represented Target Shares. Buyer instead will pay the dividend
or make the distribution to the Exchange Agent in trust for the benefit of
the
holder pending surrender and exchange. Buyer may cause the Exchange Agent to
invest any cash the Exchange Agent receives from Buyer as a dividend or
distribution in one or more of the permitted investments set forth on Exhibit
D
attached hereto; provided,
however,
that
the terms and conditions of the investments shall be such as to permit the
Exchange Agent to make prompt payments of cash to the holders of outstanding
Target Shares as necessary. Buyer may cause the Exchange Agent to pay over
to
Buyer any net earnings with respect to the investments, and Buyer will replace
promptly any cash that the Exchange Agent loses through investments. In no
event, however, will any holder of outstanding Target Shares be entitled to
any
interest or earnings on the dividend or distribution pending
receipt.
(iii)
Buyer may cause the Exchange Agent to return any Buyer Shares and dividends
and
distributions thereon remaining unclaimed 180 days after the Effective Time,
and
thereafter each remaining record holder of outstanding Target Shares shall
be
entitled to look to Buyer, subject to abandoned property, escheat, and other
similar laws, as a general creditor thereof with respect to the Buyer Shares
and
dividends and distributions thereon to which he, she, or it is entitled upon
surrender of his, her, or its certificates.
(iv)
Surviving Corporation shall pay all charges and expenses of the Exchange
Agent.
(f)
Closing
of Transfer Records. After
the
close of business on the Closing Date, transfers of Target Shares outstanding
prior to the Effective Time shall not be made on the stock transfer books of
Surviving Corporation.
(g)
In
accordance with the terms of this Agreement, and specifically this Section
2, it
is contemplated that Buyer shall issue an aggregate of Seventeen Million Seven
Hundred Eighteen Thousand One Hundred Eighty Seven (17,718,187) Buyer Shares
to
the Target Stockholders for all validly issued and outstanding Target Shares
to
be distributed on a pro rata basis to each Target Stockholder. Such newly issued
Buyer Shares shall represent, on a fully diluted basis, approximately ninety
seven (97%) percent of Buyer’s issued and outstanding common stock following any
adjustments contemplated by this Agreement.
(h)
Restrictive
Legend.
Each
newly issued certificate of Buyer Shares under the terms of this Agreement
shall
bear the following restrictive legend:
“The
Common Stock which is represented by this Certificate has not been registered
under the Securities Act of 1933, as amended (the “Act’). These securities have
been acquired for investment purposes only and not with a view to distribution
or resale, and may not be sold, transferred, made subject to a security
interest, pledged, hypothecated or otherwise disposed of unless and until
registered under the Act, or on an opinion of counsel for the Company, that
registration is not required under such Act.”
(i)
The
receipt by each of the Target Stockholders of the Buyer Shares is for that
person’s own account, is for investment purposes only, and is not with a view
to, nor for offer or sale in connection with, the distribution of the Buyer
Shares. The newly issued Buyer Shares contemplated by this Agreement have not
been registered under the Securities Act or the securities laws of any state
and, therefore, cannot be sold unless it is subsequently registered under the
Securities Act and any applicable state securities laws or exemptions from
registration thereunder are available.
(j)
Adjustments.
The
exchange of shares contemplated under this Agreement shall be adjusted to
reflect fully the effect of any reclassification, stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Buyer Shares), reorganization, recapitalization or other like change with
respect to Buyer Shares occurring, or for which a record date is established,
after the date hereof and prior to the Effective Time.
3. Target’s
Representations and Warranties. Target
represents and warrants to Buyer that the statements contained in this Section
3
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 3), except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the “Disclosure
Schedule”).
The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 3.
(a)
Organization,
Qualification, and Corporate Power.
Each of
Target and its Subsidiaries, if any, is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Target and its Subsidiaries, if any, is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of Target and its Subsidiaries has
full corporate power and authority to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
(b)
Capitalization. The
entire authorized capital stock of Target consists of 200,000,000 Target Shares,
of which 17,718,187 Target Shares are issued and outstanding and 182,281,813
Target Shares are held in treasury. All of the issued and outstanding Target
Shares have been duly authorized and are validly issued, fully paid, and
non-assessable. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Target to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Target.
(c)
Authorization
of Transaction. Target
has full power and authority (including full corporate power and authority)
to
execute and deliver this Agreement and to perform its obligations hereunder;
provided,
however,
that
Target cannot consummate the Merger unless and until it receives the Requisite
Target Stockholder Approval. This Agreement constitutes the valid and legally
binding obligation of Target, enforceable in accordance with its terms and
conditions.
(d)
Non-contravention. To
the
Knowledge of any director or officer of Target, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Target or any of
its
Subsidiaries is subject or any provision of the charter or bylaws of Target
or
any of its Subsidiaries or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right
to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
Target or any of its Subsidiaries is a party or by which it is bound or to
which
any of its assets is subject (or result in the imposition of any Lien upon
any
of its assets). To the Knowledge of any director or officer of Target, and
other
than in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act, the Nevada
Revised Statutes, the Securities Exchange Act, the Securities Act, and the
state
securities laws, neither Target nor any of its Subsidiaries needs to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties
to
consummate the transactions contemplated by this Agreement.
(e)
Compliance
with the Law and Other Instruments.
(i)
Except as otherwise provided in this Agreement and in the Exhibits annexed
hereto, the business and operations of Target have been and are being conducted
in all material respects in accordance with all applicable laws, rules and
regulations of all authorities which affect Target or its properties, assets,
businesses or prospects.
(ii)
Target Disclosure Schedule sets forth all material Permits issued or granted
to
Target. To the knowledge of Target, the Permits are validly held by Target,
and
Target is in compliance with the Permits, except for instances of noncompliance
that would not, individually or in the aggregate, have a material adverse
effect. To the knowledge of Target, the Permits constitute all of the
governmental licenses, permits, authorizations and approvals required to carry
on the business of Target as such business is presently conducted, except where
the failure to have any such license, permit, authorization or approval would
not, individually or in the aggregate, have a material adverse
effect.
(f)
Absence
of Conflicts.
The
execution and delivery of this Agreement, the transfer of the securities of
Target, and the consummation by Target of the transactions set forth in this
Agreement: (i) do not and shall not conflict with or result in a breach of
any
provision of Target’s Articles of Incorporation or By-Laws, (ii) do not and
shall not result breach of, or constitute a default or cause an acceleration
under any arrangement, agreement or other instrument to which Target is a party
to or by which any of its assets are bound, (iii) do not and shall not cause
Target to violate or contravene any provision of law or any governmental rule
or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Target. Target has performed in
all
material respects all of its obligations which are, as of the date of this
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
(g)
Environmental
Compliance.
To
Target’s knowledge, it is in compliance with all applicable Environmental Laws.
Target is presently authorized, if required, to generate, transport through
third parties, store, use, treat, dispose of, release, and conduct other
handling of, as required, those hazardous substances used in Target’s business,
which consist of, hazardous waste, hazardous material, hazardous constituents,
toxic substances, pollutants, contaminants, asbestos, radon, polychlorinated
biphenyls, petroleum product or waste (including crude oil or any fraction
thereof), natural gas, liquefied gas, synthetic gas and other material defined,
regulated, controlled or subject to any remediation requirement under any
Environmental Law.
(h)
Compliance
with Occupational and Safety Laws; Employment Matters.
(i)
To
Target’s knowledge, it is in compliance with all applicable national, provincial
and local laws, rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder and other governmental
requirements relating to occupational health and safety.
(ii)
Except as set forth on the Target Disclosure Schedule, Target does not owe
any
accrued but unpaid salary or other compensation or benefits to any officer,
director, employee or consultant of Target. Except as set forth on the Target
Disclosure Schedule, Target has no Benefit Plans. The Target Disclosure Schedule
contains for each or its officers, directors, and consultants his compensation
and benefits for the last two years.
(i)
Financial
Statements.
Target’s
audited financial statements for the year ended December 31, 2005 (the “Audited
Financial Statements”), have been prepared using generally accepted accounting
principles (“GAAP”) applied on a consistent basis. Except as set forth on the
Target Disclosure Schedule, the Audited Financial Statements shall fairly
present the financial condition and results of operations for Target. Except
as
indicated in such Financial Statements, and with the exception of ordinary
operating expenses which in the aggregate are not material, or as set forth
on
the Target Disclosure Schedule or in any Exhibit to this Agreement, Target
does
not have any outstanding indebtedness or other liabilities or obligations of
any
nature (whether absolute, accrued, contingent or otherwise, and whether due
or
to become due). Except as set forth on the Target Disclosure Schedule, since
the
date of the Audited Financial Statements, there has not been any material
adverse change in Target’s financial condition, assets, liabilities or business,
or any damage, destruction or loss, whether or not covered by insurance,
materially affecting Target’s properties, assets or business, and Target has not
incurred any indebtedness, liability or other obligation of any nature
whatsoever except in the ordinary course of business and Target has not made
any
change in its accounting methods or practices.
(j)
Taxes.
Target
has timely filed all required national, provincial, and local tax returns and
has paid or made adequate provision for the payment of all such taxes whether
or
not shown to be due on said returns.
(k)
Contracts.
Annexed
hereto as part of Target’s Disclosure Schedule is a true and complete schedule
of all of Target’s material contracts including, but not limited to, license
agreements. All of the contracts so listed have been entered into in the
ordinary course of business and neither Target nor any other party to any such
contract is in default under any such contract.
(l)
Litigation.
Except
as set forth on the Target Disclosure Schedule, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting Target or its properties, assets or businesses, or with
respect to any matter arising out of the conduct of the Target’s business
pending or to its knowledge threatened, by or against, any officer or director
of Target in connection with its affairs, whether or not covered by insurance.
Except as set forth on the Target Disclosure Schedule, neither Target nor its
officers or directors are subject to any order, writ, injunction, or decree
of
any court, department, agency, or instrumentality, affecting Target. Except
asset forth on the Target Disclosure Schedule, Target is not presently engaged
in any legal action.
(m)
Absence
of Changes.
Except
as set forth on the Target Disclosure Schedule and this Agreement, subsequent
to
the date of the Audited Financial Statements and through the date of this
Agreement, there has not been any material adverse change in, or any event
or
condition (financial or otherwise) affecting the business, properties, assets,
liabilities, historical operations or prospects of Target, and except as in
the
ordinary course of business and with respect to any items reserved by Target
and
reflected in its Audited Financial Statements, there are no liabilities or
obligations of any nature, whether absolute, contingent or otherwise, whether
due or to become due (including, without limitation, liabilities for taxes
with
respect to or measured by income of Target for any period prior to, and/or
subsequent to, the date of the Audited Financial Statements or arising out
of
any transaction of Target prior to, and/or subsequent to, such date). Subsequent
to the date of the Audited Financial Statements except as set forth on the
Target Disclosure Schedule, there has not been any declaration, or setting
aside, or payment of any dividend or other distribution with respect to Target’s
securities, or any direct or indirect redemption, purchase, or other acquisition
of any of Target’s securities. To Target’s knowledge, there has not been an
assertion against Target of any liability of any nature or in any amount not
fully reflected or reserved against in the Audited Financial
Statements.
(n)
No
Approvals.
No
approval of any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.
(o)
Broker;
Finder’s Fee.
(i)
Target represents that it has not had any dealing with respect to this
transaction with any business broker, firm or salesman, or any person or
corporation, investment banker or financial advisor who is or shall be entitled
to any broker’s or finder’s fee or any other commission or similar fee with
respect to the transactions set forth in this Agreement, except as otherwise
indicated herein. Target agrees to indemnify and hold harmless Buyer from and
against any and all claims for brokerage commissions or finder’s fees by any
person, firm or corporation on the basis of any act or statement alleged to
have
been made by Target or its affiliates or agents.
(ii)
As
compensation under the terms of a Business Development Agreement (“BDA”),
_______________________________shall receive the sum of
____________________dollars (the “BDA Compensation”) from Target upon the
successful closing of a business combination or acquisition with Buyer. It
is
anticipated that the BDA Compensation will be tendered simultaneous to the
Closing as set forth under the terms of the BDA. *
(p)
Complete
Disclosure.
No
representation or warranty of Target which is contained in this Agreement,
or in
a writing furnished or to be furnished pursuant to this Agreement, to Target’s
knowledge contains or shall contain any untrue statement of a material fact,
omits or shall omit to state any fact which is required to make the statements
which are contained herein or therein, in light of the circumstances under
which
they were made, not materially misleading. There is no fact relating to the
business, affairs, operations, conditions (financial or otherwise) or prospects
of Target which would materially adversely affect same which has not been
disclosed to Buyer in this Agreement.
*THIS
INFORMATION HAS BEEN DELETED BASED ON THE TERMS
OF THE BDA REQUIRING CONFIDENTIALITY.
(q)
No
Defense.
It shall
not be a defense to a suit for damages for any misrepresentation or breach
of
covenant or warranty that Buyer knew or had reason to know that any covenant,
representation or warranty in this Agreement furnished or to be furnished to
Buyer contained untrue statements.
(r)
Access
to Information.
During
the Pre-Closing Period, Target shall (and shall cause each of its Subsidiaries
to) afford to Buyer’s officers, employees, accountants, counsel, financing
sources and other representatives, reasonable access, upon reasonable notice,
during normal business hours and in a manner that does not unreasonably disrupt
or interfere with business operations, to all of its properties, books,
contracts, commitments, personnel and records as the Buyer shall request, and,
during such period, Target shall (and shall cause each of its Subsidiaries
to)
furnish promptly to Buyer (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal or state securities laws and (ii) all other
information concerning its business, finances, operations, properties, assets
and personnel as Buyer may reasonably request, in each case, subject to any
restrictions contained herein; provided, further, that the foregoing shall
not
require Target to permit any inspection or disclose any information that, in
the
reasonable judgment of Target, would result in the disclosure of any trade
secrets of third parties or otherwise privileged information. Buyer will hold,
and instruct all such officers, employees, accountants, counsel, financing
sources and other Representatives to hold, any such information that is
nonpublic in confidence in accordance with this Agreement.
(s)
Undisclosed
Liabilities.
Neither
Target nor any of its Subsidiaries has any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for taxes, except for (i) liabilities set forth
on
the face of the balance sheet dated as of the Most Recent Fiscal Quarter End
(rather than in any notes thereto) and (ii) liabilities that have arisen after
the Most Recent Fiscal Quarter End in the Ordinary Course of Business (none
of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(t)
Continuity
of Business Enterprise. Target
operates at least one significant historic business line, or owns at least
a
significant portion of its historic business assets, in each case within the
meaning of Reg. 1.368-1(d).
4. Buyer’s
Representations and Warranties.
Buyer
represents and warrants to Target that the statements contained in this Section
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Buyer Disclosure Schedule. The Buyer
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this Section 4.
(a)
Organization,
Qualification, and Corporate Power.
Each of
Buyer and its Subsidiaries, if any, is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Buyer and its Subsidiaries, if any, is duly authorized
to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of Buyer and its Subsidiaries has
full corporate power and authority to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
(b)
Capitalization. The
entire authorized capital stock of Buyer consists of 1,000,000,000 Buyer Shares,
of which approximately 500,000 Buyer Shares shall be issued and outstanding
and
999,500,000 Buyer Shares are to be held in treasury. All of the Buyer Shares
to
be issued in the Merger shall have been duly authorized and, upon consummation
of the Merger, will be validly issued, fully paid, and non-assessable. There
are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Buyer to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights
with
respect to Buyer.
(c)
Authorization
of Transaction. Buyer
has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder;
provided,
however,
that
Buyer cannot consummate the Merger unless and until it receives the Requisite
Buyer Stockholder Approval. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms and
conditions.
(d)
Non-contravention. To
the
Knowledge of any director or officer of Buyer, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Buyer is subject
or
any provision of the charter, bylaws, or other governing documents of Buyer
or
(ii) conflict with, result in a breach of, constitute a default under, result
in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which Buyer is a party or by which
it is bound or to which any of its assets is subject. To the Knowledge of any
director or officer of Buyer, and other than in connection with the provisions
of the Xxxx-Xxxxx-Xxxxxx Act, the Nevada Revised Statutes, the Securities
Exchange Act, the Securities Act, and the state securities laws, Buyer does
not
need to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for
the
Parties to consummate the transactions contemplated by this
Agreement.
(e)
Ownership.
As part
of Buyer’s Disclosure Schedule is a list of the share ownership of the officers
and directors of the Buyer Shares (collectively, the “Buyer Insiders”). At or
prior to the Closing Date, Buyer shall deliver to Target lock-up agreements
(collectively, the “Buyer Lock-Up Agreements”) signed by each such Buyer
Insider, providing for, among other things, that each such Buyer Insider shall
not sell or otherwise dispose of any Buyer Shares owned by it for a period
of 90
days after the Closing Date.
(f)
Compliance
with the Law and Other Instruments.
(i)
Except as otherwise provided in this Agreement and in the Exhibits annexed
hereto, the business and operations of Buyer have been and are being conducted
in all material respects in accordance with all applicable laws, rules and
regulations of all authorities which affect Buyer or its properties, assets,
businesses or prospects.
(ii)
Buyer Disclosure Schedule sets forth all material governmental licenses,
permits, authorizations and approvals (the “Permits”) issued or granted to
Buyer. To the knowledge of Buyer, the Permits are validly held by Buyer, and
Buyer is in compliance with the Permits, except for instances of noncompliance
that would not, individually or in the aggregate, have a material adverse
effect. To the knowledge of Buyer, the Permits constitute all of the
governmental licenses, permits, authorizations and approvals required to carry
on the business of Buyer as such business is presently conducted, except where
the failure to have any such license, permit, authorization or approval would
not, individually or in the aggregate, have a material adverse
effect.
(g)
Absence
of Conflicts.
The
execution and delivery of this Agreement and the issuance of the Buyer Shares,
and the consummation by Buyer of the transactions set forth in this Agreement:
(i) do not and shall not conflict with or result in a breach of any provision
of
Buyer’s Certificate of Incorporation or By-Laws, (ii) do not and shall not
result in any breach of, or constitute a default or cause an acceleration under
any arrangement, agreement or other instrument to which Buyer is a party to
or
by which any of its assets are bound, (iii) do not and shall not cause Buyer
to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Buyer. Buyer has performed in all
material respects all of its obligations which are, as of the date of this
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
(h)
Environmental
Compliance.
Except
as set forth in the Buyer Disclosure Schedule, there are no environmental
reports with respect to any of the properties owned or leased by Buyer. To
Buyer’s knowledge, it is in compliance with all applicable environmental laws
(the “Environmental Laws”). Buyer is presently authorized, if required, to
generate, transport through third parties, store, use, treat, dispose of,
release, and conduct other handling of, as required, those hazardous substances
used in Buyer’s business, which consist of, hazardous waste, hazardous material,
hazardous constituents, toxic substances, pollutants, contaminants, asbestos,
radon, polychlorinated biphenyls, petroleum product or waste (including crude
oil or any fraction thereof), natural gas, liquefied gas, synthetic gas and
other material defined, regulated, controlled or subject to any remediation
requirement under any Environmental Law.
(i)
OSHA
Compliance; Employment Matters.
(i)
To
Buyer’s knowledge, it is in compliance with all applicable federal, state and
local laws, rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder and other governmental requirements,
including, without limitation, all laws, etc. relating to (1) ERISA and (2)
occupational health and safety, including but not limited to the Occupational
Safety and Health Act of 1970, as amended, and the rules and regulations
promulgated thereunder.
(ii)
As
set forth on the Buyer Disclosure Schedule, Buyer does not owe any accrued
but
unpaid salary or other compensation or benefits to any officer, director,
employee or consultant of Buyer. Upon the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, Buyer,
from and after the Closing Date will have no obligation to any officer,
director, employee or consultant of Buyer for any claim, including, without
limitation, any claim for wages, fees, benefits, deferred compensation,
severance pay, incentive pay, or pension, arising under any of the Benefit
Plans
or arising out of such officer’s, director’s, employee’s, or consultant’s
engagement or employment by Buyer, except as set forth on the Buyer Disclosure
Schedule.
(iii)
As
a condition precedent to the Closing of this Agreement, and included in the
Buyer Disclosure Schedule, each and every contract, agreement or otherwise
legally binding obligation by and between Buyer and any of its officers,
directors, employees or consultants in effect at the time this Agreement is
executed shall be terminated, effective immediately upon Closing, except for
such agreements as are set forth in Section 4. As set forth in the notices
of
termination, which shall include a general release in favor of Buyer, that
shall
be tendered by each such Buyer officer, director, employee or consultant, Buyer,
from and after the Closing Date, will have no obligation to any officer,
director, employee or consultant of Buyer for any claim, including, without
limitation, any claim for wages, fees, benefits, deferred compensation,
severance pay, stock option, rights, incentive pay, or pension, arising under
any of the Benefit Plans or arising out of such officer’s, director’s,
employee’s, or consultant’s engagement or employment by Buyer.
(j)
Financial
Statements.
Buyer’s
financial statements contained in Buyer’s most recent Form 10-KSB and 10-QSB
(collectively, the “Buyer Financial Statements”) have been prepared using
generally accepted accounting principles (“GAAP”) applied on a consistent basis.
The Buyer Financial Statements fairly present the financial condition and
results of operations for Buyer. As of the Closing Date, Buyer will not have
any
outstanding indebtedness or other liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due). Except as set forth on the Buyer Disclosure Schedule, since the
date of the Form 10-KSB for the year ended December 31, 2005, there has not
been
any material adverse change in Buyer’s financial condition, assets, liabilities
or business, or any damage, destruction or loss, whether or not covered by
insurance, materially affecting Buyer’s properties, assets or business, and
Buyer has not incurred any indebtedness, liability or other obligation of any
nature whatsoever except in the ordinary course of business and Buyer has not
made any change in its accounting methods or practices.
(k)
Taxes.
Except
as set forth on the Buyer Disclosure Schedule, Buyer has timely filed all
required federal, state, city and local tax returns for income, franchise,
social security, withholding, sales, excise, unemployment insurance, real estate
and other taxes, and has paid or made adequate provision for the payment of
all
such taxes whether or not shown to be due on said returns.
(l)
Contracts.
(i)
Annexed hereto and made a part hereof as Exhibit “I” is a true and complete
schedule of all of Buyer’s material contracts.
(ii)
For
purposes of this Agreement, “Buyer Material Contract” shall mean:
| a. |
any
“material contract” (within the meaning of Item 601(b)(10) of
Regulation S-K under the Securities Act and the Exchange Act) with
respect to Buyer;
|
| b. |
any
indemnification, employment, consulting or other Contract with
(x) any member of the Buyer Board, (y) any executive officer of
the Buyer or (z) any other employee of Buyer earning an annual salary
plus bonus equal to or in excess of $200,000 other than those Contracts
terminable by the Buyer on no more than thirty (30) days notice
without liability or financial obligation to
Buyer;
|
| c. |
any
Contract containing any covenant (A) limiting, in any material
respect, the ability of Buyer to engage in any line of business or
compete
with any person or solicit the employees of another person,
(B) granting any exclusive rights to make, sell or distribute Buyer’s
products or (C) granting “most favored nation” pricing status to any
person;
|
| d. |
any
Contract (i) relating to the disposition or acquisition by Buyer,
with obligations remaining to be performed or liabilities continuing
after
the date of this Agreement, of any material business or any material
amount of assets other than in the ordinary course of business or
(ii) pursuant to which Buyer has any material ownership interest in
any other person or other business
enterprise;
|
| e. |
any
Contract to provide source code into any escrow or to any third party
(under any circumstances) for any product or technology that is material
to the business of Buyer, taken as a
whole;
|
| f. |
any
Contract to license to any third party the right to reproduce any
of
Buyer’s Intellectual Property products, services or technology or any
Contract to sell or distribute any of Buyer’s Intellectual Property
products, services or technology, except (A) agreements with sales
representatives or other resellers in the ordinary course of business,
or
(B) agreements allowing internal backup copies made or to be made by
end-user customers in the ordinary course of
business;
|
| g. |
any
mortgages, indentures, guarantees, loans or credit agreements, security
agreements, promissory notes or other Contracts relating to the borrowing
of money, extension of credit or other indebtedness, other than accounts
receivables and payables in the ordinary course of business or any
Contract relating to the mortgaging, pledging or otherwise placing
a Lien
on any material asset or group of assets of
Buyer;
|
| h. |
any
settlement agreement entered into within three (3) years prior to the
date of this Agreement, other than (I) releases immaterial in nature
or amount entered into with former employees or independent contractors
of
Buyer in the ordinary course of business in connection with the routine
cessation of such employee’s or independent contractor’s employment or
association with Buyer or (II) settlement agreements for cash only
(which has been paid) in an amount not exceeding
$250,000;
|
| i. |
any
Contract under which Buyer has received or granted a license relating
to
any Intellectual Property that is material to the business of Buyer,
taken
as a whole, other than non-exclusive licenses extended to customers,
clients, distributors or other resellers in the ordinary course of
business;
|
| j. |
any
material partnership or joint venture agreement to which Buyer is
a
party;
|
| k. |
any
Contract with a customer that accounted for net revenues in fiscal
year
2005 of more than $1,000,000 in the aggregate;
and
|
| l. |
any
Contract (other than Leases) with a vendor pursuant to which Buyer
incurred payables in fiscal year 2005 of more than $2,000,000 in
the
aggregate.
|
(iii)
Each Buyer Material Contract is valid and binding, in full force and effect
and
is enforceable by Buyer in accordance with its respective terms (subject to
the
Bankruptcy and Equity Exception), except to the extent it has previously expired
in accordance with its terms and except for such failures to be valid and
binding or in full force and effect that, individually or in the aggregate,
would not result in a Buyer Material Adverse Effect. Buyer and, to the knowledge
of Buyer, each other party to the Buyer Material Contracts, have performed
in
all material respects all respective obligations required to be performed by
them to the date hereof under the Buyer Material Contracts and are not, and
are
not alleged in writing to be (with or without notice, the lapse of time or
both)
in breach thereof or default thereunder, and, neither the Buyer nor any of
its
Subsidiaries nor, to the knowledge of Buyer, any other party to any Buyer
Material Contract, has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time or both, would
constitute a default under the provisions of any Buyer Material Contract, except
in each case, for those failures to perform, breaches, violations and defaults
that, individually or in the aggregate, would not result in a Buyer Material
Adverse Effect.
(m)
Title
to Assets.
Except
as set forth on the Buyer Disclosure Schedule, Buyer owns all right, title,
and
interest in and to each of its assets material to its business.
(i)
The
Buyer Disclosure Schedule contains a list of all foreign and domestic patents,
patent rights, trademarks, service marks, trade names, brands and copyrights
(whether or not registered and, if applicable, including pending applications
for registration and renewals of registration), owned, used, licensed or
controlled by Buyer (the “Intellectual Property”), specifying as to each such
item of Intellectual Property, as applicable: (a) the owner of the item, (b)
the
jurisdictions in which the item is issued or registered or in which any
application for issuance or registration has been filed, (c) the respective
issuance, registration, or application number of the item, and (d) the date
of
application and issuance or registration of the item. Buyer owns all right,
title and interest in and to, or has valid and enforceable licenses to use,
all
of the Intellectual Property used by it connection with its business. Except
as
described in Buyer Disclosure Schedule, all listed Intellectual Property is
owned by Buyer, free and clear of all liens or claims, including, without
limitation, any claim of infringement, of any nature.
(ii)
No
present or former employee, officer or director of Buyer, or agent or outside
contractor of Buyer, holds any right, title or interest, directly or indirectly,
in whole or in part, in or to any Intellectual Property.
(iii)
Except as set forth on the Buyer Disclosure Schedule, to the knowledge of Buyer:
(a) none of the Intellectual Property has been used, divulged, disclosed or
appropriated to the detriment of Buyer for the benefit of any person other
than
Buyer; and (b) no employee, independent contractor or agent of Buyer has
misappropriated any trade secrets or other confidential information of any
other
person in the course of the performance of his or her duties as an employee,
independent contractor or agent of Buyer.
(iv)
The
Buyer Disclosure Schedule lists the operating systems and applications computer
software programs and databases used by Buyer that are material to the conduct
of their business. Buyer holds valid licenses to use, reproduce, modify,
distribute and sublicense all copies of the Software. To the knowledge of Buyer,
none of the Software used by Buyer, nor any use thereof, conflicts with,
infringes upon or violates any Intellectual Property or other proprietary rights
of any other person and, to the knowledge of Buyer, no claim, suit, action
or
other proceeding with respect to any such infringement or violation is
threatened or pending.
(n)
Litigation.
Except
as set forth on the Form 10-KSB, the Form 10-QSB, and the Buyer Disclosure
Schedule, there are no legal, administrative, arbitration, or other proceeding
or governmental investigations adversely affecting Buyer or its properties,
assets or businesses, or with respect to any matter arising out of the conduct
of Buyer’s business pending or to its knowledge threatened, by or against, any
officer or director of Buyer in connection with its affairs, whether or not
covered by insurance. Except as set forth on the Form 10-KSB, the Form 10-QSB,
and the Buyer Disclosure Schedule, neither Buyer nor its officers or directors
are subject to any order, writ, injunction, or decree of any court, department,
agency, or instrumentality affecting Buyer. Except as set forth on the Form
10-KSB, the Form 10-QSB, and the Buyer Disclosure Schedule, Buyer is not
presently engaged in any legal action. The reserves for litigation set forth
on
the Buyer Financial Statements are adequate to cover the cost of any adverse
judgment in any pending litigation and, except as set forth on the Buyer
Disclosure Schedule, Buyer will not be obligated to pay the costs, including,
without limitation, attorney’s fees, of any pending litigation after the Closing
Date.
(o)
Reporting
Company Status.
Buyer is
a reporting company registered with the SEC whose common stock is quoted on
the
OTC Bulletin Board under the symbol VICI.OB. Buyer has not received any notice
with respect to non-compliance with any rules or regulations that would affect
the eligibility of its Common Stock to be quoted on the OTC Bulletin
Board.
(p)
SEC
Filings.
Except
as set forth on the Buyer Disclosure Schedule, Buyer has filed and will continue
to timely file all forms, reports and documents required to be filed by Buyer
with the SEC (collectively, the “SEC Reports”) and the SEC Reports (i) at the
time filed, complied in all material respects with the applicable requirements
of the Securities Act and the Securities Exchange Act, as the case may be,
(ii)
did not, to Buyer ‘s knowledge, at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of
such filing) contain any untrue statement of a material fact or omit to state
a
fact required to be stated in such SEC Reports or necessary in order to make
the
statements in such SEC Reports, in the light of the circumstances under which
they were made, not materially misleading and (iii) adequately described all
material transactions, which transactions were consummated on commercially
reasonable terms and were in the best interests of Buyer’s
stockholders.
(q)
Absence
of Changes.
Except
as set forth on the Buyer Disclosure Schedule and this Agreement, and except
for
transactions consummated on commercially reasonable terms and in the best
interests of Buyer’s stockholders, subsequent to the date of the Form 10-KSB and
through the date of this Agreement, and except as in the ordinary course of
business and with respect to any items reserved by Buyer and reflected in the
Buyer Financial Statements, there has not been any material adverse change
in,
or any event or condition (financial or otherwise) affecting the business,
properties, assets, liabilities, historical operations or prospects of Buyer,
there are no liabilities or obligations of any nature, whether absolute,
contingent or otherwise, whether due or to become due (including, without
limitation, liabilities for taxes with respect to or measured by income of
Buyer
for any period prior to, and/or subsequent to, the date of the Form 10KSB or
arising out of any transaction of Buyer prior to, and/or subsequent to, such
date). Subsequent to the date of the Form 10-KSB, there has not been any
declaration, or setting aside, or payment of any dividend or other distribution
with respect to Buyer securities, or any direct or indirect redemption,
purchase, or other acquisition of any of Buyer securities. To Buyer’s knowledge,
there has not been an assertion against Buyer of any liability of any nature
or
in any amount not fully reflected or reserved against in the most recent Form
10-KSB or Form 10-QSB.
(r)
No
Approvals.
No
approval of any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.
(s)
Broker.
Buyer
represents that it has not had any dealing with respect to this transaction
with
any business broker, firm or salesman, or any person or corporation, investment
banker or financial advisor who is or shall be entitled to any broker’s or
finder’s fee or any other commission or similar fee with respect to the
transactions set forth in this Agreement. Buyer agrees to indemnify and hold
harmless Target from and against any and all claims for brokerage commissions
or
finder’s fees by any person, firm or corporation on the basis of any act or
statement alleged to have been made by Buyer or its affiliates or
agents.
(t)
Complete
Disclosure.
No
representation or warranty of Buyer which is contained in this Agreement, or
in
a writing furnished or to be furnished pursuant to this Agreement, to Buyer’s
knowledge contains or shall contain any untrue statement of a material fact,
omits or shall omit to state any fact which is required to make the statements
which are contained herein or therein, in light of the circumstances under
which
they were made, not materially misleading. There is no fact relating to the
business, affairs, operations, conditions (financial or otherwise) or prospects
of Buyer which would materially adversely affect same which has not been
disclosed to Target in this Agreement.
(u)
No
Defense.
It shall
not be a defense to a suit for damages for any misrepresentation or breach
of
covenant or warranty that Target knew or had reason to know that any covenant,
representation or warranty in this Agreement furnished or to be furnished to
Target contained untrue statements.
(v)
No
Undisclosed Liabilities.
Except
as disclosed in the Buyer SEC Reports filed prior to the date of this Agreement
or in the consolidated unaudited balance sheet of Buyer as of the date hereof
(the “Balance Sheet”), Buyer does not have any liabilities (whether accrued,
absolute, contingent or otherwise) of a type that would be required by GAAP
to
be reflected on a consolidated balance sheet of Buyer (including the notes
thereto), except for liabilities (i) incurred in connection with the
transactions contemplated hereby, (ii) incurred in the ordinary course of
business consistent with past practice since the date of the Balance Sheet
or
(iii) that, individually or in the aggregate, would not result in an
adverse manner against Buyer.
(w)
Exemption
from Liability Under Section 16.
Prior to
the Closing, Buyer shall take all such steps as may be required to cause to
be
exempt under Rule 16b-3 promulgated under the Exchange Act any dispositions
of Buyer Shares (including derivative securities with respect to Company Common
Stock) under such rule resulting from the transactions contemplated by this
Agreement by each individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Buyer.
(x)
Resignations
& Termination of Buyer Material Contracts.
Buyer
shall use commercially reasonable efforts to obtain and deliver to Target at
the
Closing evidence reasonably satisfactory to Target the resignation and
termination, effective as of the Effective Time, of all Buyer Material
Contracts.
(y)
Proxy
Statement.
(i)
Information.
The
Proxy Statement and any other document filed with the SEC or by Buyer in
connection with this Agreement (taking into account any amendment thereof or
supplement thereto), at the time filed with the SEC, at the time first mailed
to
the stockholders of Buyer and at the time of the Special Buyer Meeting, as
the
case may be, will not contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
are
made, not misleading, and the Proxy Statement and such other documents filed
with the SEC by Buyer will comply in all material respects with the provisions
of the Exchange Act; provided, however that no representation is made by Buyer
with respect to statements made therein based on information supplied by Target
for inclusion in such documents.
(ii)
Proxy
Statement.
As soon
as reasonably as practicable after the execution of this Agreement, Buyer,
in
cooperation with Target, shall prepare and file with the SEC the Proxy
Statement. Buyer, acting through the Buyer Board, shall include in the Proxy
Statement (or any supplement thereto filed pursuant to this Section 4) the
unanimous (of those directors that were present) recommendation of the Buyer
Board that the shareholders of the Buyer vote in favor of this Agreement and
the
adoption of this Agreement (the “Buyer Recommendation”). Buyer shall respond to
any comments of the SEC or its staff and shall cause the Proxy Statement to
be
mailed to its shareholders at the earliest practicable time after the resolution
of any such comments. Buyer shall notify Target promptly upon the receipt of
any
comments from the SEC or its staff or any other government officials and of
any
request by the SEC or its staff or any other government officials for amendments
or supplements to the Proxy Statement and shall supply Target with copies of
all
correspondence between Buyer or any of its representatives, on the one hand,
and
the SEC, or its staff or any other government officials, on the other hand,
with
respect to the Proxy Statement. Provided that there shall have been no change
in
the Buyer Recommendation, Buyer shall use commercially reasonable efforts to
obtain the Requisite Buyer Stockholder Approval. Buyer shall use commercially
reasonable efforts to cause all documents that Buyer is responsible for filing
with the SEC or other regulatory authorities under this Section 4 to comply
in all material respects with all applicable requirements of law and the rules
and regulations promulgated thereunder. Target shall use commercially reasonable
efforts to provide, or to cause to be provided, to Buyer for inclusion in the
Proxy Statement and any amendments or supplements thereto all information
regarding Target and its Affiliates that may be required by applicable law
and
the rules and regulations promulgated thereunder to be so included. Whenever
any
event occurs which is required to be set forth in an amendment or supplement
to
the Proxy Statement, Target or Buyer, as the case may be, shall promptly inform
the other of such occurrence and cooperate in filing with the SEC or its staff
or any other government officials, and/or mailing to shareholders of Buyer,
such
amendment or supplement. Notwithstanding the foregoing, Buyer shall not file
with the SEC or mail to its shareholders the Proxy Statement, any amendment
thereto, any other soliciting material or any such other documents without
providing Target a reasonable opportunity to review and comment on such
documents.
(z)
No
Further Representations and Warranties.
The
representations and warranties made by Buyer in this Agreement are in lieu
of
and are exclusive of all other representations and warranties, including,
without limitation, any implied warranties. Buyer hereby disclaims any such
other or implied representations or warranties, notwithstanding the delivery
or
disclosure, if any, to Target or its officers, directors, employees, agents
or
representatives of any documentation or other information.
(i)
Continuity
of Business Enterprise.
It is
the present intention of Buyer to continue at least one significant historic
business line of Target, or to use at least a significant portion of Target’s
historic business assets in a business, in each case within the meaning of
Reg.
1.368-1(d).
(ii)
Disclosure. The
Definitive Buyer Proxy Materials will comply with the Securities Act and the
Securities Exchange Act in all material respects. The Definitive Buyer Proxy
Materials will not contain any untrue statement of a material fact or omit
to
state a material fact necessary in order to make the statements made therein,
in
light of the circumstances under which they will be made, not misleading;
provided,
however,
that
Buyer makes no representation or warranty with respect to any information that
Target will supply specifically for use in the Definitive Buyer Proxy Materials.
None of the information that Buyer will supply specifically for use in the
Definitive Target Proxy Materials will contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they will
be
made, not misleading.
5. Covenants.
The
Parties agree as follows with respect to the period from and after the execution
of this Agreement.
(a)
General.
Each of
the Parties will use its reasonable best efforts to take all actions and to
do
all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing conditions set forth in Section
6
below).
(b)
Notices
and Consents.
Target
will give any notices (and will cause each of its Subsidiaries to give any
notices) to third parties, and will use its reasonable best efforts to obtain
(and will cause each of its Subsidiaries to use its reasonable best efforts
to
obtain) any third-party consents referred to in Section 3 above and the items
set forth in this Section 5 of the Disclosure Schedule.
(c)
Regulatory
Matters and Approvals.
Each of
the Parties will, and Target will cause each of its Subsidiaries to, give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in 3(d) and 4(d) above.
Without limiting the generality of the foregoing:
(i)
Securities
Act, Securities Exchange Act, and State Securities Laws.
Buyer
will take all actions that may be necessary under state securities laws in
connection with the offering and issuance of the Buyer Shares.
(ii)
Nevada
Revised Statutes.
Target
will call a special meeting of its stockholders (the “Special
Target Meeting”)
as
soon as reasonably practicable in order that the stockholders may consider
and
vote upon the adoption of this Agreement and the approval of the Merger in
accordance with the Nevada Revised Statutes. Buyer will call a special meeting
of its stockholders (the “Special
Buyer Meeting”)
as
soon as reasonably practicable in order that the stockholders may consider
and
vote upon the adoption of this Agreement and the approval of the Merger in
accordance with the Nevada Revised Statutes, or other applicable law as set
forth in the Definitive Buyer Proxy Materials.
(d)
Operation
of Business.
Target
will not (and will not cause or permit any of its Subsidiaries to) engage in
any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing:
(i)
neither Target nor any of its Subsidiaries will authorize or effect any change
in its charter or bylaws;
(ii)
neither Target nor any of its Subsidiaries will grant any options, warrants,
or
other rights to purchase or obtain any of its capital stock or issue, sell,
or
otherwise dispose of any of its stock (except upon the conversion or exercise
of
options, warrants, and other rights currently outstanding);
(iii)
neither Target nor any of its Subsidiaries will declare, set aside, or pay
any
dividend or distribution with respect to its stock (whether in cash or in kind),
or redeem, repurchase, or otherwise acquire any of its capital stock, in either
case outside the Ordinary Course of Business;
(iv)
neither Target nor any of its Subsidiaries will issue any note, bond, or other
debt security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligation outside the Ordinary Course
of
Business;
(v)
neither Target nor any of its Subsidiaries will impose any Lien upon any of
its
assets outside the Ordinary Course of Business;
(vi)
neither Target nor any of its Subsidiaries will make any capital investment
in,
make any loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii)
neither Target nor any of its Subsidiaries will make any change in employment
terms for any of its directors, officers, and employees outside the Ordinary
Course of Business; and
(viii)
neither Target nor any of its Subsidiaries will commit to any of the
foregoing.
(e)
Full
Access.
Buyer
and Target each will, and will cause each of their Subsidiaries to, permit
representatives of the other party (including legal counsel and accountants)
to
have full access to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to Buyer
and
Target and each of their Subsidiaries. Buyer and Target will treat and hold
as
such any Confidential Information they receive from the other party or any
of
their Subsidiaries in the course of the reviews contemplated by this 5(e),
will
not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever,
agree
to return to the other party all tangible embodiments (and all copies) thereof
that are in their possession.
(f)
Notice
of Developments.
Each
Party will give prompt written notice to the other of any material adverse
development causing a breach of any of its own representations and warranties
in
3 and 4 above. No disclosure by any Party pursuant to this 5(f), however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g)
Exclusivity.
Buyer
and Target will not and will not cause or permit any of their Subsidiaries
to
solicit, initiate, or encourage the submission of any proposal or offer from
any
Person relating to the acquisition of all or substantially all of the capital
stock or assets of Buyer or Target or any of their Subsidiaries (including
any
acquisition structured as a merger, consolidation, or share exchange);
provided,
however,
that
Buyer and Target, their Subsidiaries, and their directors and officers will
remain free to participate in any discussions or negotiations regarding, furnish
any information with respect to, assist or participate in, or facilitate in
any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent their fiduciary duties may require.
(h)
Indemnification.
(i)
Buyer, as the Surviving Corporation in the Merger, will observe any
indemnification provisions now existing in the certificate of incorporation
or
bylaws of Target for the benefit of any individual who served as a director
or
officer of Target at any time prior to the Effective Time.
(ii)
Buyer will indemnify each individual who served as a director or officer of
Target at any time prior to the Effective Time from and against any and all
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including all court
costs
and reasonable attorneys fees and expenses, resulting from, arising out of,
relating to, in the nature of, or caused by this Agreement or any of the
transactions contemplated herein.
(i)
Continuity
of Business Enterprise.
Buyer
will continue at least one significant historic business line of Target, or
use
at least a significant portion of Targets historic business assets in a
business, in each case within the meaning of Reg. 1.368-1(d), except that Buyer
may transfer Targets historic business assets (i) to a corporation that is
a
member of Buyer’s qualified group, within the meaning of Reg. 1.368-1(d)(4)(ii),
or (ii) to a partnership if (A) one or more members of Buyers qualified group
have active and substantial management functions as a partner with respect
to
Targets historic business or (B) members of Buyers qualified group in the
aggregate own an interest in the partnership representing a significant interest
in Targets historic business, in each case within the meaning of Reg.
1.368-1(d)(4)(iii).
(j)
No
Public Announcement.
None of
the parties hereto shall, without the prior written approval of the other party
make any press release or other public announcement or communicate with any
customer, competitor or supplier of the other party concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall determine is required by law, which determination shall be made by such
party based upon the advice of its counsel, in which event the other party
shall
be advised and the parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued.
(k)
Legal
Requirements.
(i)
Subject to the terms hereof, each of Target and Buyer shall use their
commercially reasonable efforts to:
| a. |
take,
or cause to be taken, all actions, and do, or cause to be done, and
to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable (and
Buyer
shall use its commercially reasonable efforts to obtain prior to
Closing
such written consents, authorizations or resignations of the parties
to
the Buyer Material Contracts as so requiring by reason of the execution
of
this Agreement or the consummation of the transactions contemplated
hereby);
|
| b. |
as
promptly as practicable, obtain from any Governmental Entity or any
other
third party any consents, licenses, permits, waivers, approvals,
authorizations, or orders required to be obtained by Buyer or Target
or
any of their Subsidiaries in connection with the authorization, execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby;
|
| c. |
as
promptly as practicable, make all necessary filings, notifications,
and
thereafter make any other required submissions, with respect to this
Agreement required under (A) the Exchange Act, and any other
applicable federal or state securities laws, and (B) any other
applicable law; and
|
| d. |
contest
any legal proceeding relating to the transactions contemplated by
this
Agreement; and
|
| e. |
execute
or deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes
of, this
Agreement. Buyer and Target shall cooperate with each other in connection
with the making of all such filings. Buyer and Target shall each
use their
commercially reasonable efforts to furnish to each other all information
required for any application or other filing to be made pursuant
to the
rules and regulations of any applicable law (including all information
required to be included in the Proxy Statement) in connection with
the
transactions contemplated by this Agreement. For the avoidance of
doubt,
Buyer and Target agree that nothing contained in this Section 5 shall
modify or affect their respective rights and responsibilities as
otherwise
set forth in this Agreement.
|
(ii)
Buyer and Target agree, and shall cause each of their respective subsidiaries,
to cooperate and to use their commercially reasonable efforts to obtain any
government clearances or approvals required for Closing under any federal,
state
or foreign law, regulation or decree designed to prohibit, restrict or regulate
actions for the purpose or effect of monopolization or restraint of trade
(collectively “Antitrust Laws”), to respond to any government requests for
information under any Antitrust Law, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an “Antitrust Order”)
that restricts, prevents or prohibits the consummation of any transactions
contemplated by this Agreement under any Antitrust Law. The parties hereto
will
consult and cooperate with one another, and consider in good faith the views
of
one another, in connection with, and provide to the other parties in advance,
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals prepared for submission to a government agency in connection
with
an antitrust filing relating to this Agreement and made or submitted by or
on
behalf of any party hereto in connection with proceedings under or relating
to
any Antitrust Law. Notwithstanding anything in this Agreement to the contrary,
(i) Target shall not be required to agree to any consent decree or order in
connection with any objections raised by the Federal Trade Commission or
Department of Justice or any other governmental agency or authority or third
party with respect to the transactions contemplated by this Agreement and
(ii) neither Target nor its Affiliates shall be obligated to agree to
divest or hold separate all or any portion of the assets or businesses of Buyer
and its subsidiaries or any of their other assets or businesses.
6. Conditions
to Obligation to Close.
(a)
Conditions
to Buyer’s Obligation.
The
obligation of Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i)
this
Agreement and the Merger shall have received the Requisite Target Stockholder
Approval;
(ii)
Target and its Subsidiaries shall have procured all of the third-party consents
specified in Section 5 above;
(iii)
the
representations and warranties set forth in Section 3 above shall be true and
correct in all material respects at and as of the Closing Date, except to the
extent that such representations and warranties are qualified by the term
material, or contain terms such as Material Adverse Effect or Material Adverse
Change, in which case such representations and warranties (as so written,
including the term material or Material) shall be true and correct in all
respects at and as of the Closing Date;
(iv)
Target shall have performed and complied with all of its covenants hereunder
in
all material respects through the Closing, except to the extent that such
covenants are qualified by the term material, or contain terms such as Material
Adverse Effect or Material Adverse Change, in which case Target shall have
performed and complied with all of such covenants (as so written, including
the
term material or Material) in all respects through the Closing;
(v)
no
action, suit, or proceeding shall be pending or threatened before any court
or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of
any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) adversely affect the right of Surviving Corporation to own
the
former assets, to operate the former business, and to control the former
Subsidiaries of Target, or (D) adversely affect the right of any of the former
Subsidiaries of Target to own its assets and to operate its business (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(vi)
Target shall have delivered to Buyer a certificate to the effect that each
of
the conditions specified above in this Section 6(a)(i)-(v) is satisfied in
all
respects;
(vii)
this Agreement and the Merger shall have received the Requisite Buyer
Stockholder Approval;
(viii)
Buyer shall have received from counsel to Target an opinion in form and
substance as set forth in Exhibit E attached hereto, addressed to Buyer, and
dated as of the Closing Date;
(ix)
all
actions to be taken by Target in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby
will
be reasonably satisfactory in form and substance to Buyer.
Buyer
may
waive any condition specified in this 6(a) if it executes a writing so stating
at or prior to the Closing.
(b)
Conditions
to Target’s Obligation.
The
obligation of Target to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i)
this
Agreement and the Merger shall have received the Requisite Buyer Stockholder
Approval;
(ii)
Buyer and its Subsidiaries shall have procured all of the third-party consents
specified in Section 5 above;
(iii)
the
representations and warranties set forth in Section 4 above shall be true and
correct in all material respects at and as of the Closing Date, except to the
extent that such representations and warranties are qualified by the term
material, or contain terms such as Material Adverse Effect or Material Adverse
Change, in which case such representations and warranties (as so written,
including the term material or Material) shall be true and correct in all
respects at and as of the Closing Date;
(iv)
Buyer shall have performed and complied with all of its covenants hereunder
in
all material respects through the Closing, except to the extent that such
covenants are qualified by the term material, or contain terms such as Material
Adverse Effect or Material Adverse Change, in which case Buyer shall have
performed and complied with all of such covenants (as so written, including
the
term material or Material) in all respects through the Closing;
(v)
no
action, suit, or proceeding shall be pending or threatened before any court
or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of
any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) adversely affect the right of Surviving Corporation to own
the
former assets, to operate the former business, and to control the former
Subsidiaries of Buyer, or (D) adversely affect the right of any of the former
Subsidiaries of Buyer to own its assets and to operate its business (and no
such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(vi)
Buyer shall have delivered to Target a certificate to the effect that each
of
the conditions specified above in 6(b)(i)-(iv) is satisfied in all
respects;
(vii)
this Agreement and the Merger shall have received the Requisite Target
Stockholder Approval;
(viii)
Target shall have received from counsel to Buyer an opinion in form and
substance as set forth in Exhibit F attached hereto, addressed to Target, and
dated as of the Closing Date;
(ix)
all
actions to be taken by Buyer in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Target.
Target
may waive any condition specified in this 6(b) if it executes a writing so
stating at or prior to the Closing.
(c)
Conduct
of Target Business Prior to the Closing Date.
Between
the date of this Agreement and the Closing Date, Target shall carry on its
business in the ordinary course and in the same manner as heretofore conducted
and shall preserve intact the existing business organization of Target, and
use
its best efforts to (i) keep available to Target the services of Target’s
present officers and employees, (ii) maintain all of Target’s properties in
their present condition (ordinary wear and tear excepted), (iii) maintain
insurance policies with respect to Target’s business and properties consistent
with current practice, and (iv) maintain Target’s rights and franchises. Except
as set forth in the Target Disclosure Schedule or as provided for in this
Agreement, Target shall not, without the prior written consent of
Buyer:
| (i) |
make
any change in the Certificate of Incorporation or By-Laws of
Target;
|
| (ii) |
authorize
or issue any capital stock or any rights, warrants, options or convertible
securities to acquire such stock;
|
| (iii) |
conduct
the business of Target in any manner other than in the ordinary
course;
|
| (iv) |
take
any action or omit to do any act which would cause the representations
or
warranties of Target contained herein to be untrue or incorrect in
any
material respect;
|
| (v) |
hire
any employee other than in the ordinary course of
business;
|
| (vi) |
except
for liabilities incurred and obligations under contracts entered
into in
the ordinary course of business, incur any obligation or liability
(absolute or contingent), including, but not limited to, any debt
or
guarantee any such debt or issue or sell any debt securities or guarantee
any debt securities of others;
|
| (vii) |
declare
or make any payment or distribution to its stockholders (other than
payment of compensation for services rendered, if applicable) or
purchase
or redeem any shares of capital
stock;
|
| (viii) |
mortgage,
pledge or subject to lien, charge or any other encumbrance, any asset,
whether tangible or intangible, of
Target;
|
| (ix) |
sell,
lease or otherwise dispose of, or agree to sell, lease or otherwise
dispose of, any of its assets except in the ordinary course of business
unless any such successor assumes any and all outstanding
liabilities;
|
| (x) |
commit
any act or omit to do any act which would cause a material breach
of any
agreement, contract or commitment which is listed in an Exhibit annexed
to
this Agreement; or
|
| (xi) |
commit
any other act or omit to do any other act which would have a material
adverse effect upon the business, or financial condition of
Target.
|
(d)
Conduct of Buyer Business Prior to the Closing Date.
Between
the date of this Agreement and the Closing Date, Buyer shall carry on its
business in the ordinary course and in the same manner as heretofore conducted
and shall preserve intact the existing business organization of Buyer, and
use
its best efforts to (i) keep available to Buyer the services of Buyer’s present
officers, and (ii) preserve Buyer relationships, if any, with customers,
suppliers and others having business dealings with Buyer, to the end that its
goodwill and ongoing business shall not be materially impaired on the Closing
Date. Except as set forth in the Buyer Disclosure Schedule or as provided for
in
this Agreement, Buyer shall not, without the prior written consent of
Target:
| (i) |
make
any change in the Certificate of Incorporation or By-Laws of
Buyer;
|
| (ii) |
conduct
the business of Buyer in any manner other than in the ordinary
course;
|
| (iii) |
authorize
or issue any capital stock or any rights, warrants, options or convertible
securities to acquire such stock;
|
| (iv) |
pay
any accrued and unpaid compensation, nor increase the compensation
payable
to, or to become payable by Buyer to any officer, director or employee
or
make any bonus, insurance, pension, or other benefit plan, payment
or
arrangement to or with any officer, director or
employee;
|
| (v) |
hire
any employee other than in the ordinary course of
business;
|
| (vi) |
except
for liabilities incurred and obligations under contracts entered
into in
the ordinary course of business, incur any obligation or liability
(absolute or contingent), including, but not limited to, any debt
or
guarantee any such debt or issue or sell any debt securities or guarantee
any debt securities of others;
|
| (vii) |
declare
or make any payment or distribution to its stockholders or purchase
or
redeem any shares of capital stock;
|
| (viii) |
mortgage,
pledge or subject to lien, charge or any other encumbrance, any asset,
whether tangible or intangible, of Buyer;
|
| (ix) |
sell,
lease or otherwise dispose of, or agree to sell, lease or otherwise
dispose of, any of its assets except in the ordinary course of business
unless any such successor assumes any and all outstanding
liabilities;
|
| (x) |
take
any action or omit to do any act which would cause the representations
or
warranties of Buyer contained herein to be untrue or incorrect in
any
material respect;
|
| (xi) |
commit
any act or omit to do any act which would cause a material breach
of any
agreement, contract or commitment which is listed in an Exhibit annexed
to
this Agreement; or
|
| (xii) |
commit
any other act or omit to do any other act which would have a material
adverse effect upon the business, financial condition or earnings
of
Buyer.
|
(e)
Documents,
Certificates, etc. to be Delivered at Closing.
(i)
At
the Closing, Target shall deliver the following items:
| a. |
the
Target Certificate of Representations and Warranties signed by the
President
of Target; and
|
| b. |
Target’s
Disclosure Schedule.
|
(ii)
At
the Closing, Buyer shall deliver the following items:
| a. |
Buyer
Lock-Up Agreements signed by the Buyer
Insiders;
|
| b. |
the
legal opinion of the Buyer’s counsel relative to due organization of
Buyer, authority of Buyer to enter into this Agreement, and valid
issuance
of the Buyer Shares in accordance with the terms of this Agreement,
in a
form reasonably satisfactory to
Target;
|
| c. |
the
Buyer Certificate of Representations and Warranties signed by the
President of Buyer; and
|
| d. |
the
resignations/termination of all agreements with the officers, directors,
employees or consultants of Buyer.
|
7. Termination.
(a)
Termination
of Agreement.
Either
of the Parties may terminate this Agreement with the prior authorization of
its
board of directors (whether before or after stockholder approval) as provided
below:
(i)
the
Parties may terminate this Agreement by mutual written consent at any time
prior
to the Effective Time;
(ii)
Buyer may terminate this Agreement by giving written notice to Target at any
time prior to the Effective Time (A) in the event Target has breached any
material representation, warranty, or covenant contained in this Agreement
in
any material respect, Buyer has notified Target of the breach, and the breach
has continued without cure for a period of 30 days after the notice of breach
or
(B) if the Closing shall not have occurred on or before June 15, 2006, by reason
of the failure of any condition precedent under Section 6 hereof (unless the
failure results primarily from Buyer breaching any representation, warranty,
or
covenant contained in this Agreement);
(iii)
Target may terminate this Agreement by giving written notice to Buyer at any
time prior to the Effective Time (A) in the event Buyer has breached any
material representation, warranty, or covenant contained in this Agreement
in
any material respect, Target has notified Buyer of the breach, and the breach
has continued without cure for a period of 30 days after the notice of breach
or
(B) if the Closing shall not have occurred on or before June 15, 2006, by reason
of the failure of any condition precedent under Section 6 hereof (unless the
failure results primarily from Target breaching any representation, warranty,
or
covenant contained in this Agreement);
(iv)
Either Party may terminate this Agreement by giving written notice to the other
Party at any time prior to the Effective Time in the event Buyer’s Board or
Target’s Board concludes that termination would be in the best interests of
Buyer or Target, as the case may be, and its stockholders;
(v)
any
Party may terminate this Agreement by giving written notice to the other Party
at any time prior to the Effective Time; or
(vi)
any
Party may terminate this Agreement by giving written notice to the other Party
at any time after the Special Buyer Meeting or the Special Target Meeting in
the
event this Agreement and the Merger fail to receive the Requisite Buyer
Stockholder Approval or the Requisite Target Stockholder Approval
respectively.
(b)
Effect
of Termination.
If any
Party terminates this Agreement pursuant to 7(a) above, all rights and
obligations of the Parties hereunder shall terminate without any liability
of
any Party to any other Party (except for any liability of any Party then in
breach); provided,
however,
that
the confidentiality provisions contained in this Agreement shall survive any
such termination.
(c)
Fees
and Expenses.
(i)
Except as otherwise set forth herein, all Expenses shall be paid by the party
incurring such Expenses, whether or not the actions contemplated by this
Agreement are effectuated. For purposes of this Agreement, “Expenses” means all
out-of-pocket expenses (including, without limitation, all fees and expenses
of
outside counsel, investment bankers, banks, other financial institutions,
accountants, financial printers, proxy solicitors, exchange agents, experts
and
consultants to a party hereto) incurred by a party or on its behalf in
connection with or related to the investigation, due diligence examination,
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, and the financing thereof
and all other matters contemplated by this Agreement and the closing thereof,
together with any out-of-pocket costs and expenses incurred by any party in
enforcing any of its rights set forth in this Agreement, whether pursuant to
litigation or otherwise.
(ii)
If
this Agreement is terminated (i) by Buyer pursuant to Section 7(a) or
(ii) by Target pursuant to Section 7(a) then concurrently with any such
termination of this Agreement, the terminating party shall pay to the
non-terminating party an amount equal to $1,000 (the “Termination
Fee”).
(iii)
All
amounts payable by Buyer or Target, as the case may be, pursuant to this Section
7 shall be paid in cash and in immediately available funds to such bank account
as the recipient party may designate in writing to the paying
party.
(iv)
The
parties agree that the agreements contained in this Section 7 and the
payments contemplated thereby are an integral part of the transactions
contemplated by this Agreement and that such payments represent the damages
that
the party receiving the payment will incur if the conditions giving rise to
such
payments shall occur and constitute liquidated damages and not a penalty and
represent the exclusive remedy of the parties in the circumstances contemplated
by such payment events; provided, however, that the foregoing limitations shall
not be applicable or have any effect in the case of a termination of this
Agreement by reason of a willful breach by Target, one the one hand, or Buyer,
on the other, of a representation or warranty hereunder or a willful failure
of
Target, on the one hand, or Buyer, on the other, to perform their respective
obligations under this Agreement, in which event the parties expressly agree
that the payments contemplated by this Section 7(c)(iv) as the case may be,
shall not be deemed liquidated damages and shall serve as payments towards,
and
not in lieu of, any other damages and legal remedies that may be available
to,
or asserted by, Buyer against Target and its Affiliates, or Target against
Buyer, as the case may be, in such circumstances.
(d)
Cooperation;
Notice; Cure.
Subject
to compliance with applicable law, from the date of this Agreement until the
Closing Date, each of the parties shall confer on a regular and frequent basis
with one or more representatives of the other party to report on the general
status of ongoing operations. Buyer shall promptly provide Target or its counsel
with copies of all of its filings made with the SEC or with any governmental
entity in connection with this Agreement, the transactions contemplated hereby
and thereby. In this regard, each of Buyer and Target shall promptly comply
with
the other’s reasonable requests for documents, information and access to the
other’s facilities, personnel, and representatives. Each of the parties shall
notify the other of, and will use all commercially reasonable efforts to cure
before the Closing Date, any event, transaction or circumstance, as soon as
practical after it becomes known to such party, that causes or will cause any
covenant or agreement of the parties pursuant to this Agreement to be breached
or that renders or will render untrue any representation or warranty of the
parties contained in this Agreement. Each of the parties shall also notify
the
other in writing of, and will use all commercially reasonable efforts to cure,
before the Closing Date, any violation or breach, as soon as practical after
it
becomes known to such party, of any representation, warranty, covenant or
agreement made by the parties. No notice given pursuant to this paragraph shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
(e)
Survival
of Representations, Warranties and Covenants.
All
covenants, agreements, representations and warranties made in or in connection
with this Agreement shall survive the Closing Date hereof, and shall continue
in
full force and effect for two (2) years after the Closing Date, it being
understood and agreed that each of such covenants, agreements, representations
and warranties is of the essence of this Agreement and the same shall be binding
upon and shall inure to the benefit of the parties hereto, its successors and
assigns. Notwithstanding the foregoing, any representation or warranty
concerning ERISA, environmental matters, or taxes shall continue in full force
and effect for the duration of the applicable limitations period.
8. Miscellaneous.
(a)
Press
Releases and Public Announcements. No
Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the
other
Party; provided,
however,
that
any Party may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its publicly
traded securities (in which case the disclosing Party will use its reasonable
best efforts to advise the other Party prior to making the
disclosure).
(b)
No
Third-Party Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any Person other than
the
Parties and their respective successors and permitted assigns; provided,
however,
that
(i) the provisions in Section 2 above concerning issuance of the Buyer Shares
and the provisions above concerning certain requirements for a tax-free
reorganization are intended for the benefit of Target Stockholders and (ii)
the
provisions above concerning insurance and indemnification are intended for
the
benefit of the individuals specified therein and their respective legal
representatives.
(c)
Entire
Agreement.
This
Agreement and all documents and instruments refereed to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and thereof, and (b) except as otherwise provided herein, are not
intended to confer upon any person other than the parties hereto any rights
or
remedies hereunder. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Buyer or
Target makes any other representations or warranties, and each hereby disclaims
any other representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or
the transactions contemplated hereby, notwithstanding the delivery or disclosure
to the other or the other’s representatives of any documentation or other with
respect to any one or more of the foregoing.
(d)
Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other Party.
(e)
Headings.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(f)
Notices.
All
notices, requests, demands, claims, and other communications hereunder shall
be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given (i) when delivered personally to the recipient,
(ii)
1 business day after being sent to the recipient by reputable overnight courier
service (charges pre-paid), (iii) 1 business day after being sent to the
recipient by facsimile transmission or electronic mail, or (iv) 4 business
days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid, and addressed to the intended recipient
as set forth below:
If
to
Target: Copy
to:
Ethos
Environmental Xxxxxxx
X. Later
0000
Xxxxxxxx Xxx. 0000
Xxxx
Xxxx Xxxx
Xxx
Xxxxx, Xxxxxxxxxx 00000 Las
Vegas, Nevada
T:
(000)
000-0000 T:
(000)
000-0000
F:
(000)
000-0000 F:
(000)
000-0000
If
to
Buyer: Copy
to:
Xxxxxx
Industries, Inc. Xxxx
X.
Xxxxxxx
000
X.X.
Xxxxxxx Xxxxxx SteadyLaw
Group
Xxxxxxxx,
Xxxxxxx 00000 0000
Xxxx
Xxxxxx
T:
(000)
000-0000 Xxx
Xxxxx, Xxxxxxxxxx 00000
T:
(000)
000-0000
F:
(000)
000-0000
Any
Party
may send any notice, request, demand, claim, or other communication hereunder
to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless
and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice
in
the manner herein set forth.
(g)
Governing Law. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Nevada without giving effect to any choice or conflict
of
law provision or rule (whether of the State of Nevada or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than
the
State of Nevada.
(h)
Amendments and Waivers.
The
Parties may mutually amend any provision of this Agreement at any time prior
to
the Effective Time with the prior authorization of their respective boards
of
directors; provided,
however,
that
any amendment effected subsequent to stockholder approval will be subject to
the
restrictions contained in the Nevada Revised Statutes. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by both of the Parties. No waiver by any Party of any provision
of
this Agreement or any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be valid unless the same
shall be in writing and signed by the Party making such waiver nor shall such
waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in
any
way any rights arising by virtue of any prior or subsequent such default,
misrepresentation, or breach of warranty or covenant.
(i)
Expenses.
Each of
the Parties will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(j)
Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context otherwise requires. The word including shall mean including without
limitation.
(k)
Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules identified in this Agreement are incorporated herein
by
reference and made a part hereof.
(l)
Tax
Disclosure Authorization.
Notwithstanding anything herein to the contrary, the Parties (and each Affiliate
and Person action on behalf of any Party) agree that each Party (and each
employee, representative, and other agent of such Party) may disclose to any
and
all Persons, without limitation of any kind, the transaction's tax treatment
and
tax structure (as such terms are used in Code 6011 and 6112 and regulations
thereunder) contemplated by this agreement and all materials of any kind
(including opinions or other tax analyses) provided to such Party or such Person
relating to such tax treatment and tax structure, except to the extent necessary
to comply with any applicable federal or state securities laws; provided,
however,
that
such disclosure may not be made until the earlier of date of (A) public
announcement of discussions relating to the transaction, (B) public announcement
of the transaction, or (C) execution of an agreement to enter into the
transaction. This authorization is not intended to permit disclosure of any
other information including (without limitation) (A) any portion of any
materials to the extent not related to the transaction's tax treatment or tax
structure, (B) the identities of participants or potential participants, (C)
the
existence or status of any negotiations, (D) any pricing or financial
information (except to the extent such pricing or financial information is
related to the transaction's tax treatment or tax structure), or (E) any other
term or detail not relevant to the transaction's tax treatment or the tax
structure.
(m)
Enforceability.
Any term
or provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity, legality or
enforceability of the offending term or provision in any other situation or
in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid, illegal
or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words
or
phrases, or to replace any invalid, illegal or unenforceable term or provision
with a term or provision that is valid, legal and enforceable and that comes
closest to expressing the intention of the invalid, illegal or unenforceable
term or provision, and this Agreement shall be enforceable as so modified.
In
the event such court does not exercise the power granted to it in the prior
sentence, the parties hereto agree to replace such invalid, illegal or
unenforceable term or provision with a valid, legal and enforceable term or
provision that will achieve, to the extent possible, the economic, business
and
other purposes of such invalid, illegal or unenforceable term.
(n)
Further
Assurances.
The
parties agree to execute any and all such other further instruments and
documents, and to take any and all such further actions which are reasonably
required to effectuate this Agreement and the intents and purposes
hereof.
(o)
Third Party Beneficiaries.
This
Agreement and all documents and instruments referred to herein, except as
otherwise provided herein, are not intended to confer upon any person other
than
the parties hereto any rights or remedies hereunder.
(p)
Confidentiality.
(i)
Buyer, on its own behalf or on behalf of its directors, officers, employees,
stockholders and/or other representatives and/or agents, recognize and
acknowledge that they had in the past and currently have access to certain
confidential information of Target which is valuable, special and unique to
Target. Buyer agrees that, it will not use any of the confidential information
for any purpose other than as contemplated by and in accordance with the terms
of this Agreement and will not disclose such confidential information to any
person, firm, corporation, association or other entity for any purpose or reason
whatsoever, except (i) to Buyer and to authorized representatives of Buyer,
and
(ii) to counsel and other advisers and representatives of Buyer, provided that
such advisors or representatives (other than counsel) agree in writing to the
confidentiality provisions of this Section 8(q) of this Agreement, unless (1)
such information becomes known to the public generally through no fault of
Buyer, (2) disclosure is required by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any information
pursuant to this Section 8(q) of this Agreement, Buyer shall, if possible,
give
prior written notice thereof to Target and provide Target with the opportunity
to contest such disclosure, or (3) the disclosing party reasonably believes
that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party. In the event of a breach or threatened breach by Buyer
of
the provisions of this Section 8(q) of this Agreement, Target shall be entitled
to an injunction restraining Buyer from disclosing or using, in whole or in
part, such confidential information. Nothing herein shall be construed as
prohibiting Target from pursuing any other available remedy for such breach
or
threatened breach, including the recovery of damages.
(ii)
Target on its own behalf or on behalf of its respective directors, officers,
employees, stockholders and/or other representatives and/or agents, recognizes
and acknowledges that it had in the past and currently has access to certain
confidential information of Buyer. which is valuable, special and unique to
Buyer. Target agrees that, prior to the Closing Date, or if the transactions
contemplated by this Agreement are not consummated, it will not use any of
the
confidential information for any purpose other than as contemplated by and
in
accordance with the terms of this Agreement and will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to Target and to
authorized representatives of Target, and (b) to counsel and other advisers
and
representatives of Target, provided that such advisors or representatives (other
than counsel) agree to the confidentiality provisions of this Section 8(q)
of
this Agreement, unless (1) such information becomes known to the public
generally through no fault of Target, (2) disclosure is required by law or
the
order of any governmental authority under color of law, provided that prior
to
disclosing any information pursuant to this Section 8(q) of this Agreement,
Target shall, if possible, give prior written notice thereof to Buyer and
provide Buyer with the opportunity to contest such disclosure, or (3) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party.. In
the
event of a breach or threatened breach by Target of the provisions of this
Section 8(q) of this Agreement, Buyer shall be entitled to an injunction
restraining Target from disclosing or using, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
Buyer
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
(q)
Counterparts
and Signature.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall be considered one and the
same agreement and shall become effective when counterparts have been signed
by
each of the parties hereto and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. This Agreement
may be executed and delivered by facsimile transmission.
(r)
Interpretation.
When
reference is made in this agreement to an article or a section, such reference
shall be to an article or section of this Agreement, unless otherwise indicated.
The table of contents, table of defined terms and headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way
the meaning or interpretation of this Agreement. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any party. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa. Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” No summary of this Agreement
prepared by any party shall affect the meaning or interpretation of this
Agreement.
(s)
Extension; Waiver.
At any
time prior to the Effective Time, 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 contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a 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. Such extension or waiver shall not
be
deemed to apply to any time for performance, inaccuracy in any representation
or
warranty, or noncompliance with any agreement or condition, as the case may
be,
other than that which is specified in the extension or waiver. The failure
of
any party to this Agreement to assert any of its rights under this Agreement
or
otherwise shall not constitute a waiver of such rights.
(t)
Waiver of jury trial.
Each of
parties hereto irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this agreement or the transactions contemplated
hereby or the actions of Buyer or Target in the negotiation, administration,
performance and enforcement of this agreement.
(u)
Director and Officer Liability.
(i)
Survival
of Indemnification.
Buyer
and Target agree that all rights to indemnification and all limitations on
liability existing in favor of any Indemnitee as provided in the Articles of
Incorporation, Bylaws or any Indemnity Agreement involving Buyer or Target
will
survive the Merger and continue in full force and effect. To the extent
permitted by (i) the Nevada Revised Statutes, or (ii) the Surviving
Corporation’s Certificate of Incorporation and the Bylaws, advancement of
Indemnitee Expenses pursuant to this Section 8(v) will be mandatory rather
than
permissive and the Surviving Corporation will advance Indemnitee Costs in
connection with such indemnification. The Surviving Corporation will expressly
assume and honor in accordance with their terms any agreement providing for
indemnification of any Indemnitee previously made available for inspection
by
Parent in effect on the date of this Agreement (including any indemnity
provisions contained in any agreement providing for the registration of
securities) (each, an “Indemnity Agreement”).
(ii)
Indemnification
Surviving Corporation.
In
addition to the other rights provided for in this Section 8(v) and not in
limitation thereof, from and after the Effective Time, the Surviving Corporation
will, to the fullest extent permitted by applicable law, (i) indemnify and
hold
harmless the individuals who on or prior to the Effective Time were officers,
directors or employees of the Surviving Corporation or any of its Subsidiaries,
and the heirs, executors, trustees, fiduciaries and administrators of such
officers, directors or employees (collectively, the “Indemnitees”) against all
losses, Indemnitee Expenses (as hereinafter defined), claims, damages,
liabilities, judgments, or amounts paid in settlement (collectively, “Indemnitee
Costs”) in respect to any threatened, pending or completed claim, action, suit
or proceeding, whether criminal, civil, administrative or investigative based
on, or arising out of or relating to the fact that such person is or was a
director, officer or employee of the Surviving Corporation or any of its
Subsidiaries and arising out of acts or omissions occurring on or prior to
the
Effective Time (including, without limitation, in respect of acts or omissions
in connection with this Agreement and the transactions contemplated hereby)
(an
“Indemnifiable Claim”) and (ii) advance to such Indemnitees all Indemnitee
Expenses incurred in connection with any Indemnifiable Claim promptly after
receipt of reasonably detailed statements therefor; provided, that, the person
to whom Indemnitee Expenses are to be advanced would be required to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification from the Surviving Corporation. The Surviving Corporation will
not be liable for any settlement effected without its written consent (which
consent will not be unreasonably withheld or delayed). Except as otherwise
may
be provided pursuant to any Indemnity Agreement, the Indemnitees as a group
may
retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnitee, under applicable
standards of professional conduct, a conflict on any significant issue between
positions of any two or more Indemnitees. For the purposes of this Section
8(v),
“Indemnitee Expenses” will include reasonable attorneys' fees and all other
costs, charges and expenses paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Indemnifiable
Claim.
(iii)
Binding
Effect on Successors and Assigns.
Notwithstanding any other provisions hereof, the obligations of the Surviving
Corporation in this Section 5.11 will be binding upon the successors and assigns
of the Surviving Corporation. In the event the Surviving Corporation or any
of
its respective successors or assigns (i) consolidates with or merges into any
other person or (ii) transfers all or substantially all of its properties or
assets to any person, then, and in each case, proper provision will be made
so
that successors and assigns of the Surviving Corporation, as the case may be,
honor the indemnification obligations set forth in this Section
8(v).
(iv)
Termination
or Modification of Indemnification Obligations.
The
obligations of the Surviving Corporation under this Section 8(v) will not be
terminated or modified in such a manner as to adversely affect any Indemnitee
to
whom this Section 8(v) applies without the consent of such affected Indemnitee
(it being expressly agreed that the Indemnitees to whom this Section 8(v)
applies will be third party beneficiaries of this Section 8(v)).
(v)
Advancement
of Indemnitee Expenses.
The
Surviving Corporation will advance all Indemnitee Expenses to any Indemnitee
incurred by enforcing the indemnity or other obligations provided for in this
Section 8(v).
(vi)
Continuation
of Insurance Policy.
For a
period of six years after the Effective Time, the Surviving Corporation will
cause to be maintained in effect the current directors and officers liability
insurance policies maintained by the Surviving Corporation (provided that
Surviving Corporation may substitute policies of at least the same coverage
with
other terms and conditions that are no less advantageous to the Indemnitee,
and
provided further that the annual premiums to be paid with respect to the
maintenance of such policies during such six year period will not exceed one
hundred fifty percent (150%) of the annual premium paid by the Surviving
Corporation for such policies as of the date of this Agreement with respect
to
claims arising from facts or events that occurred prior to the Effective
Time.
[REMAINER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
IN
WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first
above written.
Xxxxxx
Industries, Inc. (“Buyer”) Ethos
Environmental, Inc. (“Target”)
________________________________ _________________________________
By:
Xxxx
Xxxx, Chief Executive Officer By:
Xxxxxxx De Vilmorin
Dated:_______________ Dated:_________________
