MERGER AGREEMENT AND PLAN OF REORGANIZATION
Exhibit
2.2
December
29, 2005
THIS
MERGER AGREEMENT AND PLAN OF REORGANIZATION (this “Agreement”)
is made
and entered as of December 29, 2005, by and among Cape Coastal Trading
Corporation, a Delaware corporation (“Parent”),
uBid
Acquisition Co., Inc., a Delaware corporation (“Acquisition
Subsidiary”),
which
is a wholly owned subsidiary of Parent, and uBid, Inc., a Delaware corporation
(the “Company”).
Certain capitalized terms used in this Agreement are defined in the glossary
contained in Article
7
hereof.
WITNESSETH:
A. The
Company operates an online marketplace.
B. Parent
has
proposed:
(i) That
the
Merger (as defined below) be consummated concurrently with the First Closing
(as
defined below) of the PPO (as defined below) by and between Acquisition
Subsidiary and the Company (Acquisition Subsidiary having been formed by Parent
solely for that purpose), so that as a result of the Merger, among other things:
(A) the Company will survive and become a wholly-owned subsidiary of Parent;
(B)
the stockholders of the Company immediately prior to the Merger Effective Time
(“Existing
Company Stockholders”)
will
own shares of Parent Common Stock (as defined below); (C) the Existing Company
Stockholders will receive the Contingent Shares (as defined below) as additional
merger consideration if certain conditions are met, but otherwise the Contingent
Shares would be issued to Calico Capital Partners, LLC (“Calico”)
as
consideration for financial services rendered, and (E) certain of the Existing
Company Stockholders will receive, in certain events, the rights to have certain
shares of Parent Common Stock redeemed by the Parent.
(ii) To
raise
at a minimum of $45,000,000 (the “Minimum
Amount”)
and a
maximum of $58,500,000 (the “Maximum
Amount”)
through
a private placement offering of units of its securities at $4.50 per unit
consisting of one share of Parent Common Stock, and a warrant to purchase ¼
share of Parent Common Stock for five years exercisable at $5.85 per share
(the
“PPO”)
as
described in that certain supplemental confidential offering memorandum dated
December 15, 2005 (the “Offering
Memorandum”)
and
Securities Purchase Agreement among Parent, the Company and the Investors party
thereto (the “Securities
Purchase Agreement”),
the
first closing (the “First
Closing”)
of
which shall occur after receipt of the Minimum Amount, and the Second Closing
(as defined below) which shall occur not later than 40 days after the First
Closing.
C. The
respective Parent Board, the Acquisition Subsidiary Board and the Company Board
(each as defined below) have each determined that it is fair to, and in the
best
interests of, their respective corporations and stockholders for Acquisition
Subsidiary to be merged with and into the Company upon the terms and subject
to
the conditions set forth in this Agreement.
D. The
respective Parent Board, Acquisition Subsidiary Board and the Company Board
have
each approved this Agreement and the merger of Acquisition Subsidiary with
and
into the Company in accordance with the DGCL, and upon the terms and subject
to
the conditions set forth herein and in the Certificate of Merger.
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E. The
Parent
Board has also approved the Merger and the PPO and the consummation of the
transactions contemplated hereby.
F. Parent,
Acquisition Subsidiary, and the Company desire that the Merger, together with
the PPO, qualify as a tax-free contribution
of the Rollover Shares (as defined below) under the Code and not subject the
Existing Company Stockholders to tax under the Code with respect to the Rollover
Shares.
NOW,
THEREFORE,
in
consideration of the covenants, promises and representations set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby expressly and mutually acknowledged, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE
1.
THE
MERGER
1.1 Merger.
Subject
to the terms and conditions of this Agreement and the Certificate of Merger,
Acquisition Subsidiary shall be merged with and into the Company (the
“Merger”)
in
accordance with the DGCL. At the Merger Effective Time (as defined below),
the
separate legal existence of Acquisition Subsidiary shall cease, and the Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the “Surviving
Corporation”)
and
shall continue its corporate existence under the laws of the State of Delaware.
With respect to references in this Agreement relating to any obligations or
duties of the Company accruing after the Merger Effective Date, the usage of
the
defined term “Company” as opposed to “Surviving Corporation” shall not operate
to negate any such obligation or duties.
1.2 Merger
Effective Time.
The
Merger shall become effective on the date and at the time the Certificate of
Merger substantially in the form attached as Exhibit
1.2 hereto
(the “Certificate
of Merger”)
is
filed with the Secretary of State of the State of Delaware in accordance with
Section 252(c) of the DGCL. The time at which the Merger shall become effective
as aforesaid is referred to hereinafter as the “Merger
Effective Time.”
Subject
to the terms and conditions of this Agreement, the Company shall duly execute
and file the Certificate of Merger with the Secretary of State of the State
of
Delaware as part of the Closing as contemplated by this Agreement.
1.3 Certificate
of Incorporation, By-laws, Directors and Officers.
(a) Certificate
of Incorporation.
The
Certificate of Incorporation of the Company, as in effect immediately prior
to
the Merger Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation from and after the Merger Effective Time until further
amended in accordance with applicable Law.
(b) By-Laws.
The
By-laws of the Company, as in effect immediately prior to the Merger Effective
Time shall be the By-laws of the Surviving Corporation from and after the Merger
Effective Time until amended in accordance with applicable Law, the Certificate
of Incorporation and such By-laws.
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(c) Directors
and Officers.
The
directors and officers of the Company immediately prior to the Merger Effective
Time shall be the directors and officers of the Surviving Corporation, and
each
shall hold his or her respective office or offices from and after the Merger
Effective Time until his successor shall have been elected and shall have
qualified in accordance with applicable Law, or as otherwise provided in the
Certificate of Incorporation or By-laws of the Surviving Corporation.
1.4 Assets
and Liabilities.
At the
Merger Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of
the
constituent corporations; and all and singular, the rights, privileges, powers
and franchises of each of the constituent corporations, and all property, real,
personal and mixed, and all debts due to any of the constituent corporations
on
whatever account, as well for stock subscriptions as all other things in action
or belonging to each of the constituent corporations shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were of the several and
respective constituent corporations, and the title to any real estate vested
by
deed or otherwise in any of such constituent corporations shall not revert
or be
in any way impaired by the Merger; but all rights of creditors and all liens
upon any property of any of the constituent corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the respective constituent
corporations shall thenceforth attach to the Surviving Corporation, and may
be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it.
1.5 Manner
and Basis of Converting Shares.
(a) Acquisition
Subsidiary Common Stock Conversion.
At the
Merger Effective Time, each share of common stock of Acquisition Subsidiary
that
shall be outstanding immediately prior to the Merger Effective Time shall,
by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive one share of common stock of the
Surviving Corporation, so that at the Merger Effective Time, Parent shall be
the
holder of all of the issued and outstanding shares of the Surviving
Corporation.
(b) Conversion
of Company Capital Stock.
(i) At
the
Merger Effective Time, subject to the provisions of Sections
1.5(d)
hereof,
each share of Voting Common Stock and Non-Voting Common Stock of the Company
(“Company
Common Stock”),
each
share of Series A Convertible Preferred Stock of the Company (“Company
Preferred Stock”,
and
together with the Company Common Stock, “Company
Capital Stock”),
in
each case as issued and outstanding prior to the Merger Effective Time (other
than shares of Company Common Stock cancelled in accordance with Section
1.5(d)
hereof)
shall be converted into the right to receive 2,320.0637 (the “Exchange
Ratio”)
shares
of Parent Common Stock for each share of Company Capital Stock (the
“Merger
Shares”),
or a
total of 8,800,000 shares of Parent Common Stock, provided, however, that the
Existing Company Stockholders may be entitled to receive the Contingent Shares
as additional Merger Shares in accordance with Section
1.5(b)(ii).
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(ii) On
the
Second Closing, (A) if the Maximum Amount has not been sold, Parent shall issue
an additional 600,667 shares of Parent Common Stock (the “Contingent
Shares”)
shall
be issued as additional Merger Shares to the Existing Company Stockholders,
pro
rata among them based on the number of shares of Company Common Stock owned
by
them prior to the Merger,
and
(B)
if the
Maximum Amount has been sold, then Parent shall issue the Contingent Shares
to
Calico.
(c) Bridge
Warrants.
At the
Merger Effective Time the two outstanding warrants issued as of October 3,
2005
in connection with notes issued by the Company on such date (each a
“Bridge
Warrant”),
shall
be, in connection with the Merger, assumed by Parent, provided, however, that
in
compliance with the terms of each Bridge Warrant, such Bridge Warrant shall
be
replaced with a warrants for 333,333 shares of Parent Common Stock in total,
or
166,666 per Bridge Warrant, with terms and conditions of such replacement
warrants to be the same as the warrants issued in the PPO other than the initial
exercise price shall be $4.50 per share and the warrant term shall terminate
on
October 3, 2008.
(d) Other
Securities.
Each
share of Company Capital Stock held in the treasury of the Company, if any,
each
share of any other class of capital stock of the Company (other than Company
Capital Stock), if any, and any debt or other securities convertible into or
exercisable for the purchase of Company Capital Stock, if any, issued and
outstanding immediately prior to the Effective Time shall, except as provided
in
Section
1.5(c),
be
canceled without payment of any consideration therefor and without any
conversion thereof.
(e) Cessation
of Transfers of Company Capital Stock.
After
the Merger Effective Time, there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Capital Stock that were outstanding immediately prior to the Effective
Time.
(f) Contribution.
At the
Merger Effective Time, and pursuant to the Merger, (a) the Existing Company
Stockholders shall be deemed to have contributed the Company Capital Stock
to
Parent (the
“Rollover
Shares”),
and
(b) Parent be shall be deemed to have issued the Merger Shares in exchange
therefor.
1.6 Surrender
and Exchange of Securities.
(a) Certificates.
As soon
as practicable after the Merger Effective Time, and upon (i) surrender of a
certificate or certificates representing shares of Company Capital Stock that
were outstanding immediately prior to the Merger Effective Time to the Parent
(or, in case such certificates shall be lost, stolen or destroyed, an affidavit
of that fact by the holder thereof) and (ii) delivery to the Parent of an
executed Letter of Transmittal (as described in Section
4.10
hereof),
Parent shall deliver to the record holder of the Company Capital Stock
surrendering such certificate or certificates, a certificate or certificates
registered in the name of such stockholder representing the number of shares
of
Parent Common Stock to which such holder is entitled under Section
1.5.
As of
the Merger Effective Time, each share of Company Capital Stock issued and
outstanding immediately prior to the Merger Effective Time shall no longer
be
outstanding and shall automatically be canceled and retired and until the
certificate or certificates evidencing such shares are surrendered, each
certificate that immediately prior to the Merger Effective Time represented
any
outstanding shares of Company Capital Stock shall be deemed at and after the
Merger Effective Time to represent only the right to receive upon surrender
as
aforesaid the consideration specified in Section
1.5
hereof
for the holder thereof.
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(b) Bridge
Warrants.
As soon
as practicable, at or after the Merger Effective Time and upon surrender of
the
each original Bridge Warrant to the Parent (or, in case either such Bridge
Warrant shall be lost, stolen or destroyed, an affidavit of that fact by the
holder thereof) Parent shall deliver to the holder thereof the replacement
warrant that the holder thereof shall be entitled to receive pursuant to
Section
1.5
hereof.
As of the Merger Effective Time, the Bridge Warrant shall no longer be
outstanding and shall automatically be canceled and terminated, shall be deemed
at and after the Merger Effective Time to represent only the right to receive
upon surrender as aforesaid the replacement warrant consideration specified
in
Section
1.5
hereof.
1.7 Parent
Common Stock.
Parent
agrees that it will cause the Merger Shares into which the Company Capital
Stock
is converted at the Merger Effective Time pursuant to Section
1.5
hereof
and the Contingent Shares to be issued pursuant to Section
1.5
to be
available for such purposes. All Merger Shares issued pursuant to the Merger,
and the Contingent Shares, will be “restricted” stock as defined by, and be
subject to all applicable re-sale restrictions specified by, federal and state
securities Laws.
1.8 Redemption
Shares.
To the
extent that the Parent receives gross proceeds from the sale of its securities
in the PPO in excess of the Minimum Amount on or before the Second Closing
(a
“Redemption
Event”),
Parent
shall be required to redeem up to 2,666,667 Merger Shares or other shares of
the
Parent acquired in the PPO (the “Redemption
Shares”)
from
certain of the Existing Company Stockholders or their affiliates at the
redemption price of $4.50 per Redemption Share, or an aggregate total of up
to
$12,000,000, as provided in this Section.
(a) Amount.
In the
event that the Redemption Event occurs, on the Second Closing, from any proceeds
received by Parent in excess of the Minimum Amount, less any placement agent
fees or other offering costs or expenses related to the PPO, the Merger or
the
transactions related thereto, Parent shall use any such net proceeds to redeem
certain Redemption Shares from
those
Existing Company Stockholders or their affiliates identified on Schedule
1.8,
and only
those Existing Company Stockholders or their affiliates in the priority set
forth therein (the “Redeeming
Stockholders”).
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(b) Payment.
As soon
as practicable, on or after the Second Closing, (ii) surrender of a certificate
or certificates representing the Redemption Shares to be redeemed (or, in case
such certificates shall be lost, stolen or destroyed, an affidavit of that
fact
by the Redemption Stockholder) and (iii) delivery of an executed letter of
transmittal, Parent shall pay to the applicable Redeeming Stockholder the
applicable redemption price.
1.9 Further
Assurances.
From
time to time, from and after the Merger Effective Time, as and when requested
by
Parent, Acquisition Subsidiary or their respective successors or assigns, the
proper officers and directors of the Company in office immediately prior to
the
Merger Effective Time shall, for and on behalf and in the name of the Company
or
otherwise, execute and deliver all such deeds, bills of sale, assignments and
other instruments and take or cause to be taken such further actions as Parent,
Acquisition Subsidiary or their respective successors or assigns may deem
necessary or desirable in order to confirm or record or otherwise transfer
to
the Surviving Corporation title to and possession of all of the properties,
rights, privileges, powers, franchises and immunities of the Company or
otherwise to carry out fully the provisions and purposes of this Agreement
and
the Certificate of Merger.
1.10 Post-Closing
Adjustment.
In the
event that, during the period commencing from the Closing Date and ending on
the
second anniversary of the Closing Date, the Existing Company Stockholders incur
any Section
1.10
Loss with
respect to, in connection with, or arising from any Section
1.10
Parent
Liabilities, then promptly following the filing by Parent with the SEC of a
quarterly report relating to the most recent completed quarter for which such
determination has been made, Parent shall issue to the Existing Company
Stockholders and/or their designees such number of shares of Parent Common
Stock
as would result from dividing (x) the whole dollar amount representing such
Section
1.10
Losses by
(y) $4.50 (subject to equitable adjustment in the event of a stock split or
the
like after the Merger Effective Time). The limit on the aggregate number of
shares Parent Common Stock issuable under this Section
1.10
shall be
a number of shares of Parent Common Stock equal to five percent (5%) of the
number of shares of Parent Common Stock outstanding immediately after the Merger
Effective Date as determined on an Adjusted Fully Diluted Basis (subject to
equitable adjustment in the event of a stock split or the like after the Merger
Effective Time). As used in this Section
1.10:
(a)
“Section
1.10
Loss”
shall
mean any and all diminution in value, costs and expenses, including reasonable
attorneys’ fees, court costs, reasonable accountants’ fees, and damages and
losses, net of any insurance proceeds actually received by the party suffering
the Section
1.10 Loss
with
respect thereto a a result of Section
1.10
Parent
Liabilities; (b) “Section
1.10
Claims”
shall
include, but are not limited to, any claim, notice, suit, action, investigation,
other proceedings (whether actual or threatened); and (c) “Section
1.10
Parent
Liabilities”
shall
mean all Section
1.10 Claims
and
all other liabilities, obligations or indebtedness of any nature whatsoever,
whenever accruing, arising or accruing on or before the Closing Date (whether
primary, secondary, direct, indirect, liquidated, unliquidated or contingent,
matured or unmatured), including, but not limited to (i) any breach by the
Parent or Acquisition Subsidiary of any of their respective representations
or
warranties set forth in ARTICLE
3
herein or
any of the Transaction Documents, (ii) any litigation threatened, pending or
for
which a basis exists, that has resulted or may result in the entry of judgment
in damages or otherwise against the Parent or any Parent Subsidiary; (iii)
any
and all outstanding debts owed by Parent or any Parent Subsidiary; (iv) any
and
all disputes, arbitrations or administrative proceedings threatened, pending
or
otherwise outstanding, (v) any and all Liens, foreclosures, settlements, or
other threatened, pending or otherwise outstanding financial, legal or similar
obligations of Parent or any Parent Subsidiary, as such liabilities are
determined by the Parent’s independent auditors, on a quarterly basis, and (vi)
all fees and expenses incurred in connection with effecting the adjustments
contemplated by this Section
1.10.
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ARTICLE
2.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
2.1 Representations
and Warranties of the Company. The
Company hereby represents and warrants to Parent and Acquisition Subsidiary
that
the statements contained in this Article 2 are true and correct, except as
set
forth in the disclosure schedule provided by the Company to the Parent and
Acquisition Subsidiary on the date hereof and accepted in writing by the Parent
(the “Company Disclosure Schedule”). The Company Disclosure Schedule shall be
arranged in sections corresponding to the numbered and lettered sections
contained in this Article 2, and the disclosures in any section of the Company
Disclosure Schedule shall qualify only the corresponding section in this Article
2. For purposes of this Article 2, the phrase “to the knowledge of the Company”
or any phrase of similar import shall be deemed to refer to the actual knowledge
of the executive officers of the Company, as well as any other knowledge which
such executive officers would have possessed had they made reasonable inquiry
of
appropriate employees and agents of the Company with respect to the matter
in
question.
(a) Subsidiaries.
The Company has no direct or indirect Subsidiaries other than those listed
in
Schedule 2.1(a)
hereto. Except as disclosed in Schedule 2.1(a)
hereto, the Company owns, directly or indirectly, all of the capital stock
or
comparable equity interests of each Subsidiary free and clear of any Lien and
all the issued and outstanding shares of capital stock or comparable equity
interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) Organization
and Qualification.
The Company is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite legal authority to own and use its properties
and assets and to carry on its business as currently conducted. The Company
is
not in violation of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter documents.
The Company is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature
of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as
the case may be, could not, individually or in the aggregate,
(i) materially and adversely affect the legality, validity or
enforceability of any Transaction Document, (ii) have or result in a
material adverse effect on the results of operations, assets, business or
financial condition of the Company, or (iii) materially and adversely
impair the Company's ability to perform fully on a timely basis its obligations
under any of the Transaction Documents (any of (i), (ii) or (iii), a
“Material
Adverse Effect”).
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(c) Authorization;
Enforcement.
The
Company has the requisite corporate authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents to which
it
is a party and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents to which it
is a
party by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the
part
of the Company and no further consent or action is required by the Company,
its
Board of Directors or its stockholders. Each of the Transaction Documents to
which it is a party has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of creditors rights
generally, and (ii) the effect of rules of law governing the availability
of specific performance and other equitable remedies.
(d) No
Conflicts.
The execution, delivery and performance of the Transaction Documents to which
it
is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not, and will not,
(i) conflict with or violate any provision of the Company's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other
instrument (evidencing a Company debt or otherwise) or other understanding
to
which the Company is a party or by which any property or asset of the Company
is
bound, or affected, except to the extent that such conflict, default,
termination, amendment, acceleration or cancellation right could not reasonably
be expected to have a Material Adverse Effect, or (iii) result in a violation
of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is
subject (including federal and state securities laws and regulations and the
rules and regulations of any self-regulatory organization to which the Company
or its securities are subject, including all applicable Trading Markets), or
by
which any property or asset of the Company is bound or affected, except to
the
extent that such violation could not reasonably be expected to have a Material
Adverse Effect.
(e) Capitalization.
The aggregate number of shares and type of all authorized, issued and
outstanding classes of capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
Schedule 2.1(e)
hereto. All outstanding shares of capital stock are duly authorized, validly
issued, fully paid and non-assessable and have been issued in compliance with
all applicable securities laws. Except as disclosed in Schedule 2.1(e)
hereto and as set forth in the Merger Agreement, the Company has not issued
any
other options, warrants, script rights to subscribe to, calls or commitments
of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or entered into any
agreement giving any Person any right to subscribe for or acquire, any shares
of
Common Stock, or securities or rights convertible or exchangeable into shares
of
Common Stock. Except as set forth on Schedule
2.1(e)
hereto, and except for customary adjustments as a result of stock dividends,
stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in
any
agreement providing rights to security holders) and the issuance and sale of
the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Parent and Acquisition
Subsidiary) and will not result in a right of any holder of securities to adjust
the exercise, conversion, exchange or reset price under such securities. To
the
knowledge of the Company, except as specifically disclosed in Schedule
2.1(e)
hereto, no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire,
by
agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the outstanding Common Stock, ignoring for such purposes
any limitation on the number of shares of Common Stock that may be owned at
any
single time.
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(f) Absence
of Changes.
Since the date of the latest audited financial statements , except as
specifically disclosed in Schedule
2.1(f)
hereto or incident to the transactions contemplated hereby or in connection
with
the Merger, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that could result in a Material
Adverse Effect, (ii) the Company has not incurred any material liabilities
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to
GAAP,
(iii) the Company has not altered its method of accounting or the identity
of its auditors, except as disclosed in its audited financial statements,
(iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders, in their capacities as such, or
purchased, redeemed or made any agreements to purchase or redeem any shares
of
its capital stock (except for repurchases by the Company of shares of capital
stock held by employees, officers, directors, or consultants pursuant to an
option of the Company to repurchase such shares upon the termination of
employment or services), and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock-based plans. The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so. The Company is not Insolvent (as defined below) as
of
the date hereof, and after giving effect to the transactions contemplated hereby
to occur at the applicable Closing, will not be Insolvent. For purposes of
this
Section 2.1(f), “Insolvent” means (i) the present fair saleable value of the
Company's assets is less than the amount required to pay the Company's total
Indebtedness (as defined in Section 2.1(s), (ii) the Company is unable to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, (iii) the Company intends to incur
or believes that it will incur debts that would be beyond its ability to pay
as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
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(g) Absence
of Litigation.
Except as set forth on Schedule
2.1(g)
hereto, there is no action, suit, claim, arbitration or proceeding, or, to
the
Company's knowledge, inquiry or investigation, before or by any court, public
board, government agency, self-regulatory organization or body pending or,
to
the knowledge of the Company, threatened against or affecting the Company that
could, individually, or in the aggregate, have a Material Adverse Effect.
(h) Compliance.
The Company, except in each case as could not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect,
(i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result
in
a default by the Company under), nor has the Company received written notice
of
a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has
been in violation of any statute, rule or regulation of any governmental
authority.
(i) Title
to Assets.
The Company has good and marketable title in fee simple to all real property
owned by them that is material to the business of the Company and good and
marketable title in all personal property owned by them that is material to
the
business of the Company, in each case free and clear of all Liens, except for
Liens that do not, individually or in the aggregate, have or result in a
Material Adverse Effect. Any real property and facilities held under lease
by
the Company are held by the Company under valid, subsisting and enforceable
leases of which the Company is in material compliance.
(j) Application
of Takeover Protections.
Except as described in Schedule
2.1(j),
there is no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s charter documents or the laws of its
state of incorporation (“Takeover Protections”) that is or could become
applicable to the Parent and Acquisition Subsidiary as a result of the Parent
and Acquisition Subsidiary and the Company fulfilling their obligations or
exercising their rights under the Agreement, including, without limitation,
as a
result of the Company’s issuance of the Securities and the Parent’s and
Acquisition Subsidiary’s ownership of the Securities.
(k) Patents
and Trademarks.
The Company owns, or possesses adequate rights or licenses to use, all
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights (“Intellectual
Property Rights”)
necessary to conduct their respective businesses
as presently conducted. Except as set forth on Schedule
2.1(k),
there is no current claim, action or proceeding, or to the knowledge of the
Company, being threatened or brought, against the Company regarding its
Intellectual Property Rights. The Company is unaware of any facts or
circumstances, which might give rise to any of the foregoing infringements
or
claims, actions or proceedings. The Company has taken reasonable security
measures to protect the secrecy, confidentiality, and value of all of their
intellectual properties.
Except as
set forth in Schedule
2.1(k),
since
April 2003, none of the uBid's Intellectual Property Rights have expired,
terminated or have been abandoned, or, except as discussed with Designated
Investor Counsel, are expected to expire, terminate or be abandoned, within
three years from the date of this Agreement, except for such expirations,
terminations or abandonments which would not, individually or in the aggregate
have a Material Adverse Effect.
11
(l) Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses and location in which the Company is engaged. The Company does not
have any knowledge that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(m) Regulatory
Permits.
The Company possesses all certificates, authorizations and permits issued by
the
appropriate federal, state, local or foreign regulatory authorities necessary
to
conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits does not, individually or in the
aggregate, have or result in a Material Adverse Effect (“Material
Permits”),
and the Company has not received any written notice of proceedings relating
to
the revocation or modification of any Material Permit.
(n) Transactions
With Affiliates and Employees.
Except as set forth in Schedule
2.1(n),
none of the officers, directors or employees of the Company is a party to any
transaction that would be required to be reported on Form 10-KSB with the
Company (other than for ordinary course services as employees, officers or
directors), including any contract, agreement or other arrangement providing
for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the Company's knowledge, any corporation,
partnership, trust or other entity in which any such officer, director, or
employee has a substantial interest or is an officer, director, trustee or
partner.
(o) Internal
Accounting Controls.
The Company maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect
to
any differences.
12
(p) Foreign
Corrupt Practices.
Neither
the Company nor any director, officer, agent, employee or other Person acting
on
behalf of the Company has, in the course of its actions for, or on behalf of,
the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is
in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee
(q) OFAC.
The
Company (i) is not a Person whose property or interest in property is blocked
or
subject to blocking pursuant to Section 1 of Executive Order 13224 of September
23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)
does
not engage in any dealings or transactions prohibited by Section 2 of such
executive order, or is otherwise associated with any such Person in any manner
violative of Section 2 of such executive order, or (iii) is not a Person on
the
list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s Office
of Foreign Assets Control regulation or executive order.
(r) Patriot
Act.
To the
extent applicable, the Company is in compliance, in all material respects,
with
the (i) Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, and (ii) Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot
Act
of 2001).
(s) Indebtedness.
Except
as disclosed in Schedule
2.1 (s),
neither
the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness
(as
defined below), (ii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iii) is a party to any contract, agreement
or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule
2.1(s) provides
a
detailed description of the material terms of any such outstanding Indebtedness.
For purposes of this Agreement: (a) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services
(other than trade payables entered into in the ordinary course of business),
(C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale
of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable
for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses
(A)
through (G) above; (b) “Contingent Obligation” means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto;
and
(c) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
13
(t) Employee
Relations.
The
Company is not a party to any collective bargaining agreement or employs any
member of a union. The Company believes that its relations with their employees
are good. No executive officer of the Company (as defined in Rule 501(f) of
the
Securities Act) has notified the Company that such officer intends to leave
the
Company or otherwise terminate such officer's employment with the Company.
No
executive officer of the Company, to the knowledge of the Company Subsidiary,
is
now, or expects to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract, agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company to any liability with respect to any of the foregoing
matters.
The
Company is in compliance with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure
to
be in compliance would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. There are no material
complaints or charges against the Company pending or, to the knowledge of the
Company, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by the Company of any
individual.
(u) Environmental
Laws.
The Company (i) is in compliance with any and all Environmental Laws (as
hereinafter defined), (ii) has received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) is in compliance with all terms and conditions of any
such
permit, license or approval where, in each of the foregoing clauses (i), (ii)
and (iii), the failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term
“Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or
toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
14
(v) Subsidiary
Rights.
Except as set forth in Schedule
2.1(v),
the Company or one of its Subsidiaries has the unrestricted right to vote,
and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(w) Tax
Status.
The Company (i) has made or filed all foreign, federal and state income and
all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such
claim.
(x) No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company or its respective business,
properties, prospects, operations or financial condition, that would be required
to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
announced.
(y) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company or
to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
15
ARTICLE
3.
REPRESENTATIONS
AND WARRANTIES OF PARENT AND
ACQUISITION SUBSIDIARY
ACQUISITION SUBSIDIARY
3.1 Representations
and Warranties of the Company.
The
Parent and Acquisition Subsidiary represent and warrant to the Company that
the
statements contained in this ARTICLE
3
are true
and correct, except as set forth in the disclosure schedule provided by the
Parent and the Acquisition Subsidiary to the Company on the date hereof (the
“Parent
Disclosure Schedule”).
The
Parent Disclosure Schedule shall be arranged in sections corresponding to the
numbered and lettered sections contained in this ARTICLE
3,
and the
disclosures in any section of the Parent Disclosure Schedule shall qualify
only
the corresponding section in this ARTICLE
3.
For
purposes of this ARTICLE
3,
the
phrase “to the knowledge of the Parent” or any phrase of similar import shall be
deemed to refer to the actual knowledge of the executive officers of the Parent,
as well as any other knowledge which such executive officers would have
possessed had they made reasonable inquiry of appropriate employees and agents
of the Parent with respect to the matter in question.
(a) Subsidiaries.
The Parent
and
Acquisition Subsidiary
has no direct or indirect Subsidiaries other than those listed in Schedule 3.1(a)
hereto. Except as disclosed in Schedule 3.1(a)
hereto, Parent
and
Acquisition Subsidiary each
owns, directly or indirectly, all of the capital stock or comparable equity
interests of each Subsidiary free and clear of any Lien and all the issued
and
outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights.
(b) Organization
and Qualification.
Each of the Parent
and
Acquisition Subsidiary
is an entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable),
with the requisite legal authority to own and use its properties and assets
and
to carry on its business as currently conducted. Neither the Parent
nor
the Acquisition Subsidiary is
in violation of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each
of
the Parent
and
the Acquisition Subsidiary
is duly qualified to do business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case
may
be, could not, individually or in the aggregate, cause a Material Adverse
Effect.
(c) Authorization;
Enforcement.
Each of
the Parent and Acquisition Subsidiary has the requisite corporate authority
to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents to which it is a party and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of
the
Transaction Documents to which it is a party by the Parent and the consummation
by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Parent and no further
consent or action is required by the Parent, its Board of Directors or its
stockholders. Each of the Transaction Documents to which it is a party has
been
(or upon delivery will be) duly executed by the Parent and Acquisition
Subsidiary, and is, or when delivered in accordance with the terms hereof,
will
constitute, the valid and binding obligation of the Parent and Acquisition
Subsidiary enforceable against the Parent and Acquisition Subsidiary in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors rights generally, and
(ii) the effect of rules of law governing the availability of specific
performance and other equitable remedies.
16
(d) No
Conflicts.
The execution, delivery and performance of the Transaction Documents to which
it
is a party by the Parent
and
the consummation by the Parent
and
of
the transactions contemplated hereby and thereby do not, and will not,
(i) conflict with or violate any provision of the Parent’s
or the Acquisition Subsidiary's
certificate or articles of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Parent
debt or otherwise) or other understanding to which the Parent
is a party or by which any property or asset of the Parent
is
bound, or affected, except to the extent that such conflict, default,
termination, amendment, acceleration or cancellation right could not reasonably
be expected to have a Material Adverse Effect, or (iii) result in a violation
of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Parent is
subject (including federal and state securities laws and regulations and the
rules and regulations of any self-regulatory organization to which the Parent
or
its securities are subject, including all applicable Trading Markets), or by
which any property or asset of the Parent is bound or affected, except to the
extent that such violation could not reasonably be expected to have a Material
Adverse Effect.
(e) Authorized
Securities.
The Merger Shares and the Securities (including
the Warrant Shares)
(as defined in the Securities Purchase Agreement) shall be duly authorized
and,
when issued and paid for in accordance with the Transaction Documents, will
be
duly and validly issued, fully paid and non-assessable, free and clear of all
Liens and shall not be subject to preemptive or similar rights of stockholders
(other than those imposed by the Investors). The Parent has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable upon exercise of the Warrants.
(f) Capitalization.
The
aggregate number of shares and type of all authorized, issued and outstanding
classes of capital stock, options and other securities of the Parent (whether
or
not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Parent) is set forth in Schedule 3.1(f)
hereto.
All outstanding shares of capital stock of Parent are duly authorized, validly
issued, fully paid and non-assessable and have been issued in compliance with
all applicable securities laws. Except as disclosed in Schedule 3.1(f)
hereto
and as set forth in the Securities Purchase Agreement, the Parent has not issued
any other options, warrants, script rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or entered into any
agreement giving any Person any right to subscribe for or acquire, any shares
of
Common Stock, or securities or rights convertible or exchangeable into shares
of
Common Stock. Except as set forth on Schedule
3.1(f) hereto,
and except for customary adjustments as a result of stock dividends, stock
splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Parent (or in
any
agreement providing rights to security holders) and the issuance and sale of
the
Securities will not obligate the Parent to issue shares of Common Stock or
other
securities to any Person (other than the Investors) and will not result in
a
right of any holder of securities to adjust the exercise, conversion, exchange
or reset price under such securities. To the knowledge of the Parent, except
as
specifically disclosed SEC Reports or in Schedule
3.1(f)
hereto,
no Person or group of related Persons beneficially owns (as determined pursuant
to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement
with or by obligation binding upon the Parent, beneficial ownership of in excess
of 5% of the outstanding Common Stock, ignoring for such purposes any limitation
on the number of shares of Common Stock that may be owned at any single
time.
17
(g) SEC
Reports; Financial Statements.
The Parent has filed all reports required to be filed by it under the Exchange
Act, including pursuant to Section 13(a)
or 15(d)
thereof, for the two years preceding the date hereof (the foregoing materials
(together with any materials filed by the Parent under the Exchange Act, whether
or not required) being collectively referred to herein as the “SEC
Reports”)
on a timely basis or has received a valid extension of such time of filing
and
has filed any such SEC Reports prior to the expiration of any such extension.
As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the SEC promulgated thereunder, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading. The financial statements of the Parent included
in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto
as in
effect at the time of filing. Such financial statements have been prepared
in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position
of
the Parent as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments. Except as set forth on
Schedule
3.1(g),
all material agreements to which the Parent is a party or to which the property
or assets of the Parent are subject are included as part of or specifically
identified in the SEC Reports.
(h) Absence
of Changes.
Since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in the SEC Reports or in
Schedule
3.1(h)
hereto or incident to the transactions contemplated hereby or in connection
with
the Merger, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that could result in a Material
Adverse Effect, (ii) the Parent has not incurred any material liabilities
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Parent's financial statements pursuant to GAAP
or required to be disclosed in filings made with the SEC, (iii) the Parent
has not altered its method of accounting or the identity of its auditors, except
as disclosed in its SEC Reports, (iv) the Parent has not declared or made
any dividend or distribution of cash or other property to its stockholders,
in
their capacities as such, or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (except for repurchases
by
the Parent of shares of capital stock held by employees, officers, directors,
or
consultants pursuant to an option of the Parent to repurchase such shares upon
the termination of employment or services), and (v) the Parent has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Parent stock-based plans. The Parent has not taken any
steps to seek protection pursuant to any bankruptcy law nor does the Parent
have
any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact that
would reasonably lead a creditor to do so. The Parent is not Insolvent (as
defined below) as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the applicable Closing, will not
be
Insolvent.
18
(i) Absence
of Litigation.
Except as set forth on Schedule
3.1(i)
hereto, there is no action, suit, claim, arbitration or proceeding, or, to
the
Parent's knowledge, inquiry or investigation, before or by any court, public
board, government agency, self-regulatory organization or body pending or,
to
the knowledge of the Parent, threatened against or affecting the Parent or
any
of its Subsidiaries that could, individually or in the aggregate, have a
Material Adverse Effect.
(j) Compliance.
Neither the Parent nor the Acquisition Subsidiary, except in each case as could
not, individually or in the aggregate, reasonably be expected to have or result
in a Material Adverse Effect, (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Parent or the Acquisition
Subsidiary under), nor has the Parent or the Acquisition Subsidiary received
written notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is or has
been in violation of any statute, rule or regulation of any governmental
authority.
(k) Title
to Assets.
Each of the Parent and the Acquisition Subsidiary has good and marketable title
in fee simple to all real property owned by them that is material to the
business of the Parent and the Acquisition Subsidiary and good and marketable
title in all personal property owned by them that is material to the business
of
the Parent and the Acquisition Subsidiary, in each case free and clear of all
Liens, except for Liens that do not, individually or in the aggregate, have
or
result in a Material Adverse Effect. Any real property and facilities held
under
lease by the Parent and the Acquisition Subsidiary are held by them under valid,
subsisting and enforceable leases of which the Parent and the Acquisition
Subsidiary are in material compliance.
19
(l) Listing
and Maintenance Requirements.
The Parent has not, in the twelve months preceding the date hereof, received
notice (written or oral) from any trading market on which the Common Stock
is or
has been listed or quoted to the effect that the Parent is not in compliance
with the listing or maintenance requirements of such trading market. The Parent
is in compliance with all such listing and maintenance
requirements.
(m) Registration
Rights.
Except as described in Schedule
3.1(m),
the Parent has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the
Parent registered with the SEC or any other governmental authority that have
not
been satisfied or waived.
(n) Application
of Takeover Protections.
Except as described in Schedule
3.1(n),
there are no Takeover Protections that are or could become applicable to the
Company as a result of the Company, the Parent, and the Acquisition Subsidiary
fulfilling their obligations or exercising their rights under the Transaction
Documents, including, without limitation, as a result of the Parent’s transfer
of the Securities and the Company’s ownership of the Securities.
(o) Disclosure.
The
Parent and the Acquisition Subsidiary confirm that neither it nor any officers,
directors or Affiliates, have provided the Company or their agents or counsel
with any information that constitutes or might constitute material, nonpublic
information (other than the existence and terms of the issuance of Securities,
as contemplated by this Agreement). The
Parent and the Acquisition Subsidiary understands and confirms that the Company
will rely on the foregoing representations in effecting transactions in
securities of the Parent and the Acquisition Subsidiary. All disclosure provided
by the Parent and the Acquisition Subsidiary to the Company regarding the Parent
and the Acquisition Subsidiary, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on the behalf
of the Parent and the Acquisition Subsidiary are true and correct in all
material respects and do not contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. To the Parent's and the Acquisition Subsidiary’s knowledge, no event
or circumstance has occurred or information exists with respect to the Parent
or
the Acquisition Subsidiary or its or their business, properties, operations
or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Parent or the Acquisition Subsidiary
but which has not been so publicly announced or disclosed. The Parent and the
Acquisition Subsidiary acknowledges and agrees that the Company makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in the Transaction
Documents.
(p) Acknowledgment
Regarding the Company’s Acquisitions of Securities.
Based upon the assumption that the transactions contemplated by this Agreement
are consummated in all material respects in conformity with the Transaction
Documents, the Parent and the Acquisition Subsidiary acknowledges and agrees
that the Company is acting solely in the capacity of an arm's length purchaser
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby. The Parent and Acquisition Subsidiary further acknowledges
that the Company is not acting as a financial advisor or fiduciary of the Parent
or the Acquisition Subsidiary (or in any similar capacity) with respect to
this
Agreement and the transactions contemplated hereby and any advice given by
the
Company or any of their respective representatives or agents in connection
with
the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Company's purchase of the Securities. The Parent
and
the Acquisition Subsidiary further represents to the Company that the Parent's
and the Acquisition Subsidiary’s decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Parent and its representatives.
20
(q) Patents
and Trademarks.
The Parent owns, or possesses adequate rights or licenses to use, all
Intellectual Property Rights necessary to conduct their respective businesses
as
presently conducted. Except as set forth on
Schedule 3.1(q),
there is no current claim, action or proceeding, or to the knowledge of the
Parent, being threatened or brought, against the Parent regarding its
Intellectual Property Rights. The Parent is unaware of any facts or
circumstances, which might give rise to any of the foregoing infringements
or
claims, actions or proceedings. The Parent has taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.
(r) Insurance.
The Parent and Acquisition Subsidiary is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
are prudent and customary in the businesses and location in which the Parent
and
the Acquisition Subsidiary are engaged. Neither the Parent nor the Acquisition
Subsidiary has any knowledge that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(s) Regulatory
Permits.
The Parent and the Acquisition Subsidiary possess all certificates,
authorizations and Material Permits, and neither the Parent nor the Acquisition
Subsidiary have received any written notice of proceedings relating to the
revocation or modification of any Material Permit.
(t) Transactions
With Affiliates and Employees.
Except as set forth in Schedule
3.1(t),
none of the officers, directors or employees of the Parent is a party to any
transaction that would be required to be reported on Form 10-KSB with the Parent
(other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the Parent's knowledge, any corporation,
partnership, trust or other entity in which any such officer, director, or
employee has a substantial interest or is an officer, director, trustee or
partner.
21
(u) Internal
Accounting Controls.
The
Parent maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(v) Xxxxxxxx-Xxxxx
Act.
The
Parent is in compliance with applicable requirements of the Xxxxxxxx-Xxxxx
Act
of 2002 and applicable rules and regulations promulgated by the SEC thereunder,
except where such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect.
(w) Foreign
Corrupt Practices.
Neither
the Parent, the Acquisition Subsidiary, nor any of its Subsidiaries nor any
director, officer, agent, employee or other Person acting on behalf of the
Parent , the Acquisition Subsidiary, or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Parent and Acquisition
Subsidiary (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is
in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee
(x) OFAC.
Neither
the Parent, the Acquisition Subsidiary, nor any of its Subsidiaries (i) is
a
Person whose property or interest in property is blocked or subject to blocking
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any
dealings or transactions prohibited by Section 2 of such executive order, or
is
otherwise associated with any such Person in any manner violative of Section
2
of such executive order, or (iii) is a Person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or
prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.
(y) Patriot
Act.
To the
extent applicable, the Parent, the Acquisition Subsidiary, and its Subsidiaries
are in compliance, in all material respects, with the (i) Trading with the
Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and
(ii)
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA Patriot Act of 2001).
22
(z) Indebtedness.
Except
as disclosed in Schedule
3.1 (z),
neither
the Parent nor the Acquisition Subsidiary (i) has any outstanding Indebtedness
(as defined below), (ii) is in violation of any term of or in default under
any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iii) is a party to any contract, agreement
or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Parent's officers, has or is expected to have a Material Adverse
Effect. Schedule
3.1(z)
provides
a detailed description of the material terms of any such outstanding
Indebtedness.
(aa) Employee
Relations.
Neither
Parent nor Acquisition Subsidiary is a party to any collective bargaining
agreement or employs any member of a union. The Parent and Acquisition
Subsidiary believe that their relations with their employees are good. No
executive officer of the Parent or the Acquisition Subsidiary (as defined in
Rule 501(f) of the Securities Act) has notified the Parent or the Acquisition
Subsidiary that such officer intends to leave the Parent or the Acquisition
Subsidiary or otherwise terminate such officer's employment with the Parent
or
the Acquisition Subsidiary. No executive officer of the Parent or the
Acquisition Subsidiary, to the knowledge of the Parent and Acquisition
Subsidiary, is now, or expects to be, in violation of any material term of
any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract, agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Parent or the Acquisition Subsidiary to any
liability with respect to any of the foregoing matters. The Parent and
Acquisition Subsidiary are in compliance with all federal, state, local and
foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or
in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
There are no material complaints or charges against the Parent or the
Acquisition Subsidiary pending or, to the knowledge of the Parent and
Acquisition Subsidiary, threatened to be filed with any Governmental Authority
or arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment by the Parent or the
Acquisition Subsidiary of any individual.
(bb) Environmental
Laws.
The Parent
and
Acquisition Subsidiary
(i) are in compliance with any and all Environmental Laws, (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to
so
comply could be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect.
(cc) Subsidiary
Rights.
Except as set forth in Schedule
3.1(cc),
the Parent
or
the Acquisition Subsidiary
has the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Parent
or
the Acquisition Subsidiary.
23
(dd) Tax
Status.
The Parent
and
Acquisition Subsidiary
(i) have made or filed all foreign, federal and state income and all other
tax
returns, reports and declarations required by any jurisdiction to which it
is
subject, (ii) have paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii)
have set aside on its books provision reasonably adequate for the payment of
all
taxes for periods subsequent to the periods to which such returns, reports
or
declarations apply. There are no unpaid taxes in any material amount claimed
to
be due by the taxing authority of any jurisdiction, and the officers of the
Parent know of no basis for any such claim.
(ee) No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Parent and Acquisition Subsidiary
or
its respective business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Parent under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Parent of its Common Stock and which
has
not been publicly announced.
(ff) Manipulation
of Price.
The
Parent has not, and to its knowledge no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Parent or
to
facilitate the sale or resale of any of the Securities (as defined in the
Securities Purchase Agreement), (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other
securities of the Parent.
ARTICLE
4.
ADDITIONAL
AGREEMENTS
4.1 Publicity.
No party
shall issue any press release or public announcement pertaining to the Merger
or
the PPO that has not been agreed upon in advance by Parent and the Company,
except as Parent reasonably determines to be necessary in order to comply with
the rules of the SEC or of the principal trading exchange or market for Parent
Common Stock, provided, however, that to the maximum extent practicable, Parent
shall give prior notice thereof to the Company and consult with the Company
regarding the same.
4.2 Tax
Returns; Cooperation.
The
Company on the one hand, and Parent, on the other, will cooperate with each
other and provide such information as the other party may require in order
to
file any return to determine Tax liability or a right to a Tax refund or to
conduct a Tax audit or other Tax proceeding. Such cooperation shall include
making employees available on a mutually convenient basis to explain any
documents or information provided hereunder or otherwise as required in the
conduct of any audit or other proceeding.
24
4.3 Tax
Free Exchange
Each of
Parent and the Company shall use its reasonable best efforts to cause the Merger
to qualify as a tax free exchange of the Rollover Shares under the
Code. For purposes of the foregoing, the Merger Agreement shall constitute
a plan of reorganization.
4.4 Transaction
Form 8-K; Other Filings.
As
promptly as practicable after the Closing (but in no event later than the date
required under applicable Law), Parent will prepare and file a current report
on
Form 8-K (the “Transaction
Form 8-K”)
and any
filings required to be filed by it under the Exchange Act, the Securities Act
or
any other Federal, foreign or blue sky or related Laws relating to the execution
of this Agreement and the consummation of the Transactions, as well as under
the
stock exchange or trading system on which shares of Parent Common Stock are
listed or quoted and such other governmental agencies as may require the filing
of such other filings.
4.5 Notices
from Governmental Agencies.
Parent
will notify the Company promptly upon the receipt of any communication from
the
SEC or its staff or any other government officials regarding the transactions
contemplated by this Agreement and will provide the Company with copies of
all
correspondence between Parent or any of Parent’s representatives, on the one
hand, and the SEC or its staff or any other government officials, on the other
hand, with respect to the transactions contemplated hereby. In addition, subject
to applicable Laws relating to the exchange of information, each party will
promptly furnish to the other Parties copies of written communications (and
memoranda setting forth the substance of all oral communications) received
by
such party, or any of its Subsidiaries, Affiliates or associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date
hereof), from, or delivered by any of the foregoing to, any governmental or
regulatory authority, domestic or foreign, relating to or in respect of the
transactions contemplated under this Agreement.
4.6 Registration
of Merger Shares and Other Securities.
The
Merger Shares, the shares issuable upon exercise of the warrants issued in
replacement of the Bridge Warrants, the Parent Common Stock held by the CCTR
Selling Shareholders, and the Parent Common Stock held by Calico shall be
“Registrable Securities” for purposes of the Securities Purchase Agreement.
4.7 Parent
Directors and Officers.
(a) Directors.
Immediately following the Merger Effective Time, the Parent Board shall consist
of Xxxxxxxx Xxxxxxx and Xxxxxx X. Xxxxxxxxx, Xx. At Closing, Xxxxxxxx Alison
shall resign, provided that such resignation will only be effective on the
date
following the date which is 10 days after the First Closing.
(b) Officers.
Immediately following the Merger Effective Time, the officers of Parent shall
consist of those individuals appointed by the Parent Board.
4.8 Lock-Up
Letters.
As of
the Merger Effective Time, lock-up letters, on substantially the terms set
forth
in the respective forms of lock-up letters attached as Exhibit
4.8
hereto,
shall have been executed by the Existing Company Stockholders.
25
4.9 Bridge
Warrants.
Promptly
after the Closing Date, the Company will send to each holder of Bridge Warrants
written notice of the assumption of the Bridge Warrants and the requirements
for
issuance of replacement warrants with respect thereto in accordance with
Section
1.5(c).
4.10 Letters
of Transmittal. Promptly
before the Merger Effective Time, Parent shall provide to each Existing Company
Stockholder a letter of transmittal (“Letter
of Transmittal”)
which
shall contain additional representations, warranties and covenants of such
stockholder as to the following matters: (a) such stockholder has full right,
power and authority to deliver such Company Capital Stock and Letter of
Transmittal, (b) the delivery of such Company Capital Stock will not violate
or
be in conflict with, result in a breach of or constitute a default under, any
indenture, loan or credit agreement, deed of trust, mortgage, security agreement
or other agreement or instrument to which such stockholder is bound or affected,
(c) such stockholder has good, valid and marketable title to all shares of
Company Capital Stock indicated in such Letter of Transmittal and that such
stockholder is not affected by any voting trust, agreement or arrangement
affecting the voting rights of such Company Capital Stock, (d) such stockholder
is acquiring Parent Common Stock for investment purposes and not with a view
to
selling or otherwise distributing such Parent Common Stock in violation of
the
Securities Act or the securities Laws of any state, (e) such stockholder has
had
an opportunity to ask and receive answers to any questions such stockholder
may
have had concerning the terms and conditions of the Merger and the Parent Common
Stock and has obtained any additional information that such stockholder has
requested and (f) such stockholder acknowledges that the stock certificates
evidencing the shares of Parent Common Stock to be issued to such stockholder
shall bear a restrictive legend customarily used in connection with restricted
securities within the meaning of Rule 144 under the Securities Act. Delivery
shall be effected, and risk of loss and title to the Parent Common Stock shall
pass, only upon delivery to the Parent (or an agent of the Parent) of (x)
certificates acceptable to Parent and its transfer agent evidencing ownership
thereof as contemplated by Section
1.6(a)
hereof
(or affidavit of lost certificate acceptable to Parent and its transfer agent),
and (y) the Letter of Transmittal containing the representations, warranties
and
covenants contemplated by this Section
4.10.
4.11 Name
Change Post-Closing.
Promptly
after Closing, Parent shall take such as steps as may be necessary to change
its
corporate name from “Cape Coastal Trading Corporation” to “xXxx.xxx Holdings,
Inc.”
4.12 Assumption
of Engagement Agreement.
Effective as of the Merger Effective Time, the Parent hereby assumes and agrees
to perform and discharge the Company’s obligations under its engagement letter
agreement, as amended, with the Placement Agents (as defined in the Securities
Purchase Agreement), and without limiting the generality of the foregoing,
Parent agrees to issue the warrants to the Placement Agents that the Company
is
obligated to issue thereunder.
26
ARTICLE
5.
CONDITIONS
OF PARTIES’ OBLIGATIONS
5.1 Conditions
Precedent to Each Party’s Obligation to Effect the
Merger.
The
respective obligations of each party to effect the Merger shall be subject
to
the fulfillment or satisfaction, prior to or on the Closing Date, of the
following conditions:
(a) Company
Stockholder Approval.
The
Merger shall have been duly approved by the requisite vote of the outstanding
shares of Company Common Stock entitled to vote thereon in accordance with
the
DGCL.
(b) Consents,
Etc.
Except
for the filing of the Certificate of Merger, all authorizations, consents,
orders, declarations or approvals of, or filings with, or terminations or
expirations of waiting periods imposed by, any governmental or regulatory
authority, domestic or foreign, which the failure to obtain, make or occur
would
have the effect of making the Merger or any of the transactions contemplated
hereby illegal or would have a Material Adverse Effect on Parent or the Company
(as Surviving Corporation), assuming the Merger had taken place, shall have
been
obtained, made or occurred.
(c) PPO.
Parent
shall have sold at least $45,000,000 of Parent Common Stock in the PPO.
(d) Parent
Common Stock Adjustments.
Parent
shall have taken the necessary step either through a stock split, reverse stock
split, retirements or cancellation (the “Stock
Adjustment Steps”),
to
ensure that there shall be only 599,333 shares of Parent Common Stock issued
and
outstanding as of the Merger Effective Time not including the shares of Parent
Common Stock or warrants to acquire shares of Parent Common Stock to be issued
in the PPO or to be reserved pursuant to Parent’s new stock option plan.
5.2 Conditions
Precedent to Obligations of Parent.
Parent’s
obligation to effect the Merger and consummate the other transactions
contemplated to occur in connection with the Closing and thereafter is subject
to the satisfaction of each condition precedent listed below. All corporate
and
other proceedings and actions taken in connection with the transactions
contemplated hereby and, where such instruments are not exhibits to this
Agreement, all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transactions, shall be satisfactory
in
form and substance to Parent and Acquisition Subsidiary. The Company shall
furnish to Parent and Acquisition Subsidiary such supporting documentation
and
evidence of the satisfaction of any or all of the conditions precedent specified
in this Section
5.2
as Parent
or its counsel may reasonably request.
(a) Representations
and Warranties.
Each
representation and warranty set forth in ARTICLE
2
shall be
accurate and complete in all material respects after giving full effect to
any
supplements to the schedules as amended from time to time so long as such
modification does not constitute a Material Adverse Effect on the Company.
27
(b) Actions.
No
action is pending or threatened by or before any governmental body, arbitrator,
or mediator that seeks to restrain, prohibit, invalidate, or collect any
substantial damages arising out of the transactions contemplated by this
Agreement.
(c) Opinion
of Counsel.
Counsel
for the Company shall have delivered to Parent and Acquisition Subsidiary its
legal opinion.
(d) Miscellaneous
Closing Documents.
Parent
and Acquisition Subsidiary shall have received the following:
(i) Copies
of
resolutions of the Company and the shareholders of the Company, certified by
the
Secretary of the Company, authorizing and approving the execution, delivery
and
performance of the Transaction Documents.
(ii) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as Parent and Acquisition Subsidiary may
reasonably request.
5.3 Conditions
Precedent to Obligation of the Company.
The
Company’s obligations to effect the Merger and consummate the other transactions
contemplated to occur in connection with the Closing and thereafter is subject
to the satisfaction of each condition precedent listed below. All corporate
and
other proceedings and actions taken in connection with the transactions
contemplated hereby and, where such instruments are not exhibits to this
Agreement, all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transactions shall be satisfactory
in
form and substance to the Company. Parent and Acquisition Subsidiary shall
furnish to the Company such supporting documentation and evidence of
satisfaction of any or all of the conditions specified in this Section
5.3
as the
Company may reasonably request.
(a) Representations
and Warranties.
Each
representation and warranty set forth in ARTICLE
3
shall be
accurate and complete in all material respects, after giving full effect to
any
supplements to the schedules as amended from time to time so long as such
modification does not constitute a Material Adverse Effect on Parent.
(b) Transactions
and Transaction Documents.
The
Transactions shall have been completed on terms and conditions consistent with
the terms of this Agreement and otherwise satisfactory to the Company, and
the
Transaction Documents shall contain terms and conditions consistent with those
referenced in this Agreement and otherwise satisfactory to the
Company.
(c) Director
and Officer Resignations.
Each of
the directors and officers of Parent shall have delivered to Parent and the
Company an executed resignation letter with an effective date and time agreed
upon by the Company.
(d) Opinions
of Counsel.
Counsel
for Parent and Acquisition Subsidiary shall have delivered to the Company and
the Existing Company Stockholders its legal opinion and its tax opinion, each
in
form and content satisfactory to the Company.
28
(e) Actions.
No
action is pending or threatened by or before any governmental body, arbitrator,
or mediator that seeks to restrain, prohibit, invalidate, or collect any
substantial damages arising out of the Transactions.
(f) Miscellaneous
Closing Documents.
The
Company shall have received the following:
(i) Copies
of
resolutions of Parent’s and Acquisition Subsidiary’s respective board of
directors and shareholders, certified by their respective Secretaries,
authorizing and approving, to the extent applicable, the execution, delivery
and
performance of the Transaction Documents.
(ii) A
certificate of Parent’s transfer agent and registrar certifying as of the
Closing Date that there are 599,333 shares of Parent Common Stock issued and
outstanding.
(iii) Written
evidence satisfactory to the Company of completion of the Stock Adjustment
Steps
and that all of the Stock Adjustment Steps have been duly authorized by all
necessary corporate actions on the part of Parent.
(iv) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as the Company may reasonably request.
ARTICLE
6.
NON-SURVIVAL
OF REPRESENTATIONS AND WARRANTIES
6.1 Non-Survival.
The
representations and warranties of the parties made in ARTICLE
2
and
ARTICLE
3
of this
Agreement (including the Company and Parent Disclosure Schedules to the
Agreement, which are hereby incorporated by reference) or in any instrument
delivered pursuant to this Agreement shall not survive beyond the Merger
Effective Time, except that for purposes of Section
1.10,
the
representations and warranties of Parent and Acquisition Subsidiary shall
survive the Merger Effective Time for a period of two (2) years. This
ARTICLE
6
shall not
limit any claim for fraud or for breach of any covenant or agreement of the
parties.
ARTICLE
7.
DEFINITIONS
Unless
the
context otherwise requires, the terms defined in this ARTICLE
7
shall
have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms herein
defined.
“Acquisition
Subsidiary”
means
uBid Acquisition Co., Inc., a Delaware corporation.
“Acquisition
Subsidiary Board”
means
the Board of Directors of Acquisition Subsidiary.
29
“Adjusted
Fully Diluted Basis”
means
all shares of Parent Common Stock determined immediately after the Merger,
and
completion of the PPO, on a basis of calculation that takes into account (a)
all
shares of Parent Common Stock actually issued and outstanding immediately after
the Merger, (b) all shares of Parent Common Stock issuable upon conversion
or
exercise of any option, warrant, convertible instrument or other right to
acquire Parent Common Stock of Parent then outstanding, including, without
limitation, the warrants issued or issuable pursuant to the PPO. However, for
these purposes, Adjusted Fully Diluted Basis shall exclude that number of shares
of Parent Common Stock reserved for issuance under Parent’s stock option plan.
“Affiliate”
means
any Person that directly or indirectly controls, is controlled by, or is under
common control with, the indicated Person.
“Agreement”
shall
have the meaning assigned to it in the Preamble.
“Bridge
Warrants”
shall
have the meaning assigned to such term in Section
1.5
hereof.
“Business
Day”
means
any day, other than a Saturday or Sunday, on which the national banks in New
York, New York as a general matter are open for business for substantially
all
of their banking functions.
“Calico”
shall
have the meaning assigned to such term in the Recitals.
“CCTR
Selling Shareholders”
means
Gaha Ventures, LLC, Altitude Group, LLC, Q Management, Inc., Fountainhead
Investments, Inc., Xxxx Xxxx Xxxxxxx, Xxxxxxx Xxxxxxxxx, and their respective
permitted assigns and transferees.
“Certificate
of Merger”
shall
have the meaning assigned to it in Section
1.2
of this
Agreement.
“Closing”
shall
have the meaning assigned to such term in Section
8.1
hereof.
“Closing
Date”
shall
have the meaning assigned to such term in Section
8.1
hereof.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Company”
shall
have the meaning assigned to such term in the Preamble.
“Company
Board”
means
the Board of Directors of the Company.
“Company
Capital Stock”
means
the assigned to such term in Section
1.5.
“Company
Common Stock”
means
the assigned to such term in Section
1.5.
“Company
Preferred Stock”
means
the assigned to such term in Section
1.5.
“Contingent
Shares”
shall
have the meanings assigned to such terms in Section
1.5
hereof.
30
“Contract”
means
any note, instrument, mortgage, lease, franchise, sales order, purchase order,
license, commitment or other contract, agreement or arrangement.
“DGCL”
means
the Delaware General Corporation Law.
“Employee
Plans”
means
any health care plan or arrangement; life insurance or other death benefit
plan
or arrangement; deferred compensation or other pension or retirement plan or
arrangement; stock option, bonus or other incentive plan or arrangement;
severance, change of control or early retirement plan or arrangement; or other
fringe or employee benefit plan or arrangement; or any employment or executive
compensation agreement.
“ERISA”
means
the Employee Retirement Income Securities Act of 1974, as amended.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exchange
Ratio”
shall
have the meaning assigned that term in Section
1.5.
“Existing
Company Stockholders”
shall
have the meaning assigned to such term in the Recitals to this Agreement.
“First
Closing”
shall
have the meaning assigned to such term in the Recitals.
“GAAP”
means
generally accepted accounting principles in the United States, as in effect
from
time to time.
“Governmental
Authority”
means
any federal, national, state or local judicial, legislative, executive or
regulatory authority.
“Governmental
Authorization”
means
any consent, license, registration, authorization or permit issued, granted,
given or otherwise made available by or under the authority of any Governmental
Authority or pursuant to any Law.
“Intellectual
Property”
means
the following intellectual property:
(a) (i)
all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, divisions, extensions and re-examinations thereof, (ii)
all trademarks, including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (iii) all
copyrights and copyrightable woks and all applications, registrations and
renewals in connection wherewith, (iv) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
methods, schematics, technology, technical data, designs, drawings, flowcharts,
block diagrams, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), and (v) all
software and firmware, in whatever form (including data, databases and related
documentation);
31
(b) all
documents, records and files relating to design, end user documentation, quality
control, sales, marketing or customer support for, and other tangible
embodiments of, all intellectual property described herein;
(c) all
proprietary rights and other tangible or intangible proprietary information
and
materials; and
(d) all
licenses, agreements, and other permissions or rights in any third party product
or any third party intellectual property described in (a) through (c) above.
“Intellectual
Property Rights”
shall
have the meaning assigned to it in Section
2.1(k)
of this
Agreement.
“Investment
Company Act”
means
the Investment Company Act of 1940, as amended.
“Laws”
means
any federal, national, state or local statute, law, ordinance, regulation,
rule,
code, order or other requirement or rule of law.
“Letter
of Transmittal”
shall
have the meaning assigned to it in Section
4.10
of this
Agreement.
“Lien”
means
any mortgage, pledge, security interest, encumbrance, lien or charge of any
kind, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code
of
any jurisdiction and including any lien or charge arising by Law.
“Material
Adverse Effect”
means
(unless otherwise specified), as to a party, any condition or event that may
(i)
have a material adverse effect on the assets, business, financial condition,
operations of such party or parties taken as a whole, or (ii) materially impair
the ability of such party to perform its obligations under this Agreement.
“Material
Permits”
shall
have the meaning assigned to it in Section
4.10
of this
Agreement.
“Maximum
Amount”
shall
have the meaning assigned to such term in the Recitals.
“Minimum
Amount”
shall
have the meaning assigned to such term in the Recitals.
“Merger”
shall
have the meaning assigned to it in Section
1.1
of this
Agreement.
“Merger
Documents”
means
the Certificate of Merger.
“Merger
Effective Time”
shall
have the meaning assigned to it in Section
1.2
of this
Agreement.
“Merger
Shares”
shall
have the meaning assigned to it in Section
1.5(b)
of this
Agreement.
32
“Offering
Memorandum”
shall
have the meaning assigned to such term in the Recitals.
“Parent”
shall
have the meaning assigned to it in the Preamble.
“Parent
Board”
means
the Board of Directors of Parent.
“Parent
Common Stock”
shall
means share of the common stock of Parent.
“Person”
means
all natural persons, corporations, business trusts, associations, limited
liability companies, partnerships, joint ventures and other entities and
Governmental Authority.
“PPO”
shall
have the meaning assigned that term in the Recitals to this Agreement.
“Redeeming
Stockholders”
shall
have the meaning assigned that term in Section
1.8
of this
Agreement.
“Redemption
Event”
shall
have the meaning assigned that term in Section
1.8
of this
Agreement.
“Redemption
Shares”
shall
have the meaning assigned that term in Section
1.8
of this
Agreement.
“Resale
Registration Statement”
shall
have the meaning assigned that term in Section
4.6
of this
Agreement.
“Rollover
Shares”
shall
have the meaning assigned to such term in Section
1.5(f).
“SEC”
means
the U.S. Securities and Exchange Commission.
“Second
Closing”
shall
mean the second closing under the Securities Purchase Agreement, or if there
is
no such second closing, then the fortieth (40th)
day
following the First Closing.
”Section
1.10
Loss,”
“Section
1.10
Claim”
and
“Section
1.10
Parent
Liability”
each
shall have the meaning assigned to it in Section
1.10.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Securities
Purchase Agreement”
shall
have the meaning assigned to such term in the Recitals.
“Stock
Adjustment Steps”
shall
have the meaning assigned that term in Section
5.1(d)
of this
Agreement.
“Subsidiary”
means,
as to any Person, any corporation, company, partnership, organization or other
entity in respect of which that Person, at the date of determination, owns,
directly or indirectly, the securities or other ownership interests which
possess a majority of the voting power required for the election of a majority
of the members of the board of directors or other governing body thereof.
33
“Surviving
Corporation”
shall
have the meaning assigned to it in Section
1.1
hereof.
“Tax”
or
“Taxes”
means
(a) any and all taxes, assessments, customs, duties, levies, fees, tariffs,
imposts, deficiencies and other governmental charges of any kind whatsoever
(including, but not limited to, taxes on or with respect to net or gross income,
franchise, profits, gross receipts, capital, sales, use, ad valorem, value
added, transfer, real property transfer, transfer gains, transfer taxes,
inventory, capital stock, license, payroll, employment, social security,
unemployment, severance, occupation, real or personal property, estimated taxes,
rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative
minimum, doing business, withholding and stamp), together with any interest
thereon, penalties, fines, damages costs, fees, additions to tax or additional
amounts with respect thereto, imposed by the United States (federal, state
or
local) or other applicable jurisdiction; (b) any liability for the payment
of
any amounts described in clause (a) as a result of being a member of an
affiliated, consolidated, combined, unitary or similar group or as a result
of
transferor or successor liability, including, without limitation, by reason
of
Regulation section 1.1502-6; and (c) any liability for the payments of any
amounts as a result of being a party to any tax sharing agreement or as a result
of any express or implied obligation to indemnify any other Person with respect
to the payment of any amounts of the type described in clause (a) or (b).
“Tax
Return”
shall
include all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns required to be supplied to a Tax
authority relating to Taxes.
“Transactions”
means
the Merger, the PPO and the other transactions contemplated by or referenced
in
this Agreement.
“Transaction
Form 8-K”
shall
have the meaning assigned to it in Section
4.4
this
Agreement.
“Transaction
Documents”
means
the Merger Documents, and other Contracts, documents and instruments
contemplated by or referenced in this Agreement, including, without limitation,
the Offering Memorandum, and the Securities Purchase Agreement.
ARTICLE
8.
CLOSING
8.1 Closing.
The
closing of the Merger (the “Closing”)
shall
occur contemporaneously with the closing of the Transactions at the offices
of
Xxxxxxxxxx & Xxxxx, P.A., 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx,
Xxxxxxxxx on December 29, 2005, or such other date mutually agreeable to the
parties hereto (the “Closing
Date”).
8.2 Deliveries.
At the
Closing, or as promptly thereafter as practicable, Parent shall deliver to
each
Existing Company Stockholder the certificates representing the Merger Shares
to
be issued pursuant to the provisions of Section
1.5
hereof.
Such presentment for delivery shall be against delivery to Parent and
Acquisition Subsidiary of the certificates, opinions, agreements and other
instruments referred to in Section
5.2
hereof.
All of the other documents, instruments, certificates and agreements referenced
in Section
5.2
will also
be executed and delivered as described therein. At the Merger Effective Time,
all actions to be taken at the Closing shall be deemed to be taken
simultaneously.
34
ARTICLE
9.
MISCELLANEOUS
9.1 Notices.
Any
notice, request or other communication hereunder shall be given in writing
and
shall be delivered personally or mailed, certified or registered mail, return
receipt requested, or delivered by overnight courier service, to the following
addresses, or such other addresses as shall be given by notice delivered
hereunder, and shall be deemed to have been given upon delivery, if delivered
personally, four (4) days after mailing, if mailed, or one (1) Business Day
after timely delivery to the overnight courier service, if delivered by
overnight courier service:
if
to
Parent or Acquisition Subsidiary, to:
c/o
Law
Offices of Xxxxxx Xxxxxx
000
Xxxxx
Xxxx Xxxxxxxxx
Xxxxx
000
Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx Xxxxxx
if
to
Company, to
0000
Xxxx
Xxxx Xxxx
Xxxxx
000,
Xxxxxxx, Xxxxxxxx 00000
Fascimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxxxx, Xx.
with
a
copy to
Xxxxxxxxxx
& Xxxxx P.A.
000
Xxxxx
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxxxx 00000
Fascimile:
(000) 000-0000
Attention:
Xxxxx X. Xxxx
Notices
shall be deemed received at the earlier of actual receipt or three (3) Business
Days following mailing.
9.2 Entire
Agreement.
This
Agreement, including the schedules and exhibits attached hereto and other
documents referred to herein, contains the entire understanding of the parties
hereto with respect to the subject matter hereof. This Agreement supersedes
all
prior oral or written agreements and undertakings between the parties with
respect to such subject matter, including, but not limited to that certain
Memorandum of Understanding to which Parent and the Company are parties.
35
9.3 Expenses.
If the
Merger is not consummated, each party shall bear and pay all of the legal,
accounting and other expenses incurred by it in connection with the transactions
contemplated by this Agreement. If the Merger is consummated, the Parent shall
pay the expenses of the Parent, Acquisition Subsidiary and the
Company.
9.4 Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
9.5 Successors
and Assigns; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns and heirs; provided, however, that
the
neither the Company nor Parent and Acquisition Subsidiary shall directly or
indirectly transfer or assign any of its rights hereunder in whole or in part
without the written consent of the Company (in the case of Parent and
Acquisition Subsidiary) or Parent (in the case of the Company), which written
shall not be unreasonably withheld or delayed, and any such transfer or
assignment without such written consent shall be void.
9.6 No
Third Parties Benefited.
This
Agreement is made and entered into for the sole protection and benefit of the
parties hereto, their successors, assigns and heirs, and no other Person shall
have any right or action under this Agreement, except that Section
1.10
and
Section
4.6
are for
the express benefit of the Existing Company Stockholders.
9.7 Counterparts.
This
Agreement may be executed in one or more counterparts, with the same effect
as
if all parties had signed the same document. Each such counterpart shall be
an
original, but all such counterparts together shall constitute a single
agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page was an original
thereof.
9.8 Recitals,
Schedules and Exhibits.
The
Recitals, Schedules and Exhibits to this Agreement are incorporated herein
and,
by this reference, made a part hereof as if fully set forth herein.
9.9 Section
Headings and Gender.
The
Section headings used herein are inserted for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement. All
personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender, and the singular
shall
include the plural, and vice versa, whenever and as often as may be appropriate.
9.10 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without giving effect to principles of conflicts or choice
of
laws thereof.
36
9.11 Specific
Performance; Remedies.
Each of
Parent and the Company acknowledges and agrees that the other party would be
damaged irreparably if any provision of this Agreement is not performed in
accordance with its specific terms or is otherwise breached. Accordingly, each
of Parent and the Company agrees that the other party will be entitled to seek
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and its terms and
provisions in any action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the matter, in addition
to any other remedy to which they may be entitled, at law or in equity. Except
as expressly provided herein, the rights, obligations and remedies created
by
this Agreement are cumulative and in addition to any other rights, obligations
or remedies otherwise available at law or in equity, and nothing herein will
be
considered an election of remedies.
9.12 Submission
to Jurisdiction; No Jury Trial.
(a) Submission
to Jurisdiction.
Each of
Parent, Acquisition Subsidiary and the Company hereby submits to the
jurisdiction of any state or federal court sitting in Xxxx County, Illinois,
in
any action arising out of or relating to this Agreement and agrees that all
claims in respect of the action may be heard and determined in any such court.
Each of Parent, Acquisition Subsidiary and the Company also agrees not to bring
any action arising out of or relating to this Agreement in any other court.
Each
of Parent, Acquisition Subsidiary and the Company agrees that a final judgment
in any action so brought will be conclusive and may be enforced by action on
the
judgment or in any other manner provided at law or in equity. Each of Parent,
Acquisition Subsidiary and the Company waives any defense of inconvenient forum
to the maintenance of any action so brought and waives any bond, surety, or
other security that might be required of any other party with respect thereto.
(b) No
Jury
Trial.
EACH OF
PARENT, ACQUISITION SUBSIDIARY AND THE COMPANY HEREBY AGREES TO WAIVE ITS RIGHTS
TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY
OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY
DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope
of this waiver is intended to be all encompassing of any and all actions that
may be filed in any court and that relate to the subject matter of the
transactions, including, contract claims, tort claims, breach of duty claims,
and all other common Law and statutory claims. Each of Parent, Acquisition
Subsidiary and the Company hereby acknowledges that this waiver is a material
inducement to enter into a business relationship and that they will continue
to
rely on the waiver in their related future dealings. Each of Parent, Acquisition
Subsidiary and the Company further represents and warrants that it has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL
APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event
of commencement of any action, this Agreement may be filed as a written consent
to trial by a court.
37
9.13 Amendment.
This
Agreement may be amended by action taken by or on behalf of the respective
Boards of Directors of Parent, Acquisition Subsidiary and the Company at any
time prior to the Effective Time, provided that notwithstanding the foregoing,
after the Existing Company Stockholders approve and adopt this Agreement and
the
Merger, no amendment to this Agreement may be made that would reduce the amount
of or change the Merger Shares or otherwise would require the Existing Company
Stockholders to approve such amendment under the DGCL, unless the Existing
Company Stockholders approve such amendment in accordance with the DGCL.
Amendments to this Agreement must be in writing and signed the Parties.
9.14 Electronic
Signatures.
(a) Execution
on Paper.
Notwithstanding the Electronic Signatures in Global and National Commerce Act
(15 U.S.C. Section 7001 et. seq.), the Uniform Electronic Transactions Act,
or
any other Law relating to or enabling the creation, execution, delivery, or
recordation of any contract or signature by electronic means, and
notwithstanding any course of conduct engaged in by the Company, Acquisition
Subsidiary and Parent, neither the Company, Parent or Acquisition Subsidiary
will be deemed to have executed a transaction document or other document
contemplated thereby (including any amendment or other change thereto) unless
and until such party shall have executed such transaction document or other
document on paper by a handwritten original signature or any other symbol
executed or adopted by that party with the current intention to authenticate
such transaction document or such other document contemplated.
(b) Electronic
Delivery.
Delivery
of a copy of a transaction document or such other document bearing an original
signature by facsimile transmission (whether directly from one facsimile device
to another by means of a dial-up connection or whether mediated by the worldwide
web), by electronic mail in “portable document format” (“.PDF”) form, or by any
other electronic means intended to preserve the original graphic and pictorial
appearance of a document, will have the same effect as physical delivery of
the
paper document bearing the original signature. “Originally signed” or “original
signature” means or refers to a signature that has not been mechanically or
electronically reproduced.
9.15 Construction.
The
parties hereto have participated jointly in the negotiation and drafting of
this
Agreement. If an ambiguity or question of intent or interpretation arises,
this
Agreement will be construed as if drafted jointly by the parties hereto and
no
presumption or burden of proof will arise favoring or disfavoring any party
because of the authorship of any provision of this Agreement. Any reference
to
any Law will be deemed also to refer to law as amended and all rules and
regulations promulgated thereunder, unless the context requires otherwise.
The
words “include,” “includes,” and “including” will be deemed to be followed by
“without limitation.” Pronouns in masculine, feminine, and neuter genders will
be construed to include any other gender, and words in the singular form will
be
construed to include the plural and vice versa, unless the context otherwise
requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,”
and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The parties hereto intend
that each representation, warranty, and covenant contained herein will have
independent significance. If any party hereto has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which that party
has
not breached will not detract from or mitigate the fact that such party is
in
breach of the first representation, warranty, or covenant.
[Signature
Page Follows]
38
IN
WITNESS
WHEREOF, the parties hereto have executed this Agreement to be binding and
effective as of the day and year first above written.
CAPE COASTAL TRADING CORPORATION | ||
|
|
|
/s/ | Xxxxxxxx Alison | |
Xxxxxxxx Xxxxxx |
||
President |
uBID ACQUISITION CO. INC. | ||
|
|
|
/s/ | Xxxxxxxx Alison | |
Xxxxxxxx Xxxxxx |
||
President |
uBID, INC. | ||
|
|
|
/s/ | Xxxxxx X. Xxxxxxxxx, Xx. | |
Xxxxxx X. Xxxxxxxxx, Xx. |
||
President and Chief Executive Officer |
39
ACKNOWLEDGED
AND AGREED BY CALICO AS TO SECTION 1.5(b)(ii):
CALICO CAPITAL PARTNERS, LLC | ||
|
|
|
By: | /s/ X.X. Xxxxxxx | |
|
||
Its: | Managing Partner | |
|
40