EXHIBIT 2.1
MERGER AGREEMENT ANDPLAN OFMERGER
THISMERGERAGREEMENT ANDPLANOFMERGER("Agreement")ismade this6thdayofFebruary2015("Execution Date"or"ClosingDate")by andamongDUOS TECHNOLOGIES,INC.,aFloridacorporation("Duos");INFORMATIONSYSTEMSASSOCIATES,INC.,aFloridacorporation("ISA"); andDUOSACQUISITIONCORPORATION, aFlorida corporationand awholly-ownedsubsidiary ofISA("Merger Sub").
RECITALS
A. Therespective Boards ofDirectors ofISA, MergerSub andDuoshaveeachapproved themergerofMerger SubwithandintoDuos withDuossurviving ("Merger"),upon theterms and subjecttotheconditionssetforthinthisAgreement,wherebytheissuedandoutstanding sharesofcommon stock,noparvalue pershare, of Duos("DuosCommonStock"), willbe convertedinto aportion of the MergerConsideration(asdefinedbelow).
B. Therespective BoardsofDirectorsofISA,Merger SubandDuoshaveeachdeterminedthattheMerger and theothertransactions contemplated hereby are consistentwith, andinfurtheranceof,theirrespective businessstrategiesandgoalsandareinthebestinterestsoftheirrespectivestockholders.
C. ISA,MergerSubandDuosdesiretomakecertainrepresentations, warranties,covenants,eachtotheother,and agreementsinconnection withtheMergerandalso toprescribevariousconditions totheMerger.
NOW, THEREFORE,inconsiderationoftherepresentations,warranties,covenants andagreementscontained inthis Agreement, thepartieshereto agreeasfollows:
ARTICLEIDEFINITION OFTERMS
1.1Certain Definitions.For purposesofthis Section1.1,capitalized words andtermshavethefollowing meanings:
"Affiliate" hasthe meaningsetforthinExchangeActRule12b-2.
“Books andRecords” meansallbooksandrecordsofDuos,includingfiles,manuals, pricelists,mailinglists, distributorlists,customerlists, salesandpromotionalmaterials, purchasingmaterials,documentsevidencing intangiblerightsorobligations,personnelrecords, accountingrecordsandlitigationfiles(regardlessofthemedia inwhichstored).
“Closing”isdefined in Section 2.2.“Closing Date”isdefined in Section 2.2.
“Code” meansU.S.Internal RevenueCodeof1986, asamended.
“Dissenting Shares”meansthesharesofDuosCommonStockownedbyshareholdersofDuoswhoareelectingtheirappraisalrightsundertheFBCAandhave perfectedsuchrightsinaccordancewiththe FBCA.
“Duos Bylaws” means theBylawsofDuos, asamendedas in effectontheClosingDate.“DuosCommon Stock”isdefined in Recital A.
“Duos Shareholders” meanstheholdersofDuosCommon StockpriortotheEffectiveTime.
“Duos Certificate”meanstheCertificateofIncorporationofDuos,asamended,asineffectontheClosing Date.
“Duos DisclosureLetter”isdefined in ArticleIII.“Effective Time”isdefinedinSection2.2.
"Exchange Act"meanstheSecurities ExchangeActof1934,asamended,andtherulesand regulationspromulgated thereunder.
“FBCA”isdefinedinSection 2.1.
“FINRA” meanstheFinancial IndustryRegulatory Authority.“FloridaSecretary”isdefined in Section2.2.
“Governmental Authority”shallmeanany foreign,federal,national,stateorlocaljudicial, legislative,executiveorregulatorybody,authorityorinstrumentality,whetherUnited Statesorotherwise.
“ISACertificate” means theCertificateofIncorporationofISA,asamended.“ISABylaws”meanstheBylawsofISA,asamended.
“ISACommon Stock”meansthe commonstock,parvalue $.001pershare,ofISA.“ISADisclosure Letter”isdefined in Article IV.
“ISAStock”means,collectively, theISA Common Stockand theSeries APreferredStock.
"Knowledge" meanstheactualknowledgeoftheexecutive officersofaParty,without independent investigation.
“Law”meansany federal,stateorlocallaw,statute,rule, regulation,judgment,decree,injunction, order,ordinance,code,regulation, arbitrationaward,grant,franchise, permitandlicenseorotherlegallyenforceablerequirementoforbyanyGovernmental Authorityorself-regulatory organization.
“Liability”meansobligationsorcommitmentsofanynaturewhatsoever,assertedorunasserted,knownorunknown,absoluteorcontingent,accruedorunaccrued,maturedorunmaturedorotherwise.
“Lien” meansany mortgage,pledge, securityinterest, encumbrance,lienorchargeofanykind,including anyconditionalsaleorothertitle retentionagreement,anyleaseinthenaturethereof andany lienorchargearisingbyLaw.
“Material AdverseEffect”means,withrespecttoeachParty, anyeffectorchangethatwouldhaveamaterialadverse effectontheresultsofoperations,financial condition,assets,propertiesorbusinessoftheparty,takenasawhole,orontheabilityofthePartyto consummatetimely thetransactions contemplatedhereby.
“Merger”isdefined in Recital A.
“Merger Documents”isdefinedin Section 2.3.
“Merger Consideration”meanstheaggregatenumberofsharesofISACommon Stock,representing96%oftheissuedandoutstanding ISACommonStockaftergivingeffecttotheMerger(onapost-ReverseStockSplit basis);provided,that,if theReverse StockSplitisnotimplementedonor beforetheClosing,theMergerConsiderationshallalso meansuchnumberofsharesofSeriesAConvertiblePreferredStock(togetherwiththeISACommonStock,the“ISAStock”) which,followingtheimplementationoftheReverse StockSplit,shalltogetherwithISACommonStockcomprisingthe MergerConsideration, represent96% oftheissued andoutstandingISACommon Stockaftergiving effecttotheMerger(onapost-ReverseStockSplitbasis).
“Ownership Interest”means,astoeach DuosShareholder,theamount, expressedasapercentage,eachHolderisentitledtoreceiveoftheMerger Consideration.
“Parties” shallmean Duos,ISA andMergerSub.
“Person”meansany individual,group,organization,corporation, partnership,jointventure,limited liabilitycompany,trustorentityof anykind.
“Reverse StockSplit”isdefined in Section 5.1(g). "SEC"meanstheSecuritiesandExchangeCommission.
"SecuritiesAct"meanstheSecurities Actof1933,asamended, andtherules andregulationspromulgatedthereunder.
“Series AConvertiblePreferred Stock”iftheReverse StockSplit isnotimplementedonorbeforetheClosingISAshall createanew SeriesAConvertible PreferredStock,parvalue $0.001pershare,to beissuedto DuosshareholdersaspartoftheMerger Considerationandwhich willautomaticallyconvert intoISACommon Stockimmediatelyfollowing theimplementationof theReverseStockSplit,therights,preferencesandprivilegesareassetforthinthecertificateofdesignationofthe rightsandprivileges thereof
“Surviving Corporation”isdefinedin Section2.1.
“Tax”or“Taxes” meansalltaxes,feesorotherassessmentsofanykindimposed byanyGovernmentalAuthority, andanyandallinterest,penalties andadditionsrelatingthereto. “Tax”or“Taxes” includeswithoutlimitationall add-onminimum,alternativeminimum,capitalstock, currency,customs,documentary,disability,employee,employer, environmental,estimated, excise,export, FICA,franchise,FUTA, grossreceipts, income,import,naturalresources,license,occupation, payroll,personalproperty,premium, realproperty,registration, sales,severance,social security,stamp,transfer,unemployment,use, valueadded,escheat,unclaimedproperty,windfallprofitand withholdingtaxesandduties. “Tax” or“Taxes”alsoincludesanyLiabilityfortaxesofanyotherPerson,including transferee orsecondaryLiability forTaxesandany Liabilitypursuant to anagreement orotherwise,including Liabilityarisingasaresultofbeingorceasingtobe amemberofanyaffiliatedgroup,orbeingincluded orrequired tobeincluded inanyTaxReturn relating thereto.
“TrueVue Subsidiary”means andreferstoTrueVue 360,Inc.,aDelawarecorporationand ISA’swhollyowned subsidiary.
ARTICLEIITHEMERGER
2.1 THEMERGER.Upontheterms andsubjecttothe conditionssetforthinthisAgreement, andinaccordancewithapplicableprovisionsoftheFloridaBusinessCorporationAct("FBCA"),MergerSub shallbemergedwithand into DuosattheEffectiveTime (asdefinedinSection2.3).FollowingtheEffectiveTime,the separatecorporateexistenceofMergerSub shallceaseand Duosshall bethesurvivingcorporationofthe Merger("SurvivingCorporation")andshall succeed toandassume allof therightsand obligationsofMerger Subin accordancewith theFBCA.
2.2 CLOSING;EFFECTIVE TIME.The closingoftheMergerand othertransactionscontemplatedhereby ("Closing")willtake placeat10:00a.m.,EasternStandardtime,onadatetobespecifiedbytheparties("Closing Date")attheofficesofDuos inJacksonville, Florida,orsuchotherlocation asmaybe agreed toby thepartieshereto.At theClosing, thePartieshereto shall causethe Mergertobeconsummated byfiling theAgreementand articlesof merger(collectivelythe"Merger Documents")withtheSecretaryofState oftheStateofFlorida(the “FloridaSecretary”), inaccordance with therelevant provisionsoftheFBCA(thetime ofsuchfilings,orsuch latertimeasmaybe agreed inwritingbythePartiesandspecified in theMergerDocuments,beingthe“Effective Time”).IftheFloridaSecretaryrequires anychanges intheMerger Documents as aconditiontofilingorissuingacertificatetotheeffect thatthe Merger iseffective,Duos, ISAand/ortheMergerSub shallexecuteany necessarydocumentincorporatingsuchchanges,providedsuchchanges arenotinconsistent withanddo notresultinanymaterialchangein thetermsofthisAgreement.
2.3 EFFECTSOF THEMERGER. TheeffectsoftheMergershall beasprovidedinthisAgreement,theMergerDocumentsand theapplicable provisions ofFBCA.
2.4 CERTIFICATEOF INCORPORATIONANDBYLAWS
(a) AttheEffectiveTime, byvirtueoftheMergerandwithout anyactiononthepartofISA,MergerSuborDuos,thearticlesofincorporationandthebylawsofMergerSub,asineffect immediatelypriortotheEffectiveTime, shallbetheDuosCertificateandDuosBylawsuntilthereafter amendedasprovidedby theFBCA.
(b) ThedirectorsandofficersofDuosprior totheEffective TimeshallbetheinitialdirectorsandofficersoftheSurviving Corporation.
(a) PriortotheClosing, DuosshalldeliverascheduletoISA,whichshallsetforththenamesoftheDuosShareholders,theirrespective OwnershipInterestandtheirportionoftheMergerConsideration,payabletoeach ofthem as of theClosing Date.AllsharesofISAStockissuedupon thesurrenderand exchangeofsharesofDuosCommonStock orSeries APreferredStock,asthecasemay be, in accordancewiththetermshereof shall(i)containarestrictedsecuritieslegendincompliancewith theSecurities Actand(ii)be deemed tohavebeenissuedinfullsatisfaction of allrights pertaining tosuch shares ofDuosCommon Stock orSeriesAPreferredStock.Followingthe EffectiveTime,thereshallbeno furtherregistration oftransfersonthestocktransferbooksofDuosofthesharesofDuosCommon Stockthatwereoutstanding immediatelypriortotheEffectiveTime.
(b) AttheEffectiveTime, withoutanyactionoftheholderthereof,eachshareof commonstockofMerger Sub ("MergerSub Stock")issuedandoutstanding immediatelypriortotheEffective Timeshallbeconverted intoandexchangedforonevalidlyissued,fullypaid,nonassessable shareofcommon stockoftheSurvivingCorporation. Eachstockcertificate evidencingownership ofanysharesofMergerSubStock shall, at theEffectiveTime,evidenceownershipofonesuchshareofcapitalstockof theSurviving Corporation.
| (c) | Effecton CapitalStock. |
(i) NoFractional Shares.Nofractional shareswillbeissuedinconnectionwiththeconversionofDuosCommonStockorSeriesAPreferredStockinto ISACommonStock,and anyrighttoreceive afractionalsharewillberounded-upto thenearestwholeshareofISA Common Stock.
(ii) CancellationofDuosCommon Stock.AttheEffective Time,withoutanyfurtheractionofaholder,theDuosCommon Stockwillbe deemedcanceledandretiredandwillceasetoexist, andeachholderofDuosCommonStockwillceasetohaveanyrightswithrespectthereto;provided,however,that, followingtheClosingDate,uponsurrender of anoriginal stockcertificaterepresenting DuosCommonStockoraffidavit oflostcertificateand thedelivery of thedeliverables listed insub-section(iii)below,ISA willdeliverastockcertificate forsharesofDuosCommonStocktowhichsuchperson isentitledpursuanttoitsOwnershipInterest,bearing anynecessaryorappropriaterestrictive legend.
(iii) Lost,StolenorDestroyed Certificates.Ifanycertificateevidencing sharesofDuosCommon Stockshallhavebeen lost,stolenordestroyed,uponthe makingofanaffidavitofthatfactbytheperson claimingthecertificatetobelost,stolenordestroyed and, ifrequiredbyISA, theposting of anindemnitybond, insuch reasonableamount asISA or thetransferagent maydirect,ascollateralsecurityagainstanyclaimthatmaybemade with respecttothecertificate, ISAwillissue in exchangeforthelost,stolen ordestroyedcertificatetheISA Common Stock equaltotheOwnership Interest.
(d)Dissenting SharesofDuosCommon Stock.EachDissenting Shareshallbeconverted intotherighttoreceivepayment withrespecttheretoinaccordancewiththeprovisionsoftheFBCA.Provided,however,thatifany DuosShareholdershall havefailedto perfect orshalleffectivelywithdrawor losehisright to appraisalandpaymentundertheFBCA,suchholder’s sharesshallthereuponbe deemedtohave beenconverted as oftheEffectiveTime, assetforth inthis Section2.5andsuch sharesshall nolongerbe DissentingShares.DissentingShares shallbe canceledandanyholder thereofshallcease tohave anyrights withrespect thereto.
| 2.6 | PROCEDUREFOR ISSUANCESTOHOLDERS |
(a) PriortotheEffectiveTime,ISAwillinstructISA’stransfer agenttoprepare stockcertificatesinthenamesofeachDuosShareholder eligibletoreceiveMergerConsideration,reflectingsuchholder’sOwnership Interest,itslegal addressandtaxidentificationnumber(if appropriate).AtClosing,appropriate stockcertificatesmaybe deliveredtoDuosonbehalfofsuchDuosShareholder. Thefeesdue to thetransfer agent shall bepaidbyISA.
| (b) | Allcertificatesevidencing theISAStock shall contain thefollowing legend. |
“THE SHARESEVIDENCEDHEREBYHAVENOTBEENREGISTEREDUNDER THESECURITIESACTOF 1933,ASAMENDED (THE“ACT”),ANDMAYNOTBETRANSFERREDEXCEPT PURSUANTTOANEFFECTIVEREGISTRATIONUNDER THEACTORINATRANSACTIONWHICH, INTHE OPINIONOFCOUNSELREASONABLY SATISFACTORYTOTHECOMPANY,QUALIFIES AS ANEXEMPTTRANSACTION UNDERTHEACTAND THERULESAND REGULATIONSPROMULGATED THEREUNDER.”
ARTICLE III
REPRESENTATIONS ANDWARRANTIES OFDUOS
Duosrepresentsand warrantstoISA andMergerSubthatthestatementscontainedinthisArticle IIIaretrueandcorrectasofthedatehereofandwillbetrueandcorrectasoftheClosing Date,exceptasmodifiedby thedisclosureschedulesofDuosattachedto thisAgreement(the "DuosDisclosureLetter"), arrangedinsections correspondingtotheparagraphsinthisSection;thedisclosureinanysection orparagraphwillqualifyotherparagraphsinthisSectionto theextent that itisreasonablyapparent from areading of thedisclosure that italsoqualifies orapplies tosuchotherparagraphs.
3.1 Organization.Duosisacorporation validlyexistingandingoodstandingunderthelawsoftheStateofFloridaand hasallrequisite powerandauthorityand possessesallnecessary governmental approvalsnecessarytoown,lease andoperateitsproperties, tocarryonitsbusinessasnowbeingconducted,to executeanddeliver this Agreementandtheagreementscontemplatedherein,and toconsummatethetransactionscontemplated hereby andthereby. Duos isdulyqualified todobusinessandis ingoodstandingin alljurisdictionsin which its ownership ofpropertyorthe character of itsbusinessrequires suchqualification,exceptwherethefailuretobesoqualifiedwould notreasonablybe expected to have aMaterial AdverseEffect.
| 3.2 | Capitalization’ OwnershipofShares. |
(a) Duos'authorized capitalstockconsistsof14,500,000shares, noparvalueper share,ofcommonstockand 500,000 shares,nopar valuepershare,ofpreferred stock.
(b) ThecapitalizationofDuosisassetforthinSchedule3.2(b). Allofthe issuedandoutstandingsharesofDuosCommon Stockweredulyand validlyissuedandfully paid,arenon-assessableandfree ofpreemptive rights,andwereissuedincompliance withallapplicablestate andfederal securitieslaws.
| (c) | ExceptasprovidedintheDuosDisclosureLetter,therearenooutstanding |
(A) options,warrants,orotherrightstopurchasefromDuosany capitalstockofDuos;(B)debt securitiesorinstruments convertibleintoorexchangeableforsharesofDuos;or(C)commitmentsofanykind forthe issuanceofadditional sharesofDuosoroptions,warrantsorothersecuritiesofDuos.
3.3 Authorization.Duos hasallrequisite powerandauthorityto executeanddeliverthis Agreement,toperformitsobligationshereunder,andtoconsummatethe transactionscontemplatedhereby.The executionanddeliveryofthisAgreementbyDuos andtheconsummation byDuosofthetransactionscontemplated herebyhavebeendulyandvalidlyauthorized bythe board ofdirectorsof Duos,and, exceptforapproval of thestockholdersof Duos,no othercorporateproceedingson thepart of Duos isnecessary toauthorizethisAgreement or toconsummate thetransactionscontemplatedhereby.This Agreement hasbeendulyand validlyexecutedanddelivered byDuos.This Agreementand allotheragreements andobligationsenteredintoandundertakeninconnectionwiththetransactionscontemplated hereby to whichDuos is apartyconstitutethevalid andlegallybindingobligations of Duos,enforceableagainstDuosinaccordancewiththeir respectiveterms,exceptasmaybelimitedbyprinciplesofequityorapplicablebankruptcy, reorganization,insolvency,moratorium,fraudulent conveyance orothersimilarlawsrelatingtooraffecting therightsandremediesofcreditors generally.Theexecution,delivery andperformanceby Duos ofthisAgreementand theagreements providedforherein,andtheconsummationbyDuosof thetransactionscontemplatedherebyand thereby, willnot,with orwithoutthegivingofnotice or thepassage oftimeor both,violatetheprovisionsofthe DuosCertificate or DuosBylaws, or(i)violate anyjudgment,decree, order oraward ofanycourt, governmental bodyorarbitrator;(ii)conflict withorresult in thebreachortermination ofany term orprovision of, orconstitute adefault under, orcauseanyacceleration under, orcause thecreationofanylien,charge orencumbranceupon theproperties orassetsof Duospursuant to,anyindenture, mortgage,deedof trustorotherinstrumentoragreementtowhich Duosisapartyorby whichDuosorany of itsproperties is ormaybebound;or(iii) toDuos'Knowledge, violate theprovisions ofany law,rule orregulationapplicabletoDuos,except wheresuch violation wouldnotreasonably beexpected to have aMaterialAdverseEffect.
3.4 NoConflict. Theexecutionanddeliveryofthis AgreementbyDuosdoesnotrequireanyconsentorapprovalunder,resultinanybreachof,resultinanylossofanybenefitunder,orconstituteachangeofcontrolordefault(oranevent which withnotice orlapse oftime orbothwould becomeadefault)under; give toothersany rightoftermination,vesting, amendment, accelerationorcancellation of;orresultinthecreationofanylienorencumbranceonanypropertyorassetofDuos pursuant toanymaterial agreementofDuosorotherinstrumentorobligation ofDuos.
3.5 Litigation.ExceptaspreviouslydisclosedandasreflectedinExhibit3.5,thereisnoaction,suit,legaloradministrativeproceedingorinvestigationpendingor,toDuos'Knowledge,threatenedagainstorinvolvingDuos (eitheras aplaintiff ordefendant) beforeanycourtorgovernmentalagency, authority,body orarbitrator. Thereisnotinexistence on thedate hereofanyorder,judgmentordecree ofanycourt, tribunal oragencyto Duos 'Knowledgeenjoining orrequiringDuosto takeanyaction ofany kind withrespecttoitsbusiness,assetsorproperties.
3.6 CompliancewithLaws.ToDuos’Knowledge, Duosisnotinviolationofanyfederal,stateorlocallaw,regulationorordinance(including,without limitation,laws,regulations orordinancesrelatingtobuilding,zoning, environmental,disposal ofhazardouswaste,landuseorsimilarmatters) relating to itsbusiness oritsproperties.
3.7 NoBrokers.Nobrokerorfinderhas actedforDuosinconnectionwith thisAgreementorthetransactionscontemplated hereby, andnobroker orfinder is entitled toanybrokerageorfinder'sfeeorothercommissionsinrespectofsuchtransactions baseduponagreements,arrangements, orunderstandings madebyor on behalf of Duos.
3.8 NoSubsidiaries. ExceptasotherwisedisclosedonSchedule3.8,Duosdoesnothaveany subsidiaries.
(a) CompletecopiesofDuos’audited financialstatementsconsistingofthebalancesheetofDuosasatDecember31,2012andthe relatedstatementsofincomeandretained earnings,shareholders’equityand cash flow fortheyearthenended(the “DuosAuditedFinancialStatements”)andtheunauditedfinancial statementsfortheyearended December31,2013and2014 (the“DuosInterim FinancialStatements”)and together withthe DuosAuditedFinancialStatements(the “DuosFinancial Statements”)havebeendelivered to ISA
(b) Duos(i)makes andkeepsaccurate BooksandRecordsinaconsistentmannerand (ii)maintainsinternalaccounting controlsthatprovidereasonable assurancethat(A) transactionsareand havebeenexecutedinaccordancewithmanagement’sauthorization,(B)transactionsareandhave beenrecordedasnecessary topermitpreparation oftheirfinancialstatements and tomaintain accountabilityfortheirassets,(C)access totheirassetsisandhasbeen permittedonlyinaccordance withmanagement’sauthorization,and(D)thereportedaccountabilityfortheir assets iscomparedwithexisting assetsatreasonable intervals.
3.10 TaxMatters. Duoshastimelyfiledallfederal,stateandlocaltaxreturns andalltaxreturnsforothergoverningbodieshaving jurisdictiontolevy taxesuponitwhicharerequiredtobefiled.ExceptaspreviouslydisclosedandasreflectedinSchedule3.10, Duoshaspaidalltaxes,interest, penalties, assessments,anddeficiencieswhichhavebecomedue, includingwithoutlimitationincome,franchise, realestate,andsales andwithholding taxes.
3.11 Booksand Records.To Duos’Knowledge,thegeneral ledgerandbooksofaccountofDuos,allminute booksofDuos,allfederal,stateandlocalincome,franchise,property andothertaxreturns filedbyDuos,allof whichhavebeenmadeavailabletoISA,areinallmaterialrespects complete andcorrectand havebeenmaintained inaccordancewithgoodbusinesspractice and inaccordance with allapplicable proceduresas aprivatecompany.
3.12 ForeignCorrupt PracticesAct.Inconnectionwithitsbusiness,DuoshascompliedwiththeForeignCorruptPractices Act,15U.S.C.78dd-1etseq.andrules, regulations,codes,plans,injunctions, judgments,orders,decrees,rulings, andchargesthereunder offederal, state,local,andforeigngovernments (and allagenciesthereof),andnoAction,investigation, inquiry charge,claim,demand,ornoticehasbeen filedorcommenced againstanyofthem alleging anyfailuresoto comply.
3.13 Disclosure.The informationconcerningDuossetforthinthisAgreement,theexhibitsandschedules hereto,andanydocument, statementorcertificate furnishedortobefurnishedinconnectionherewith(as applicable)doesnotandwillnotcontain anyuntruestatementofamaterialfactoromittostate amaterialfactrequiredtobestated herein ortherein ornecessaryto makethestatements andfactscontainedhereinortherein,inlightofthecircumstancesinwhichtheyaremade, notfalseormisleading.
ARTICLEIVREPRESENTATIONS ANDWARRANTIES OF
ISA ANDMERGER SUB
EachofISAandMergerSubrepresents andwarrantstoDuosthatthestatementscontainedinthisArticle IVaretrueand correctas of thedate ofthis Agreementandwillbetrueandcorrectas oftheClosingDate,exceptasmodifiedbythedisclosureschedulesofISAand/or MergerSubtoDuosattachedtothisAgreement(the"ISA DisclosureLetter"),arrangedinsectionscorrespondingtotheparagraphsinthisSectiontotheextent that it isreasonablyapparentfrom areadingof thedisclosure that italsoqualifies orapplies tosuch otherparagraphs.
4.1 Organization.
(a) ISAisacorporationvalidlyexisting andingood standingunderthelawsoftheStateofFloridaandhasallrequisitepowerand authorityandpossessesallnecessarygovernmental approvalsnecessarytoown,leaseandoperateitsproperties,tocarryonitsbusinessasnowbeingconducted, toexecuteanddeliverthisAgreementandtheagreements contemplatedherein,and toconsummatethetransactionscontemplatedherebyand thereby.ISAisdulyqualified todo business and is in goodstandingin alljurisdictionsinwhich itsownershipofpropertyorthecharacterofitsbusiness requiressuchqualification, except wherethefailureto besoqualified wouldnot reasonablybeexpected tohaveaMaterialAdverseEffect.
(b) MergerSubisacorporationvalidlyexistingandingoodstandingunderthelawsoftheStateofFloridaandhas allrequisitepowerand authorityandpossessesallnecessarygovernmental approvalsnecessarytoown,leaseandoperateitsproperties,tocarryonitsbusinessasnowbeingconducted, toexecuteanddeliver thisAgreement andtheagreements contemplated herein,andtoconsummate thetransactionscontemplatedhereby and thereby.MergerSub wasincorporated onFebruary 6th,2015, hasconductedno business andhasnoassets (other than theMergerConsideration)orliabilities.
(c) TrueVueSubsidiaryisacorporation validlyexistingandingoodstandingunderthelawsoftheStateofDelawareandhasallrequisitepowerand authorityandpossessesallnecessarygovernmental approvalsnecessarytoown,lease andoperateitsproperties,tocarryonitsbusinessasnowbeingconducted,to executeanddeliverthis Agreement and theagreementscontemplatedherein,andtoconsummate thetransactionscontemplated herebyand thereby.
(a) Priortoactionscontemplated bytheReverseStock Split,ISA'sauthorizedcapital stockconsistsof(i)1,000,000sharesofpreferredstock,parvalue$.001 pershare;(ii)450,000,000 sharesofClassACommonStock,par value$.001pershare; and(iii)50,000,000sharesofClassBCommonStock, parvalue$.001 pershare.
(b) Thereare138,155,740sharesofcommonstock issuedand outstanding(whichnumberexcludesapproximately 36,000,000sharesduetobeissued,anystock issuedinsettlementofdebt,anystocktobeissuedinsettlementofoutstandingwarrants andoptionsand anyactionscontemplatedbytheReverseStock Split),nosharesofISApreferred stock areissuedand outstanding,andnoshares ofISA CommonStock areheld in thetreasury ofISA.Allof theissuedandoutstanding shares ofISACommonStockweredulyandvalidly issuedandfullypaid, arenon-assessableandfreeofpreemptiverights,and wereissued in compliancewith all applicablestateand federal securities laws.
(c) AsoftheClosingDate,therearenooutstanding (A)options,warrants,orotherrightstopurchasefromISA anysharesofISAorMergerSub; (B)debt securitiesorinstrumentsconvertibleintoorexchangeableforsharesofISA; or(C)commitmentsofanykind fortheissuanceofadditionalsharesoroptions,warrantsorothersecuritiesofISAorMerger Sub.
(d) ISAownsallofthe outstandingcapitalstockofeachofMergerSubandTrueVueSubsidiary,freeandclearof allliensorotherencumbrances.
4.3 NoSubsidiaries. ExceptforTrueVueSubsidiaryandMergerSub,ISA doesnotownanycapital stockorotherequity interest inanycorporation, partnership,jointventureorotherentity.
4.4 Authorization.EachofISA,andMergerSubhasallrequisitepowerandauthorityto executeanddeliverthis Agreement,toperform itsobligationshereunderandtoconsummatethetransactions contemplatedhereby.The executionanddelivery ofthis AgreementbyISAandMergerSubandtheconsummationbyISA and MergerSub of thetransactionscontemplatedhereby have beendulyandvalidlyauthorizedby the boardofdirectorsofISAandtheISAshareholdersifandasrequiredunder applicablelawand,to theextentapplicable,thetransactionscontemplated herebyhavebeenapprovedbyISAasthesolestockholderofMergerSuband theboard ofdirectorsofMergerSub, andnoothercorporate proceedings on thepart ofISA andMergerSub,respectivelyarenecessarytoauthorize thisAgreement ortoconsummatethetransactions contemplatedhereby. ThisAgreementhasbeen dulyandvalidlyexecuted anddeliveredbyISA andMergerSub.ThisAgreementandallotheragreementsand obligations enteredintoandundertaken inconnection with thetransactions contemplatedhereby towhichISA or MergerSub is apartyconstitutethevalid andlegallybindingobligationsofISAandMergerSub, respectively,enforceable againstISA andMerger Sub,respectively, inaccordancewiththeir terms, exceptasmaybe limited byprinciplesofequityorapplicablebankruptcy, reorganization, insolvency,moratorium,fraudulentconveyanceorothersimilar laws relatingto oraffectingtherightsand remediesofcreditors generally.Theexecution, deliveryandperformancebyISAandMergerSubof thisAgreementandtheagreements providedfor herein, and theconsummationby ISAand MergerSub ofthetransactionscontemplated hereby,willnot,withorwithoutthegiving of notice orthepassage of time orboth, violatetheprovisions of theISAArticles orISA Bylaws, thearticlesofincorporationorbylawsofMergerSub or(i) violateanyjudgment,decree, order oraward ofanycourt,governmental bodyorarbitrator;(ii)conflictwith orresultin thebreach ortermination ofanytermorprovisionof,orconstituteadefaultunder,orcauseany accelerationunder, orcausethecreation ofanylien, chargeorencumbrance uponthepropertiesor assets ofISA orMergerSubpursuantto,anyindenture,mortgage, deedoftrustorotherinstrumentoragreementto whichISAorMergerSubisapartyorby whichISAor MergerSub orany oftheir respectiveproperties isor maybebound;or(iii) toISA's orMergerSub's Knowledge,violate theprovisionsofanylaw,ruleorregulationapplicable toISAor MergerSub, except wheresuch violation would not reasonablybeexpectedtohave an MaterialAdverse Effect.
4.5 NoConflict. TheexecutionanddeliveryofthisAgreementby ISAandMergerSubdoesnotrequireany consentorapproval under,resultinanybreachof,resultinanylossofanybenefitunderorconstitute achange ofcontrolordefault(or aneventwhich withnotice orlapse oftime or both wouldbecome adefault) under, orgive toothersany right oftermination,vesting,amendment,accelerationorcancellation of, orresult in thecreation ofanylienorencumbrance onanyproperty or asset ofISA,TrueVueSubsidiaryor MergerSubpursuant toanymaterialagreement ofISA, TrueVueSubsidiaryorMergerSub orother instrumentorobligationofISA orMergerSub.
4.6 ValidIssuanceoftheISA Stock.UpontheeffectivenessoftheReverse StockSplit,theISAStockto beissuedtotheDuosshareholdersaspartoftheMergerConsiderationwillbeduly authorized,validlyissued,fullypaidandnon-assessable, freeandclearfrom all taxesand liens,claimsand encumbrances(except theapplicable securities Laws),andwillnotbesubject toany preemptiverights orsimilar rights.
| 4.7 | SECandStateSecurities LawFilings. |
(i) ISAhas filedallforms,reports anddocumentsrequiredtobefiled withtheSECand anystatesecurities administratorssinceformationofISA.Atthetimefiled,all such filings (A)complied inallmaterialrespectswiththeapplicable requirementsoftheSecuritiesAct andtheExchangeAct,asthecase maybe,and(B) didnotat thetimetheywerefiled(orifamendedorsupersededbyafilingpriorto thedate ofthisAgreement,then on thedate ofsuchfiling)containanyuntruestatementof amaterialfact oromit tostate amaterialfact required tobestated insuch filings ornecessary in order tomake thestatements insuchfilings,in thelight of thecircumstancesunder which theyweremade, notmisleading.
(ii) Eachofthefinancialstatements(including,ineachcase,anyrelated notes)containedinISAsSECfilings compliedastoforminallmaterialrespectswiththeapplicablerules andregulationswithrespectthereto,was preparedinaccordance withGAAPappliedonaconsistentbasisthroughouttheperiodsinvolved(exceptasmaybeindicatedin the notestosuch financial statementsor,in thecaseofunauditedstatements, aspermitted byForm10-Qof theSEC)andfairly presented thefinancialpositionofISA as of thedatesandtheresultsofits operationsand cashflowsfor theperiodsindicated, except that theunauditedinterimfinancial statementswere oraresubject tonormalandrecurringyear-end adjustmentswhichwerenotorare notexpected tobe materialinamount. ISAmaintainsastandard systemofaccounting establishedandadministeredinaccordancewithGAAP.
4.8 UndisclosedLiabilities. Exceptasset forthonISA'sbalancesheet dated September30,2014,assetforthinISA'sQuarterly ReportonForm10-QfortheperiodendedSeptember 30,2014,asfiledwiththeSEC, neitherISAnorTrueVueSubsidiaryhas anyliabilityorobligation,securedor unsecured,whetheraccrued, absolute,contingent, unassertedorotherwise, thatexceedsanaggregateof$10,000.MergerSubdoesnothaveany liabilities orobligations.Other than asdisclosedISADisclosure LetterSinceSeptember30,2014, ISA hasnot incurredanyliabilitiesofanynature,whetheror notaccrued, contingentorotherwise,whichcould reasonablybe expected tohave,and therehavebeennoevents, changes oreffectswith respecttoISA havingorwhichreasonably couldbeexpected tohaveaMaterial AdverseEffecton ISA.SinceSeptember 30,2014,therehas notbeen(i) anychangebyISA in itsaccountingmethods,principlesorpractices(other thanasrequired after thedatehereof byconcurrentchangesingenerallyacceptedaccounting principles),(ii)anyrevaluation byISAofanyofitsassets,including,without limitation, anywrite-downofthevalue ofany assetsor(iii) anyotheraction or event that wouldhaverequired theconsentofanyotherparty heretopursuantto ofthisAgreement had such actionoreventoccurredafterthe dateofthis Agreement
4.9 Litigation.ExceptaspreviouslydisclosedandasreflectedinExhibit4.9,thereisnoaction,suit,legaloradministrativeproceeding orinvestigationpendingor,toISA'sKnowledge,threatened againstorinvolving ISA,TrueVueSubsidiaryorMergerSub (eitherasaplaintiffordefendant)beforeanycourt orgovernmentalagency, authority,body orarbitrator.Thereisnotinexistenceonthedatehereofanyorder, judgmentordecreeofanycourt,tribunal oragency toISA'sKnowledgeenjoiningorrequiringISA,TrueVue Subsidiary orMergerSubtotakeanyactionofanykind withrespecttoitsbusiness,assetsorproperties.
4.10 ExemptionFrom Registration.Subjecttotheaccuracyoftherepresentations madebytheDuosshareholdersinquestionnairesdelivered bysuchshareholderstoDuosandassumingthatthedisclosure documentgiventoDuosshareholdersinconnectionwiththe MergercomplieswithRule 502undertheSecuritiesAct,ISA’s Stocktobeissued to theDuos shareholderswill beexemptfromregistration undertheSecurities Actand applicablestatesecuritieslaws.
(a) ISAhasavalid leaseholdinterestin,allrealpropertyandpersonal propertyandotherassets,otherthanpropertiesandassetssoldorotherwisedisposedofintheordinarycourseofbusinessconsistent withpastpractice.All suchpropertiesandassets(including leaseholdinterests) arefreeand clearofLiensexcept forthefollowingencumbrances:
| (i) | those itemsset forth in Schedule 4.11ofthe ISADisclosureLetter; |
| (ii) | liens forTaxes notyet dueand payableorbeingcontestedingood faithby appropriateprocedures andforwhichthereareadequateaccrualsorreservesonthe ISA’sbalance sheets; |
| (iii) | mechanics, carriers,’workmen’s, repairmen’sorotherstatutoryliensarisingorincurredintheordinarycourseofbusiness consistentwith pastpracticeoramounts thatarenotdelinquentandwhicharenot,individuallyorintheaggregate, materialtothebusinessofISA; |
| (iv) | easements, rightsofway,zoningordinancesandothersimilarencumbrancesaffectingrealpropertywhicharenot,individuallyorintheaggregate,materialtothebusinessofISA;or |
| (v) | liens arisingunder originalpurchase priceconditional salescontracts andequipmentleaseswiththirdpartiesenteredintointheordinarycourseofbusinessconsistentwithpast practicewhicharenot,individuallyorintheaggregate,materialtothebusinessofISA. |
4.12 Insurance.Section 4.12ofthe ISADisclosureLettersets forth alisting ofallcurrentISAinsurance policies.ToISA'sKnowledge,allcurrentinsurancepoliciesareinfull forceandeffect,areinamountsofanaturethatareadequateand customaryforISA'sbusiness,andtoISA'sKnowledgearesufficientfor compliancewithalllegalrequirementsand agreementstowhich itis aparty orby which it isbound.All premiumsdue oncurrentpoliciesorrenewalshavebeen paid,and there isno materialdefaultunderanyof thepolicies.
4.13 TaxMatters. EachofISA andTrueVueSubsidiaryhas timelyfiledallfederal,stateandlocaltaxreturns andalltaxreturnsfor othergoverningbodieshaving jurisdictiontolevy taxesuponitwhicharerequired tobe filed.EachofISAand TrueVueSubsidiaryhas paidalltaxes, interest,penalties,assessments,anddeficiencies whichhavebecome due,includingwithoutlimitation income,franchise, realestate, andsalesand withholding taxes.Noexaminations of thefederal,state or localtaxreturns ofISAorTrueVueSubsidiary arecurrentlyinprogressnorthreatenedandnodeficiencies havebeenassertedor,toISA’sKnowledge,assessedagainst ISAorTrueVueSubsidiaryasaresultofanyaudit by theInternalRevenueServiceoranystate orlocal taxingauthorityandno suchdeficiencyhasbeen proposed orthreatened.
4.14 Booksand Records. Thegeneral ledgerandbooks ofaccount ofISA,allminutebooksofISA,allfederal,stateandlocalincome,franchise,propertyandothertaxreturnsfiledby ISA,allreportsandfilingswiththeSECbyISA,allofwhichhavebeenmadeavailabletoDuos, areinallmaterial respectscompleteandcorrectandhavebeen maintainedin accordancewithgood businesspractice and in accordancewith all applicableprocedures
4.15 Contractsand Commitments.There arenomaterialcontracts towhichISAorTrueVueSubsidiaryisapartyotherthanthosespecifiedinitsfilingswiththeSEC.MergerSubisnotapartyto anycontract.
4.16 CompliancewithLaws.EachofISA,TrueVueSubsidiaryandMergerSubhasallrequisitelicenses, permitsandcertificatesfromfederal,state andlocalauthoritiesnecessary toconductitsbusiness ascurrentlyconductedand ownandoperate itsassets,exceptwhere thefailure tohavesuch permitswouldnotreasonablybeexpectedtohave aMaterialAdverse Effect.NeitherISA norTrueVue Subsidiary isinviolationofanyfederal,state orlocallaw,regulationorordinance(including, withoutlimitation,laws,regulationsorordinancesrelatingtobuilding,zoning,environmental, disposal ofhazardouswaste,landuseor similarmatters)relatingtoitsbusinessoritsproperties.
4.17 Indebtednessto andfromAffiliates.AsoftheClosingDate, ISAisnotindebted,directlyortoitsKnowledgeindirectly,to anyofficer,directororstockholderofISAinanyamount,and nosuch person isindebted toISAexceptfor advancesmadetoemployeesofISA in theordinary course ofbusiness tomeetreimbursable businessexpenses.
4.18 BankingFacilities. Section4.18oftheISA DisclosureLettersetsforthatrue,correct,and completelistof:(i)eachbank, savingsandloanorsimilar financialinstitutioninwhichISA hasanaccountorsafetydepositboxandthenumbersoftheaccountsorsafetydepositboxes maintainedbyISAthereat; and(ii) thenames of allsignatories authorizedtodrawon eachsuchaccount or tohave accesstoanysuch safetydeposit boxfacility.
4.19 RegulatoryApprovals. Allconsents,approvals,authorizationsorotherrequirementsprescribed byanylaw,ruleorregulationthatmustbeobtainedorsatisfiedbyISA, andMergerSub andthatarenecessaryfortheexecutionanddeliveryby ISAand MergerSubofthisAgreementoranydocuments tobeexecutedand deliveredby ISAand MergerSubinconnectiontherewithhave beenobtained andsatisfied.
4.20 NoBrokers. NobrokerorfinderhasactedforISAorMergerSubinconnectionwith thisAgreementorthetransactions contemplatedhereby,andno brokerorfinderisentitledtoanybrokerageorfinder'sfeeor othercommissionsinrespectofsuchtransactions baseduponagreements,arrangementsorunderstandings madebyor onbehalf ofISAorMergerSub.
4.21 Disclosure.The informationconcerningeachofISA, MergerSubandTruVue SubsidiarysetforthinitsreportsandfilingswiththeSEC, thisAgreement,theexhibitsandschedules hereto,andanydocument,statementorcertificatefurnishedortobe furnishedinconnection herewith(asapplicable) doesnotand will notcontain anyuntruestatement of amaterial fact oromittostate amaterial factrequired tobestated herein ortherein ornecessary to makethestatementsand factscontainedherein ortherein,inlight of thecircumstances in whichthey aremade, notfalseormisleading.
4.22 TaxTreatment. NoneofISA,MergerSuborTrueVueSubsidiaryhastakenoragreedtotakeactionthatwouldpreventtheMergerfromconstitutingareorganizationqualifyingundertheprovisionsofSection368oftheTax Code.
4.23 InvestmentCompany. ISAisnot, andisnotanAffiliateof,andimmediately followingtheClosingwillnothave become,an"investment company"withinthemeaningoftheInvestment CompanyActof1940, asamended.
4.24 ForeignCorrupt PracticesAct.Inconnectionwithitsbusiness,ISAanditsAffiliateshavecomplied withtheForeign CorruptPracticesAct,15U.S.C.78dd-1etseq.andrules, regulations,codes,plans,injunctions, judgments,orders,decrees,rulings, andchargesthereunder offederal, state,local,and foreigngovernments(andallagencies thereof),andnoAction, investigation,inquirycharge,claim, demand,ornoticehasbeen filedorcommencedagainstanyofthem alleging anyfailuresoto comply.
ARTICLEVCOVENANTS
5.1 COVENANTSOF ISAPRIORTOEFFECTIVETIME.
(a) ConductofBusiness. Exceptascontemplated bythisAgreementorasotherwiseagreedinwritingbytheParties,duringtheperiodfromthedatehereof totheEffectiveTime,ISAwillconductits operations in theordinarycourse ofbusinessconsistentwith pastpracticeand, tothe extentconsistenttherewith, withno lessdiligenceand effort thanwouldbeappliedin theabsence ofthis Agreement,seek topreserveintactitscurrentbusinessorganization. Except asotherwiseexpresslyprovided inthisAgreementor in theISADisclosureLetter, priorto theEffectiveTime,without thepriorwrittenconsentofDuos, ISAshallnot,and shallcauseTrueVue Subsidiary,tonot doanyof thefollowing:
(i) authorizefor issuance,issue,sell,deliveroragreeorcommittoissue,sellordeliver(whether throughtheissuanceorgrantingofoptions,warrants,commitments, subscriptions,rightstopurchaseorotherwise)anystockofanyclassoranyother securitiesorequityequivalents(including,withoutlimitation, anystockoptions orstockappreciationrights);
(ii) exceptforthecontemplatedReverseStockSplit,split,combineorreclassifyanysharesofitscapitalstock,declare, setasideorpay anydividendorotherdistribution(whetherincash,stockorpropertyorany combinationthereof) inrespectofitscapitalstock,makeanyotheractual,constructive ordeemeddistributioninrespectofitscapitalstock orotherwise makeanypaymentsto stockholders intheircapacityassuch, orredeem orotherwiseacquireany ofitssecurities;
(iii) adoptaplanofcompleteorpartialliquidation, dissolution,merger,consolidation, restructuring,recapitalizationorotherreorganizationofISA(otherthantheMerger);
(iv) (A)incurorassumeanylong-termorshort-termdebtorissueany debtsecurities;(B)assume, guarantee,endorseorotherwisebecomeliableorresponsible(whether directly,contingentlyorotherwise)fortheobligationsofanyotherperson;(C)makeanyloans,advancesorcapitalcontributions to,orinvestments in,anyotherperson;(D)pledge orotherwiseencumber shares ofcapitalstock ofISA;or(E)mortgageorpledgeany of itsmaterial assets, orcreateorsuffer toexistanymaterial lienthereupon(otherthantaxLiensfortaxesnotyetdue);
(v) exceptascontemplatedinthisAgreement, acquire,sell,leaseordisposeofanyassetsinanysingletransactionorseries ofrelated transactions(other thanintheordinarycourseofbusiness);
(vi) exceptasmayberequiredas aresultof achangeinlaw or in generallyacceptedaccounting principles, changeanyoftheaccounting principlesorpractices usedbyit;
(vii) (A)otherthanbyandthroughtheMerger,acquire(by merger,consolidation,oracquisitionofstockorassets)anycorporation, partnershiporotherbusiness organizationordivision thereoforanyequityinterest therein;(B)enterintoanycontractoragreement other than in theordinarycourse ofbusinessconsistentwithpastpractice;
(C) authorizeany newcapital expenditureorexpenditureswhich, individuallyisinexcessof$1,000or, intheaggregate,areinexcessof$5,000;
(viii) makeanytaxelectionorsettleorcompromiseanyincome taxliabilitymaterialto ISA;
(ix) settleorcompromiseany pendingorthreatenedsuit, actionorclaimwhich(A)relatestothetransactions contemplatedherebyor(B)thesettlementorcompromiseofwhichcould haveaMaterial AdverseEffect onISA;
(x) formany subsidiary,enterintoanycontract,issueanydividends, hireanyemployees,etc.;or
(xi) take,oragreeinwritingorotherwiseto take,anyactionwhichwouldmakeanyoftherepresentationsorwarrantiesoftheISAcontainedinthisAgreementuntrueorincorrect.
(i) BetweenthedatehereofandtheEffectiveTime, ISAwillgive Duosanditsauthorizedrepresentativesreasonable accesstoitsfacilities andtoallitsbooksandrecordsofISAandTrueVue Subsidiary,willpermitDuostomakesuch inspectionsasDuosmayreasonablyrequire andwillcauseitsofficerstofurnish Duoswithsuchfinancialandoperatingdataand otherinformationwith respectto thebusinessandproperties ofitselfas Duosmayfromtimeto timereasonablyrequest.
(ii) EachofthePartiesheretowillholdandwillcauseitsconsultantsandadviserstoholdinconfidencealldocumentsandinformation furnishedtoitinconnection withthetransactionscontemplated by thisAgreement.
(c) Releases.ISA agreestoobtainageneralrelease andwaiverinaformacceptabletoDuos'counsel, fromeachofficer anddirectorofISA,TrueVueSubsidiaryandMergerSub,releasingeachofISA,TruVue SubsidiaryandMergerSubfrom anyclaimsagainstitarising priorto theEffectiveTime.
(d) SECFilings.At alltimesfromandafter thedateheretountiltheEffectiveTime,ISAcovenants and agreesto make allfilingsit isrequired to makepursuant to theExchangeActonatimely basis.
(e) OTCQBListing. ImmediatelyfollowingtheexecutionofthisAgreement,ISA shalltakeallactionsnecessary forISA tojoin OTC.QB.
(g )ReverseStockSplit. PriortotheEffectiveTime,ISAshallinaccordancewiththeFBCA,theISA CertificateandISABylaws, takeallactions necessaryordesirable toimplement(i)areversestock split,wherebyapre-determinednumberofoutstandingshares shallbesplitintoone(1) shareofISA CommonStock(the“Reverse StockSplit”)and(ii) recapitalizationofboth ISA’sClassACommonStockandClassBCommonStockintoone class ofISACommonStockincompliance withFBCA,effectiveprior totheEffectiveTime. ThePartiescurrently contemplatethatthe ratiofortheReverseStockSplit shallbeapproximatelytwo hundred-to-one[200:1]. Incompliance withFBCA,no fractionalshareswillbeissuedandeachISA shareholder who wouldotherwisebe entitledtofractionalsharesshallbeentitledtoreceivethenexthigherwholenumberofsharesofISACommon Stock.TheParties heretoagreethat,aftergivingeffect to(i) theReverseStockSplit priorto theEffectiveTime,and(ii)theissuanceofISACommon StockaftertheEffective Time pursuanttotheexchange described in Section 2.5(a), there shallbe approximately 2,200,000sharesof ISACommon Stockissuedandoutstanding.
(h)MergerSub Compliance.ISAshallcauseMergerSubtocomplywithallofitsrespectiveobligationsunderorrelatingtothisAgreement.Merger Subshallnotengageinanybusinesswhichis not in connection with the Merger andthe transactionscontemplated hereby.
5.2 ISA’sBoardofDirectors.SimultaneouslywiththeClosing, ISAshallcausetheDirectorNominees(ashereinafter defined)tobeappointedasmembersoftheboards ofdirectorsofISAanditsSubsidiariesby theexistingmembers of theboardsofdirectors ofISAand TrueVueSubsidiary(totheextent thatthey are notalreadyserving insuch capacity).Following theappointmentofthe DirectorNominees,ISA shallcause each currentdirector ofISA, MergerSubandTrueVueSubsidiarytotenderhis/her resignation letter,tobeeffective atthe EffectiveTime.
Except ascontemplatedbythisAgreement, including asdescribed in theDuosDisclosure Letter,duringtheperiodfromthe datehereoftotheEffective Time,Duoswillconductitsoperationsintheordinarycourseofbusinessconsistentwithpastpracticeand, totheextent consistenttherewith,withnolessdiligenceand effortthanwouldbe applied intheabsenceofthis Agreement,seek topreserveintact itscurrentbusinessorganization, and keepavailable theservice ofitscurrentofficers andemployees.
| 5.4 | COVENANTS OFBOTH PARTIES |
(a) FurtherActions.Subjecttotheterms andconditionshereinprovided,eachofthePartieshereto agreestouseall reasonableefforts totake,orcausetobe taken,all action, andtodo,orcause tobedone,allthingsreasonably necessary,properoradvisableunderapplicablelawsandregulationstoconsummateandmake effective thetransactionscontemplated bythisAgreement,including, withoutlimitation,(i) cooperatinginthepreparationofaForm8-KtobefiledwiththeSECinconnectionwiththisAgreement, (ii)obtainingconsentsofallthird partiesandgovernmentalentitiesnecessary,properoradvisablefor theconsummation of thetransactions contemplatedbythisAgreement; and(iii) theexecution ofany additionalinstrumentsnecessary toconsummate thetransactionscontemplated hereby.
(b) TaxTreatmentEachPartyshalluseitscommerciallyreasonableeffortstocausetheMergertoqualifyeitherasatransaction describedinSection351oftheCodeorasareorganizationwithinthemeaningofSection351orSection368(a)ofthe Code.
(c)Third PartyConsents.Assoonaspracticablefollowingthe datehereof,ISAand Duoswilleach use itscommerciallyreasonableefforts toobtainanyconsents,waivers and approvalsunderany ofitsorits subsidiaries’respectivematerialagreements, contracts,licensesorleasesrequiredtobeobtained inconnectionwith theconsummationoftheMergerand theothertransactions contemplatedhereby.
(d)Confidentiality.The partieshave previouslyentered intoaconfidentialityagreement, thetermsofwhicharehereby incorporated herein.
ARTICLEVI
CLOSING CONDITIONS; DELIVERIES
6.1 DUOS’CLOSING CONDITIONSTOTHEMERGER.TheobligationofDuos toeffecttheMergershall besubjecttothefulfillmentatorpriortotheClosingofthefollowing conditions,unlesswaivedby Duos:
(a) EachoftherepresentationsandwarrantiesofISA,MergerSub andTrueVueSubsidiarycontainedin thisAgreementshall be true andcorrectas ofthe EffectiveTime, andatthe ClosingeachofISA andMergerSub shallhave delivered toDuosacertificateto thateffect;
(b) Anygovernmentalorthird partyapprovalsrequiredtoeffecttheMergershall havebeen obtained;
(c) EachofISAand MergerSubshallhave performedorcompliedinallmaterialrespectswithallagreementsandcovenants requiredbythisAgreement tobeperformedorcompliedwithbyitonorpriortotheEffective TimeandattheClosingISAshall havedeliveredtoDuosacertificate tothat effect;
(d) Fromthe dateofthisAgreement through theEffectiveTime,thereshallnothaveoccurredanychange, circumstanceoreventconcerningISAorMergerSubthathashadorcouldbereasonablylikelyto haveaMaterial AdverseEffect;
(e) ISAshall havedelivered toDuosalldocuments requestedbyDuostoconductduediligenceofISAandsuchdocumentsandtheresultsofitsdiligenceofISAshallhave beenapprovedbyDuosin its solediscretion.
(f) ThenomineesofDuosshallhave beenappointedasmembersoftheboardofdirectorsandasofficersofISAand TrueVueSubsidiarytobe effectiveaftertheEffectiveTime(“Director Nominees”);
(g) Lettersofresignationfrom ISA'sandTrueVueSubsidiary’s current officersanddirectors,tobeeffectivetobeeffectiveafter theEffectiveTimeandaftertheDirector Nominees’appointmentsshall havebecomeeffective; and
(i) ISA shallhave adopted[atClosing][onorprior totheEffective Time]aresolution adopting amendedrestatedArticles ofIncorporationandBylawsforDuos.
| 6.2 | ISA’s and MERGERSUB’S CLOSINGCONDITIONSTOTHE MERGER. |
The obligationsof ISAandMergerSubto effecttheMerger shall be subjecttothefulfillmentatorpriortotheClosing Dateofthefollowing conditions,unlesswaivedbyISA:
(a) EachoftherepresentationsandwarrantiesofDuoscontainedinthisAgreement shallbetrueandcorrectasofthe dateoftheEffectiveTime, andattheClosingDuosshallhave deliveredtoISA acertificatetothat effect;
(b) Duosshall haveperformedorcomplied inallmaterial respectswithall agreementsandcovenantsrequiredbythis AgreementtobeperformedorcompliedwithbyitonorpriortotheEffectiveTimeandtotheextent applicableattheClosingDuosshall havedelivered to ISAacertificatetothateffect;and
(c) Fromthedateof thisAgreementthroughtheEffectiveTime,thereshallnothaveoccurredanychange,circumstance,oreventconcerningDuosthathas hadorcouldbereasonably likelytohaveaMaterialAdverse Effect.
(d) Theholdersofnomorethan5%oftheoutstandingDuosvotingcapital stockshallhavedelivered toDuosawrittennoticepursuant toChapter607,Florida Statutes,theFlorida BusinessCorporation Actexercisingappraisal rights.
(e) ISAshall confirmthat nomorethanamaximumofthirtyfive(35)non-accreditedstockholders(asdefinedinRule501ofRegulationDundertheSecuritiesAct)ofDuos,whoareU.S.Persons(as definedinRule 402underRegulationSundertheSecuritiesAct)willbe receivingsharesofISA Common Stock in theMerger.
ARTICLEVIITERMINATION
7.1 ThisAgreementmaybeterminatedand abandonedatany timepriortotheEffective TimeoftheMerger:
(a) bymutual writtenconsentof ISAandDuos;
(b) byeitherISAorDuosifanygovernmental entityshallhaveissuedanorder,decreeorrulingortakenany otheractionpermanentlyenjoining, restrainingorotherwise prohibitingtheMerger and suchorder,decree,rulingorotheraction shallhavebecomefinal and nonappealable;
(c) byeither ISAorDuos,solongassuchPartyisnotinbreachhereunder,iftheMergershallnothavebeenconsummatedonorbefore March15,2015 (otherthanasaresultofthefailureofthePartyseeking toterminatethisAgreementtoperformitsobligationsunder thisAgreementrequiredtobeperformedat,or prior to, theEffectiveTime, in which eventsuch Party maynotterminate thisAgreementpursuanttothisprovisionfor aperiod of tendaysfollowingsuchparty's cureof suchfailure);
(d) byeither ISAorDuos,iftherehas beenamaterial breachofthis Agreementonthepartoftheotherofitsobligationshereunderorifanyofitsrepresentations orwarrantiescontainedherein shallbemateriallyinaccurate andsuchbreachorinaccuracyisnotcurableor,ifcurable,isnotcured withinten (10)daysafterwrittennotice ofsuchbreach isgivenbyISAtoDuos,as the casemaybe,to theotherparty.
7.2 IntheeventofterminationofthisAgreementbyeitherDuosorISAprovidedinthisArticle VII,thisAgreementshall forthwithbecomevoidandhaveno effect,withoutanyliabilityorobligationonthepartofISAorDuos.Nothingcontainedinthissection7.2 shallrelieveanyPartyforanybreachoftherepresentations,warranties, covenants oragreementssetforthinthisAgreement.
ARTICLEVIIIMISCELLANEOUS
8.1 Survival.Only thosecovenantsthatbytheirtermssurvivetheEffectiveTimeshall survive theEffectiveTime. ThisSection8.1 shallsurvivetheEffective Time.
8.2 NoThird-Party Beneficiaries.This Agreementwillnotconferany rightsorremedies uponanypersonother than thePartiesandtheirrespective successors andpermitted assigns.
8.3 Notices.All noticesrequiredorpermittedunderthis Agreementwillbeinwriting,and shallbedeemedgiven whendelivered(i)inperson;(ii) byovernightcourier,upon writtenconfirmationofreceipt;(iii)bycertifiedorregisteredmail,withproofofdelivery;(iv)by facsimiletransmissionwithconfirmationofreceipt; or (v)byemail (andshallbe deemeddelivered whenleavingthenetwork ofthe sendingpartyprovidedthat nooutofofficeorotherdeliveryfailuremessageisreceived).Notices shallbesentto thePartytoreceive noticeatthefollowingaddressesoratsuchotheraddressasanyParty may,by notice,direct:
ToISAorMergerSub,beforetheClosing:
Information SystemsAssociates, Inc.7401WilesRd,Suite232,
Coral Springs,Florida,33067Attention:Adrian Goldfarb,ChiefFinancial Officer
E-mail address:agoldfarb@truevue360.
With acopy(whichshall notconstitutenotice)to:
Nason YeagerGerson While &Lioce1645 PalmBeachLakesBlvd.
West PalmBeach, Florida33401 Attention:Michael Harris
E-mail: mharris@nasonyeager.com
To Duos:
DuosTechnologies,Inc.6622 SouthpointDriveSouth Jacksonville,Florida32216
Attention: GianniArcaini,Chief ExecutiveOfficer,
E-mail: gba@duostech.com
With acopy (whichwillnot constitutenotice)to:
PearlCohenZedek LatzerBaratz1500 Broadway,Floor12
New York,NY10036
Attention: David Aboudi
Email:DAboudi@PearlCohen.com
8.4 Waiver.The rightsandremediesofthePartiestothis Agreementarecumulative andnotalternative.Neither thefailure nor anydelay by any Partyinexercisinganyright,power, orprivilege underthisAgreementorthedocuments referredtointhisAgreementwilloperateasawaiverofsuchright,power, orprivilege,andno single orpartial exercise ofanyright,power, orprivilegewillprecludeany other orfurther exerciseofsuchright,power, orprivilege or theexerciseofany otherright,power,orprivilege.To themaximum extentpermittedbyapplicablelaw,(a)noclaim orrightarisingfromthisAgreementor thedocuments referredtointhisAgreementcanbedischarged by oneParty, inwhole or inpart,byawaiver orrenunciationofthe claimorrightunlessin writingsignedbythewaivingParty,(b) nowaiverthatmaybegiven by aParty willbe applicableexcept inthespecificinstance forwhichitisgiven, and(c)nonoticetoordemandononePartywillbedeemedtobe awaiverofanyobligation ofsuchPartyor of therightof theParty givingsuchnoticeordemandtotake furtheraction withoutnotice ordemandasprovidedin thisAgreementorthedocumentsreferred tointhis Agreement.
8.5 SuccessorsandAssigns. ThisAgreement willbebinding uponandinure tothe benefitoftheParties andtheirrespectivesuccessorsand permittedassigns.NoPartymayassigneitherthis Agreementoranyofitsrights, interests,orobligationshereunderwithoutthepriorwrittenapprovalofthe otherParties, whichmay begranted orwithheld at thesolediscretion ofsuch otherParties.Anyunauthorized assignmentisvoid.
8.6 Severability.AnyprovisionofthisAgreement thatisinvalid, illegalorunenforceableinanyjurisdictionwill,astothatjurisdiction,be ineffectivetotheextentofsuchinvalidity,illegalityorunenforceability,withoutaffectinginanywaytheremainingprovisions hereofinsuchjurisdictionorrenderingthat oranyotherprovisionofthisAgreement invalid,illegal orunenforceableinanyotherjurisdiction.
8.7 Expenses.Each Partywillpayallfeesandexpenses (including,withoutlimitation,legal andaccountingfeesand expenses)incurredbysuchPartyinconnectionwiththetransactions contemplatedbythis Agreement.
8.8 GoverningLaw.ThisAgreementwillbegovernedby andconstruedinaccordancewiththe lawsoftheStateof Florida,withoutgiving effecttoprinciplesofconflictsoflaws.
8.9 Counterparts;Signatures. ThisAgreementmaybe executedinoneormorecounterparts,eachofwhichwillbedeemedto beanoriginal, butallofwhichwillbeoneandthesamedocument.Facsimiles andelectroniccopiesinportabledocument format("PDF")containingoriginalsignatures shallbedeemed forallpurposestobeoriginallysignedcopiesofthedocumentsthatarethesubject ofsuch facsimilesor PDFversions.
8.10 EntireAgreement. ThisAgreement,theschedulesandexhibits hereto,andtheagreementsandinstruments tobedelivered bythePartiesonClosingrepresenttheentireunderstandingandagreementbetweenthePartiesand supersedeallpriororalandwrittenandallcontemporaneousoral negotiations,commitments and understandings.
8.11 AmendmentThis Agreementmaynotbeamended bythePartiesheretoexceptbyexecutionof aninstrumentinwriting signedon behalfofeachofISA,MergerSuband Duos.
[REMAINDEROFPAGE INTENTIONALLYLEFTBLANK]
INWITNESS WHEREOF,theundersignedhaveexecutedanddeliveredthisAgreementundersealas ofthedatefirstwrittenabove.
Information SystemsAssociates,Inc
| By: /s/ JosephP.Coschera | | By: /s/ Adrian G.Goldfarb |
|---|
| JosephP.Coschera | | Adrian G.Goldfarb |
Chief ExecutiveOfficer | | Chief Financial Officer |
| | | |
Duos Technologies,Inc
By: /s/ Gianni B. Arcaini
GianniB.Arcaini
Chief ExecutiveOfficer
