AGREEMENT AND PLAN OF REORGANIZATION dated as of March 5, 2001, among
Integrated Health Technologies, Inc. (formerly known as Chem International,
Inc.), a Delaware corporation ("Parent"), Chem Acquisition Corp., a New Jersey
corporation and wholly-owned subsidiary of Parent ("Acquisition Sub"), and
Nucycle Therapy, Inc., a New Jersey corporation ("Company"). The Boards of
Directors of Parent, Acquisition Sub and Company have each duly approved and
adopted this Agreement and Plan of Reorganization (this "Agreement"), the plan
of merger (the "Plan of Merger") and the proposed merger of Acquisition Sub with
and into Company in accordance with this Agreement, the Plan of Merger and the
New Jersey Business Corporation Act (the "New Jersey Statute"), whereby, among
other things, the issued and outstanding shares of common stock, no par value,
of Company (the "Company Common Stock") and the issued and outstanding shares of
preferred stock, no par value, of Company (the "Company Preferred Stock")
(hereinafter the Company Preferred Stock and the Company Common Stock being
collectively referred to as the "Company Stock") will be exchanged and converted
into shares of common stock, $.002 par value, of Parent (the "Parent Common
Stock") in the manner set forth in Article II hereof and in the Plan of Merger,
upon the terms and subject to the conditions set forth in this Agreement and the
Plan of Merger. As used herein, the term "Transaction Documents" shall mean
collectively, this Agreement, the Plan of Merger, the Confidentiality Agreement,
Non-competition Agreement, and No Solicitation Agreements, and the other
documents, instruments and agreements contemplated hereby and executed and
delivered in connection herewith.
NOW, THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement and the Plan of Merger and the representations, warranties,
covenants, agreements, conditions and promises contained herein and therein, the
parties hereby agree as follows:
ARTICLE I
GENERAL
1.1 THE MERGER. In accordance with the provisions of this Agreement, the
Plan of Merger and the New Jersey Statute, Acquisition Sub shall be merged with
and into Company (the "Merger"), which at and after the Effective Date shall be,
and is sometimes herein referred to as, the "Surviving Corporation." Acquisition
Sub and Company are sometimes referred to as the "Constituent Corporations."
1.2 THE EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, the Plan of Merger in substantially the form set forth in EXHIBIT 1.2
shall be executed, delivered and filed with the Treasurer of the State of New
Jersey by each of the Constituent Corporations on the Closing Date in the manner
provided under Section 14A:10-4.1 of the New Jersey Statute. The Merger shall
become effective upon the filing of the Certificate of Merger (to which the Plan
of Merger is an exhibit) with the Treasurer of the State of New Jersey (the
"Effective Date").
1.3 EFFECT OF MERGER. At the Effective Date, the separate existence of
Acquisition Sub, shall cease and Acquisition Sub shall be merged with and into
Company and Company shall continue as the Surviving Corporation. The Surviving
Corporation shall possess all of 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 the Merger shall have such other effects as provided by the New Jersey
Statute.
1.4 CERTIFICATE AND BY-LAWS OF SURVIVING CORPORATION. From and after the
Effective Date: (a) the Certificate of Company shall be amended so that it shall
read in its entirety as set forth in EXHIBIT 1.4 attached hereto, and the
Certificate of Company, as so amended, shall be the Certificate of the Surviving
Corporation, unless and until altered, amended or repealed as provided in the
New Jersey Statute; (b) the by-laws of the Acquisition Sub shall be the by-laws
of the Surviving Corporation; (c) the directors of Acquisition Sub shall be the
directors of the Surviving Corporation, unless and until removed, or until their
respective terms
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of office shall have expired, in accordance with the New Jersey Statute, the
Certificate or the by-laws of the Surviving Corporation, as applicable; and (d)
the officers of the Acquisition Sub shall be the officers of the Surviving
Corporation, unless and until removed, or until their terms of office shall have
expired, in accordance with the New Jersey Statute, the Certificate or the
by-laws of the Surviving Corporation, as applicable.
1.5 TAKING OF NECESSARY ACTION. Prior to the Effective Date, the parties
hereto shall do or cause to be done all such acts and things as may be necessary
or appropriate in order to effectuate the Merger as expeditiously as reasonably
practicable, in accordance with this Agreement, the Plan of Merger, and the New
Jersey Statute. In case at any time after the Effective Date, any further action
is necessary or desirable to carry out the purpose of this Agreement and to vest
in the Surviving Corporation full title to all Assets, privileges, rights and
entitlements (as well as the obligations and duties) of either Constituent
Corporations, the officers and directors of such corporations shall take all
such lawful and necessary action.
1.6 TAX-FREE REORGANIZATION. For Federal income tax purposes, the parties
intend that the Merger be treated as a tax-free reorganization within the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code"), by reason of Section 368(a)(2)(E) of the Code.
1.7 CLOSING. Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article XIV, and subject to this Agreement, the closing of the Merger (the
"Closing") will take place at 10:00 a.m. (eastern standard time) on a date (the
"Closing Date") to be mutually agreed upon by the parties, which date shall be
not later than the third (3rd) Business Day after all the conditions set forth
in Articles VIII, IX and X shall have been satisfied (or waived to the extent
the same may be waived), unless another date is agreed to in writing by Parent
and Company. The Closing shall take place at such place as Parent shall
designate in the State of New Jersey. As used herein, the term "Business Day"
shall mean any day other than a Saturday, Sunday or day on which banks are
permitted to close in New Jersey.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS, EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. At the Effective Date, subject and pursuant to
the terms and conditions of this Agreement and the Plan of Merger, by virtue of
the Merger and without any action on the part of the Constituent Corporations or
the holders of the capital stock of the Constituent Corporations:
(a) CAPITAL STOCK OF ACQUISITION SUB. Each issued and outstanding
share of common stock, par value $.001 per share, of Acquisition Sub shall
immediately prior to the Effective Date be deemed cancelled and converted
into and shall represent the right to receive one share of common stock, no
par value per share, of the Surviving Corporation.
(b) CANCELLATION OF CERTAIN SHARES OF COMPANY STOCK. Each share of
Company Stock that is immediately prior to the Effective Date: (i) owned by
Company as treasury stock; (ii) owned by any Subsidiary of Company; or
(iii) owned by Parent or any subsidiary of Parent, shall be cancelled and
no Parent Common Stock or other consideration shall be delivered in
exchange therefor. As used in this Agreement, a "Subsidiary" means with
respect to any Person (a) any corporation or other entity with respect to
which such Person, directly or indirectly, has the power to vote or direct
the voting of securities sufficient to elect a majority of the directors or
other managers thereof or (b) any corporation or other entity with respect
to which another Person, directly or indirectly, owns fifty percent (50%)
or more of the aggregate equity interests therein.
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(c) EXCHANGE RATIO FOR COMPANY STOCK.
(i) Subject to Sections 2.2 and 4.27, each share of Company Stock
issued and outstanding immediately prior to the Effective Date (other
than shares cancelled pursuant to Section 2.1(b)) shall be deemed
cancelled and converted into and shall represent the right to receive
(a) that number of shares of Parent Common Stock equal to the quotient
obtained by dividing (i) the Share Converter, by (ii) the number of
outstanding and issued shares of Company Stock (the "Share
Consideration"), plus (b) that number of Parent Warrants equal to the
quotient obtained by dividing (x) the Warrant Converter, by (y) the
sum of the number of outstanding and issued shares of Company Stock.
(ii) Subject to Section 2.2, each Company Warrant shall be deemed
cancelled and converted into and shall represent the right to receive
that same number of Parent Warrants having the same price and the same
terms and conditions as the Company Warrant.
(iii) Each warrant issued under Section 2.1(c)(i) shall represent
the right to purchase one share of Parent Common Stock for a purchase
price of $3.00 upon the terms and conditions of the warrant agreement
attached hereto as Exhibit 2.1(c)(i). Each warrant issued under
Section 2.1(c)(ii) shall represent the right to purchase one share of
Parent Common Stock for a purchase price of $8.00 upon the same terms
and conditions as the warrant agreement attached hereto as Exhibit
2.1(c)(ii). As used herein, the term "Parent Warrant" shall mean any
warrants to purchase shares of Parent Common Stock issued by Parent in
connection with this Agreement, the Plan of Merger, the Transaction
Documents, and the transactions contemplated hereby and thereby.
(iv) As used herein, the term "Share Converter" shall mean THREE
HUNDRED THIRTY-THREE THOUSAND THREE HUNDRED THIRTY THREE (333,333)
shares of Parent Company Stock; provided, however, the Share Converter
shall be reduced by one (1) share for each $1.50 of liabilities of
Company at closing in excess of FIVE HUNDRED THOUSAND ($500,000.00)
DOLLARS. As used herein, the term "Warrant Converter" shall mean five
hundred thousand (500,000) Parent Warrants. For convenience of
reference, the
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shares of Parent Common Stock and Parent Warrants to be issued upon
the exchange and conversion of Company Stock in accordance with
Section 2.1(c)(i) are sometimes hereinafter collectively referred to
as the "Merger Consideration" and the Parent Warrants to be issued
upon the exchange and conversion of Company Warrants in accordance
with Section 2.1(c)(ii) are sometimes hereinafter referred to as the
"Warrant Consideration."
(d) LOCK-UP AGREEMENT. The holders of shares of Company Stock who
receive shares of Parent Common Stock in the exchange shall execute an
agreement to not sell or otherwise transfer for value their shares of
Parent Common Stock for a period of one (1) year following the Closing.
2.2 EXCHANGE OF CERTIFICATES AND WARRANTS.
(a) PROCEDURE FOR EXCHANGE. (i) Prior to the Closing Date, Parent
shall select Continental Stock Transfer, Inc. as exchange agent (the
"Exchange Agent") to act in such capacity in connection with the Merger. As
of the Effective Date, Parent shall deposit with the Exchange Agent, for
the benefit of the holders of shares of Company Stock (the "Shareholders"),
for exchange in accordance with this Article II and the Plan of Merger,
certificates representing the shares of Parent Common Stock to be issued as
Merger Consideration, if any, and certificates representing the Parent
Warrants contemplated to be issued as Warrant Consideration (which shares
of Parent Common Stock, together with any dividends or distributions with
respect thereto, and such Parent Warrants being hereinafter collectively
referred to as the "Exchange Fund"). As soon as practicable after the
Effective Date, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately before the Effective Date
represented issued and outstanding shares of Company Stock (collectively,
the "Old Certificates") and to each holder of record of a certificate or
certificates which immediately before the Effective Date represented
outstanding Company Warrants (collectively, the "Old Warrants"): (i) a
letter of transmittal advising such holders of the terms of the exchange
effected by the Merger (and specifying how delivery shall be effected, and
risk of loss and title to the Old Certificates and Old Warrants shall pass,
only upon delivery
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of the Old Certificates and Old Warrants to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably
specify); and (ii) instructions for use in effecting the surrender of Old
Certificates and Old Warrants in exchange for certificates representing
Merger Consideration and Warrant Consideration, as the case may be. Upon
surrender of an Old Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal and such other
documents as may be reasonably required by the Exchange Agent, the holder
of such Old Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of shares of Parent Common Stock which
such holder has the right to receive pursuant to the provisions of this
Article II and the Plan of Merger, and the Old Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of
shares of Company Stock which are not registered on the transfer records of
Company, it shall be a condition of the exchange thereof that the Old
Certificate representing such Company Stock is presented to the Exchange
Agent properly endorsed and otherwise in proper form for transfer and
accompanied by all documents required to evidence and affect such transfer
and by evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.2(a) and the Plan of
Merger, each Old Certificate shall be deemed, on and after the Effective
Date, to represent only the right to receive upon such surrender a
certificate representing that number of shares of Parent Common Stock which
such holder has the right to receive pursuant to this Article II and the
Plan of Merger.
(b) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Date
with respect to Parent Common Stock with a record date after the Effective
Date shall be paid to the holder of any unsurrendered Old Certificate with
respect to the shares of Parent Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(d) or the Plan of Merger until the holder of record
of such Old Certificate shall surrender such Old Certificate. Subject to
the effect of applicable laws, following surrender of any such Old
Certificate, there shall be paid to the record holder of the
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certificates representing shares of Parent Common Stock issued in exchange
therefor, without interest: (i) the amount of dividends or other
distributions with a record date after the Effective Date theretofore paid
with respect to such shares of Parent Common Stock; and (ii) at the
appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Date but prior to surrender and a
payment date subsequent to surrender payable with respect to such shares of
Parent Common Stock.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All shares of Parent
Common Stock issued upon the surrender for exchange of shares of Company
Stock in accordance with the terms of this Article II and the Plan of
Merger shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Stock and there shall be no
further registration or transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Stock which were outstanding
immediately prior to the Effective Date. If, after the Effective Date, any
Old Certificate is presented to the Surviving Corporation for any reason,
such Old Certificate shall be cancelled and exchanged as provided in this
Article II and the Plan of Merger.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY WARRANTS. All Parent
Warrants issued upon the surrender for exchange of Company Warrants in
accordance with the terms of this Article II and the Plan of Merger shall
be deemed to have been issued in full satisfaction of all rights pertaining
to such Company Warrants. If, after the Effective Date, any Old Warrant is
presented to the Surviving Corporation for any reason, such Old Warrant
shall be cancelled and exchanged as provided in this Article II and the
Plan of Merger.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Old
Certificates or Old Warrants shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Old Certificate or Old Warrant to be lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Old Certificate or Old Warrant the consideration payable and exchange
therefor pursuant to this Article II. The Exchange Agent or the Surviving
Corporation may, in its discretion and as a
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condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Old Certificate or Old Warrant to give the
Exchange Agent a bond in such reasonable sum as it may direct as indemnity
against any claim that may be made against the Surviving Corporation with
respect to the Old Certificate or Old Warrant alleged to have been lost,
stolen or destroyed. As used in this Agreement, the term "Person" shall
mean any individual, firm, corporation, limited liability company,
partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of such
entity.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the Shareholders for eighteen (18) months
after the Effective Date shall be delivered to Parent, and upon demand from
any former Shareholders who have not theretofore complied with this Article
II, any dividends or distributions with respect to Parent Common Stock to
which such Shareholder is entitled pursuant to Section 2.2(a) and as
described in Section 2.2(b), shall be distributed, to the former
Shareholders upon the receipt of Old Certificates and/or evidence
reasonably satisfactory in form and substance to Parent.
(g) NO LIABILITY. Neither the Exchange Agent, Parent, Acquisition Sub,
nor Company shall be liable to any holder of shares of Company Stock or
Parent Common Stock, as the case may be, for shares (or dividends or
distributions with respect thereto) of Parent Common Stock to be issued in
exchange for Company Stock pursuant to this Section 2.2, if, on or after
the expiration of eighteen (18) months following the Effective Date, such
shares are delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Neither the Exchange Agent,
Parent, Acquisition Sub, nor Company shall be liable to any holder of
Company Warrants or Parent Warrants, as the case may be, for Parent
Warrants to be issued in exchange for Company Warrants pursuant to this
Section 2.2, if, on or after the expiration of eighteen (18) months
following the Effective Date, such Parent Warrants are delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY OFFICER
3.1 Except as set forth on Schedule 3.1, the Company officer executing this
Agreement represents and warrants to Parent and Acquisition Sub with respect to
himself that Company owes no amounts to him or to any other current or former
officer, director or employee of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition Sub
that:
4.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. The Company:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey; (b) has all requisite
corporate power and authority to own, lease and operate its properties and
Assets and to carry on its business in the Ordinary Course; and (c) is duly
qualified and in good standing to do business in all jurisdictions in which
the failure to be so qualified and in good standing could be reasonably
expected to have a material adverse effect on Company's business, Assets,
operations, results of operations, liabilities, properties, condition
(financial or otherwise), affairs or an effect which could materially
impair the ability of Company to perform any obligation under this
Agreement or materially impair the consummation of the transaction
contemplated hereby ("Material Adverse Effect"). The parties hereto
acknowledge that the Company has never produced either positive net cash
flow or earnings since its formation. The Company has all requisite
corporate power and authority to enter into this Agreement and the Plan of
Merger and each of the other Transaction Documents to which it is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Company
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has delivered to Parent true and complete copies of the Charter and by-laws
of Company as amended to the date hereof, and its minute books. As used in
this Agreement, "Certificate" shall mean, with respect to any corporation,
those instruments that at the time constitute its corporate charter as
filed or recorded under the general corporation law of the jurisdiction of
its incorporation, including the articles or certificate of incorporation
or organization, and any amendments thereto, as the same may have been
restated, and any amendments thereto (including any articles or
certificates of merger or consolidation or certificates of designation or
similar instruments which effect any such amendment) which became effective
after the most recent such restatement.
4.2 EQUITY INVESTMENTS. The Company does not own any capital stock or other
proprietary interest, directly or indirectly, in any corporation, association,
trust, partnership, limited liability company, joint venture or other entity.
The Company does not have any Subsidiaries. There are no options, rights, calls,
commitments or agreements of any character to which Company is a party or by
which Company is bound calling for the issuance of shares of capital stock of
Company or any securities convertible into or exercisable or exchangeable for,
or representing the right to purchase or otherwise receive, any such capital
stock, or other arrangement to acquire, at any time or under any circumstance,
capital stock of Company or any such other securities of Company or Company Sub.
4.3 MARGIN STOCK. The Company owns no "margin stock" as such term is
defined in Regulation U, as amended (12 C.F.R. Part 221) of the Federal Reserve
Board.
4.4 CAPITAL STOCK; SECURITIES. The authorized capital stock of Company
consists of 8,000,000 shares of Company Common Stock, of which 2,003,660 shares
are outstanding as of the Closing Date, and 2,000,000 shares of Company
Preferred Stock, of which 1,000,000 are designated as Series A Preferred (the
"Series A Shares"), and 805,266 Series A Shares are outstanding as of the
Closing Date. The Parent acknowledges that each share of Series A Shares
automatically converts to one (1) share of Company Common Stock on March 30,
2001. Except as set forth on Schedule 4.4, as of the Closing Date, Company has
no
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outstanding warrants for shares of Company Stock (collectively, the "Company
Warrants"). The Company does not have outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. All outstanding shares of Company Stock
are validly issued and outstanding, full, paid and non-assessable and not
subject to preemptive rights. There are no voting trusts, voting agreements
(except pursuant to Section 6.1 below), first offer rights, co-sale rights,
transfer restrictions (other than restrictions imposed by federal or state
securities laws) or other agreements, instruments or understandings (whether
written or oral, formal or informal) with respect to the voting, registration,
transfer or disposition of Company Securities to which Company is a party or by
which it is bound, or to the knowledge of Company, among or between any Persons
other than Company. As used herein, "Company Securities" shall mean
collectively, all issued and outstanding Company Stock and all Company Warrants.
4.5 NO CAPITAL CHANGES. Company will not recapitalize through a subdivision
of its outstanding shares into a greater number of shares, or a combination of
its outstanding shares into a lesser number of shares, or reorganize, reclassify
or otherwise change its outstanding shares into the same or a different number
of shares or other classes, or declare a dividend on its outstanding shares
payable in shares of its capital stock or securities convertible into shares of
its capital stock.
4.6 AUTHORITY; NO CONSENTS. The execution, delivery and performance by
Company of the Transaction Documents to which it is a party and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Company; and this
Agreement and the other Transaction Documents to which Company is a party have
been, and the Plan of Merger when executed and delivered by Company will be,
duly and validly executed and delivered by Company, and this Agreement and the
other Transaction Documents to which Company is a party is, and the Plan of
Merger when executed and delivered by the parties thereto will be, the
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valid and binding obligations of Company, enforceable against Company in
accordance with their respective terms subject to bankruptcy, fraudulent
conveyance, insolvency, moratorium or similar laws affecting the rights of
creditors generally or general equitable principles. Neither the execution,
delivery and performance of the Transaction Documents to which Company is a
party, nor the consummation by Company of the transactions contemplated hereby
or thereby, nor compliance by Company with any provision hereof or thereof will:
(a) conflict with; (b) result in any violations of, (c) cause a default under
(with or without due notice, lapse of time or both); (d) give rise to any right
of termination, amendment, cancellation or acceleration of any obligation
contained in or the loss of any material benefit under; or (e) result in the
creation of any Encumbrance on or against any Assets, right or property of
Company under any term, condition or provision of: (x) any instrument or
agreement to which Company is a party, or, to the knowledge of Company, by which
Company, its properties, Assets or rights may be bound (except as shall have
been waived or with respect to which consent shall have been obtained prior to
the Closing) except where the foregoing would not result in a Material Adverse
Effect on Company; (y) any law, statute, rule, regulation, order, writ,
injunction, decree, permit, concession, license or franchise of any Federal,
state, municipal, foreign or other governmental court, department, commission,
board, bureau, agency or instrumentality (collectively, the "Governmental
Authority") applicable to Company or any of its properties, Assets or rights
except where the foregoing would not result in a Material Adverse Effect on
Company; or (z) Company's Certificate or by-laws, as amended through the date
hereof. Except as contemplated by this Agreement or the Plan of Merger, no
permit, authorization, consent or approval of or by, or any notification of or
filing with, any Governmental Authority is required in connection with the
execution, delivery and performance by Company of this Agreement, the Plan of
Merger, the Transaction Documents to which Company is a party, or the
consummation of the transactions contemplated hereby or thereby, except for: (i)
the filing with the Securities and Exchange Commission (the "SEC") of (A) Form
S-4 with respect to the Merger Consideration and the shares of Parent Common
Stock reserved for issuance upon exercise of Parent Warrants (as to
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which the option or warrant holder is, by the terms of the warrant in effect,
entitled upon exercise of the option or warrant, to receive registered stock)
(the "S-4") and (B) such reports and information under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated by the SEC thereunder, as may be required in connection
with this Agreement, the Plan of Merger and the transactions contemplated hereby
and thereby; (ii) such filings as may be required by the NASDAQ with respect to
Parent Common Stock and Parent Warrants to be issued in connection with the
Merger; (iii) the filing of such documents with, and the obtaining of such
orders from, various state securities and blue-sky authorities as are required
in connection with the transactions contemplated hereby; (iv) the distribution
of the Shareholders' Materials with respect to the adoption by the Shareholders
of this Agreement and the Plan of Merger; (v) the filing of the Plan of Merger
with the Treasurer of the State of New Jersey and appropriate documents with the
relevant authorities of other states in which Company is qualified to do
business; (vi) the filings or notices that may be required under Environmental
Laws as set forth on Schedule 4.6; and (vii) such other consents, waivers,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a Material Adverse Effect on Company or materially impair
the ability of Company and the Shareholders to consummate the transactions
contemplated by this Agreement or the Plan of Merger, including, without
limitation, the Merger.
4.7 FINANCIAL STATEMENTS. The financial statements of Company,
(a) were prepared in accordance with generally accepted accounting
principals ("GAAP"), consistently applied (except as may have been
indicated in the notes thereto or, in the case of the unaudited
statements);
(b) were prepared in accordance with the books and records of Company;
and
(c) fairly present (subject, in the case of the unaudited statements,
to normal, nonrecurring audit adjustments) the financial position of
Company as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (the "Company
Financial Statements").
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4.8 COLLECTABILITY OF ACCOUNTS RECEIVABLE. All accounts receivable included
in Company Financial Statements, net of any reserves for losses as reflected
thereon, and net of costs, which costs shall not exceed $15,000 in the
aggregate, are fully collectible in cash within three (3) months from the date
hereof, with the exception of financed accounts receivable which by their terms
are not payable in full within such three-month period (collectively the
"Collectible Accounts Receivable"). Credits, returns and rebates shall not
constitute payment of accounts receivable. (In determining whether there has
been any nonpayment of any Account Receivable, all payments received from any
account debtor shall, unless otherwise specified by such account debtor, be
first applied to the oldest outstanding account Receivable of such account
debtor until all accounts receivable of such account debtor have been paid in
full.)
4.9 ABSENCE OF UNDISCLOSED LIABILITIES. (a) At December 31, 2000 (a)
Company had no Liability which was not provided for or disclosed on Company
Financial Statements for the fiscal year ended December 31, 2000; and (b) all
liability reserves established by Company and set forth on Company Financial
Statements were adequate, in the good faith judgment of Company, for all such
Liabilities at the date thereof. There were no material loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975 ("FAS No. 5")) which were
not adequately provided for on Company Financial Statements as required by FAS
No. 5. As used herein, the term "Liability" shall mean all material liabilities
or obligations of any nature (whether known or unknown, matured or unmatured,
fixed or contingent.
(b) On the date of Closing, the total liabilities of Company will not
exceed FIVE HUNDRED THOUSAND ($500,000.00) DOLLARS.
4.10 ABSENCE OF CHANGES; CONDUCT OF BUSINESS. Since December 31, 2000,
Company has been operated in the ordinary course, consistent with Company's past
practice ("Ordinary Course") and:
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(a) Company has notified Parent in writing of any Material Adverse
Effect on Company;
(b) there has not been any damage, destruction or loss, whether or not
covered by insurance, having or which could have a Material Adverse Effect
on Company;
(c) Company has kept in a normal state of repair and operating
efficiency all tangible personal property used in the operation of its
business;
(d) except as set forth on Schedule 4.10(d), there has not been any
Liability created, assumed, guaranteed or incurred, or any material
transaction, contract or commitment entered into, by Company, other than
the license, sale or transfer of Company's products to customers in the
Ordinary Course (except for liabilities to Parent, including, but not
limited to, the Parent Loan), or incurred or to be incurred in connection
with negotiation and execution of this Agreement;
(e) there has not been any declaration, setting aside or payment of
any dividend or other distribution of any Assets of any kind whatsoever
with respect to any shares of the capital stock of Company, or any direct
or indirect redemption, purchase or other acquisition of any such shares of
the capital stock of Company;
(f) there has not been any payment, discharge or satisfaction of any
material Encumbrance or Liability or any cancellation by Company of any
material debts or claims or any amendment, termination or waiver of any
right of material value to Company;
(g) except as otherwise provided for in this Agreement Company has
paid or incurred only those fees and expenses not in the Ordinary Course of
its business with the prior approval in writing or ratified in writing by
Parent (including, without limitation, statements of fees for legal and
accounting services, only on a time basis at regular hourly rates). Except
as otherwise provided for in this Agreement, no such fees have been paid or
incurred in respect of services performed in connection with the
negotiation, preparation or execution of any documents, instruments,
exhibits, schedules or any other matter relating to the transactions
16
contemplated hereby. Except as set forth on Schedule 4.10(g), Company has
paid all of its current liabilities as and when they became due;
(h) there has not been any stock split, reverse stock split,
combination, reclassification or recapitalization of any Company Stock, or
any issuance of any other security in respect of or in exchange for, any
shares of Company Stock;
(i) Company has not redeemed, repurchased, or otherwise acquired any
of its capital stock or securities convertible into or exchangeable for its
capital stock or entered into any agreement to do so;
(j) except as set forth on Schedule 4.10(j), there has not been any
issuance by Company of any shares of its capital stock or any debt security
or securities, rights, options or warrants convertible into or exercisable
or exchangeable for any shares of its capital stock or debt security;
(k) except as set forth on Schedule 4.10(k), there has not been any
termination of or indication of an intention to terminate or not renew, any
material contract, license, commitment or other agreement between Company
and any other Person, or the assignment by Company of any interest in any
contract to which Company is a party;
(l) Company has used commercially reasonable efforts to maintain the
good will associated with its business, and the existing business
relationships with its agents, customers, key employees and consultants,
suppliers and other Persons having relations with it;
(m) there has not been any material write-down or write-up of the
value of any Asset of Company, or any material write-off of any accounts
receivable or notes receivable of Company or any portion thereof;
(n) Company has not sold, leased, licensed or otherwise disposed of
any Assets or created or permitted to exist any Encumbrance on its Assets
except in the Ordinary Course and which would not have a Material Adverse
Effect on Company;
(o) except as set forth on Schedule 4.10(o), there has not been any
increase in or modification or acceleration of compensation or benefits
payable or to become payable to any
17
officer, employee, consultant or agent of Company, or the entering into of
any employment contract or consulting contract with any such Person;
(p) there has not been any making of any loan, advance or capital
contribution to or investment in any Person or the engagement in any
transaction with any employee, officer, director, consultant or shareholder
of Company;
(q) there has not been any Encumbrance created, or agreement to do so,
with respect to any Company Assets, tangible, or intangible;
(r) there has not been any change in the accounting methods or
practices followed by Company, or any change in depreciation or
amortization policies or rates theretofore adopted by Company;
(s) except as set forth on Schedule 4.10(s) there has not been any
termination of employment or consultancy of any officer or key employee or
key consultant of Company or, any expression of intention by any officer,
key consultant or key employee of Company to terminate such office,
employment or consultancy with Company;
(t) there have not been any amendments or changes in Company's
Certificate or by-laws;
(u) except as set forth on Schedule 4.10(u), there has not been any
commencement of any litigation or other action by or against Company and,
to Company's knowledge, there has been no occurrence which could give rise
thereto;
(v) Company has kept in all material respects true, complete and
correct books and records of account ("Books and Records") with respect to
its business, in which entries have made of all transactions up to the
Effective Date in Company's Ordinary Course; and
(w) there has not been any agreement, understanding, authorization or
proposal, whether in writing or otherwise, for Company to take any of the
actions specified in items (a) through (v) above.
4.11 TAX MATTERS. The Company:
18
(a) has filed and will file, in a timely and proper manner, consistent
with applicable laws, all Federal, state and local Tax returns and Tax
reports required to be filed by them through the Closing Date (the "Company
Returns") with the appropriate governmental agencies in all jurisdictions
in which Company Returns are required to be filed and have paid or will pay
all amounts shown thereon to be due; and
(b) has paid and shall timely pay all Taxes required to have been paid
on or before the Closing Date.
All Taxes attributable to all taxable periods ending on or before the
Closing Date, to the extent not required to have been previously paid have been
adequately provided for on Company Financial Statements and Company will not
incur or accrue a Tax liability from the date of Company Financial Statements up
to and including the Closing Date, other than a Tax liability incurred or
accrued in the Ordinary Course of business. The Company has not been notified by
the Internal Revenue Service or any state, local or foreign taxing authority
that any issues have been raised (and are currently pending) in connection with
any Company Return, and no waivers of statutes of limitations have been given or
requested with respect to Company. Any deficiencies asserted or assessments
(including interest and penalties) made as a result of any examination by the
Internal Revenue Service or by any other taxing authorities of any Company
Return have been fully paid or are adequately provided for on Company Financial
Statements and no proposed additional Taxes have been asserted. The Company has
not made an election to be treated as a "consenting corporation" under Section
341(t) of the Code nor is it a "personal holding company" within the meaning of
Section 542 of the Code. The Company has not agreed to, nor is required to make
any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise. The Company will not incur a Tax liability
resulting from Company ceasing to be a member of a consolidated or combined
group that had previously filed consolidated, combined or unitary Tax returns.
As used in this Agreement, "Tax" means any of the Taxes and "Taxes" means, with
respect to any entity: (x) all income taxes (including any tax on or based upon
net income, gross income, income as specially defined, earnings,
19
profits, or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties and
other taxes, fees, assessments or charges of any kind whatsoever, together with
all interest and penalties, additions to tax and other additional amounts
imposed by any taxing authority (domestic or foreign) on such entity; and (y)
any liability for the payment of any amount of the type described in the
immediately preceding clause (x) as a result of: (i) being a "transferee"
(within the meaning of Section 6901 of the Code or any other applicable law) of
another entity; (ii) being a member of an affiliated or combined group; or (iii)
any contractual obligations or otherwise.
(b) Prior to the Merger, Shareholders did not dispose of any Company
Stock, or receive any distribution from Company, in a manner that would
cause the Merger to violate the continuity of shareholder interest
requirement set forth in Treasury Regulation Section 1.368-1(c).
(c) Schedule 4.11(c) hereto sets forth the following information with
respect to Company as of the most recent practicable date: (A) the Tax
basis of Company in its Assets; (B) the amount of any net operating loss,
net capital loss, unused investment or other credit, unused foreign tax
credit, research and development credit, excess charitable contribution or
other carryover allocable to Company, the years in which such Tax
attributes arose and the years (if any) in which such Tax attributes are
scheduled to expire, and (C) a list of any Tax elections made by Company
and affecting Company. The Company has no net operating losses or other Tax
attributes subject to limitation under Code Section 382, 383 or 384, or the
federal consolidated return regulations, or under any similar provision of
state, local or foreign law. The amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax credit,
research and development credit, excess charitable contribution or other
carryover allocable to Company is fully utilizable by Company.
20
4.12 BOOKS AND RECORDS; AUDITS AND INVESTIGATIONS. All the books and
records of Company have been kept and were prepared in accordance with GAAP. The
Company has delivered to Parent all responses to auditors' inquiry letters
received in the past four years and all letters to Company from the auditors
during such period. Schedule 4.12 hereto identifies all correspondence received
from a Governmental Authority in the past four years relating to tax and
accounting, regulatory compliance reviews, audits or investigations.
4.13 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
(a) The Company has good and marketable title to, or valid leasehold
interests in, all its Assets, subject to no security interests, mortgages,
liens, pledges, guarantees, charges, easements, reservations, restrictions,
clouds, equities, rights of way, options, rights of first refusal and all
other encumbrances, whether or not relating to the extension of credit or
the borrowing of money ("Encumbrances") except for: (i) liens for current
Taxes not yet due and payable, (ii) mechanics' and materialmen's liens
arising or incurred in the Ordinary Course of its business, and (iii) as
reflected on Schedule 4.13(a).
(b) The properties, assets, rights, contracts, leases, easements,
permits, licenses and real and personal property (the "Assets") evidenced
on Company Financial Statements are the sole items of tangible and
intangible personal property heretofore utilized by Company in the (and
necessary for Company to) conduct of its operations.
(c) The real and personal property owned or leased by Company,
including, without limitation, all equipment and machinery of Company, are
in reasonable working order and have been maintained in accordance with
standard maintenance procedures, and meet all material standards,
clearances and ratings in effect on the date hereof in respect of those
rules and regulations promulgated by any Governmental Authority applicable
thereto except where the failure to meet the above would not have a
Material Adverse Effect.
(d) Except as set forth elsewhere in this Section 4.13, Company makes
no representations or warranties regarding the real or personal property
owned or leased by
21
Company, specifically excluding any representations or warranties with
respect to merchantability or fitness for a particular purpose of Company's
products or services.
(e) Schedule 4.13(e) hereto identifies all real property owned by
Company and all improvements located thereon, all unexpired options held by
Company or contractual obligations on its part to purchase or sell any
interest in real property, and all mortgages held by Company. There exists
no event constituting a default under any such mortgage and no notice of
deficiency has been issued with respect thereto. The real property
identified on such Schedule 4.13(e) as owned by Company is the same as the
real property owned by Company on December 31, 1999, and the condition
thereof, including the improvements thereon, has not deteriorated since
such date, reasonable wear and tear excepted.
(f) Each lease or license of an Asset by Company is a valid and
subsisting obligation enforceable against the lessor or licensor, as the
case may be, in accordance with its terms.
(g) Except as set forth on Schedule 4.13(g), to the knowledge of
Company, none of the Shareholders nor any third party owns or has any
rights in any Assets or property used to carry on the business or
operations of Company.
(h) Such of the Assets as constitute inventory on the date hereof is
in good and merchantable condition and usable for its intended purpose,
and, as to finished goods inventory, saleable at its normal gross profit
margins experienced over the last twelve (12) months;
(i) Schedule 4.13(i) hereto is a true and correct list of all of the
machinery and equipment owned or leased by Company as of the date hereof
having an initial cost exceeding $10,000 or requiring annual lease payments
exceeding $10,000, and, as to each item under lease or license, a brief
description of the material terms of such lease. The Company has good and
marketable title or, if reflected as a leasehold interest in Company
Financial Statements, a valid and enforceable leasehold interest in and to
the machinery and equipment, merchandise, materials, supplies and other
property of every kind, tangible or intangible, which
22
are shown as or reflected in the Assets on the most recent Company
Financial Statements, or which, whether or not shown on Company Financial
Statements, were acquired directly or indirectly by Company through the
purchase of Assets or stock from or through merger, consolidation or other
transaction with, another Person, except for machinery and equipment and
other Assets which have been consumed, sold or disposed of in the Ordinary
Course since the date of those Company Financial Statements or such
acquisition, free and clear of all Encumbrances.
(j) The Company has complied with all obligations under all material
leases and licenses to which it is a party or to which it has succeeded by
merger or acquisition of stock or Assets of any other Person and under
which it is in occupancy or license, as the case may be, and all such
leases and licenses are in full force and effect. The Company enjoys
peaceful and undisturbed possession under all real property leases.
4.14 ENVIRONMENTAL LIABILITY. The Company has obtained all permits,
licenses and other authorizations which are required with respect to its
operation, and (a) Company is not in violation of any Federal, state, local or
foreign law, ordinance, rule, regulation, order, writ, injunction, decree,
judgment, award, determination, direction, stipulation or demand of a Government
Authority ("Order"), demand letter, request for information, schedule, or time
table set forth in any Federal, state, local or foreign law, ordinance, rule,
regulation, Order, demand letter or request for information issued, promulgated,
approved, or entered thereunder relating to pollution or protection of the
environment or to occupational health or safety, including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land, surface or subsurface strata),
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
(collectively, the "Environmental Laws"); (b) Company is in compliance with the
terms and conditions of the
23
required permits, licenses and authorizations required by the Environmental
Laws; (c) except as set forth on Schedule 4.14 there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
proceeding, notice or demand letter pending relating to Company or threatened
against it relating in any way to any Environmental Laws or any regulation,
code, plan or Order issued, entered, promulgated or approved thereunder; (d)
except as set forth on Schedule 4.14 there are no investigations or internal or
non-public agency proceedings pending regarding Company relating in any way to
any Environmental Laws or any regulation, code, plan, or Order issued, entered,
promulgated, or approved thereunder; and (e) except as set forth on Schedule
4.14 there has been no generation, production, refining, processing,
manufacturing, use, storage, disposal, treatment, shipment, emission, receipt,
or release of a substance or material regulated by any Environmental Law, and in
the regulations adopted and publications promulgated pursuant thereto and
include, without limitation, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, toxic substances, asbestos, or any
material containing asbestos or petroleum or petroleum by-product (collectively
the "Hazardous Substance") on, in or under such of the Assets of Company
constituting real property which would subject the owner or operator of the real
property or business, or any past or future owner or operator of the real
property to liability for the removal, remediation or cleanup of the Hazardous
Substance, petroleum or petroleum by-product under the Environmental Laws or
common law. The Company has delivered to Parent true and complete copies of all
environmental studies made in the last ten years relating to Company's real
property or the business of Company. Except as set forth on Schedule 4.14 no
Hazardous Substance has ever been spilled, released, leaked, poured, leached,
dumped, discharged, placed, or disposed of, or otherwise caused to be located at
any property which has at any time been owned, leased, or used by Company in
violation of any Environmental Law and all Hazardous Substances have been
handled in compliance with Environmental Laws.
4.15 INTELLECTUAL PROPERTY. Schedule 4.15 sets forth a list of all patents,
copyrights, trademarks, tradenames and service marks and any licensed
intellectual property
24
rights (other than commercial or "shrink-wrap" licenses covering software
generally available to the public on a retail basis) (collectively,
"Intellectual Property Rights") of Company (the "Company Intellectual Property
Rights"). The ownership or use of Company Intellectual Property Rights does not
infringe on the intellectual property rights of others and Company has not
received notice alleging any such infringement, and, to the knowledge of
Company, no third party is infringing on the Company Intellectual Property
Rights. Except as set forth on Schedule 4.15, the Company is not obligated to
pay any third party any royalty or fee for the use of the Company Intellectual
Property Rights in the Business. The execution and delivery of this Agreement by
Company and the consummation of the transactions contemplated hereby, will
neither cause Company to be in violation or default under any such license,
sublicense, or agreement, nor entitle any other party to any such license,
sublicense, or agreement to terminate or modify such license, sublicense, or
agreement. The Company is the sole and exclusive owner or licensee of, with all
right, title and interest in and to (free and clear of any Encumbrances),
Company Intellectual Property Rights, and Company has sole and exclusive rights
to the use thereof or the material covered thereby in connection with the
services or products in respect of which Company Intellectual Property Rights
are being used. There is no unauthorized use, infringement or misappropriation
of any of Company Intellectual Property Rights by any third party, including,
without limitation, any employees, former employee, Shareholder or former
shareholder of Company.
4.16 AGREEMENTS, ETC. Schedule 4.16 sets forth a true and complete list of
all written or oral contracts, agreements and other instruments to which Company
is a party and not made in the Ordinary Course of business, or made in the
Ordinary Course of business which are currently in effect, and referred to in
any of clauses (a) through (k) of this Section 4.16:
(a) any joint venture, partnership or other agreement or arrangement
for the sharing of profits;
(b) any collective bargaining contract or other contract with or
commitment to any labor union;
25
(c) the future purchase, sale, or license of products, material,
supplies, equipment or services requiring payments to or from Company in an
amount in excess of $10,000 per annum, which agreement, arrangement or
understanding is not terminable on thirty (30) days' notice without cost or
other liability at or at any time after the Effective Date, or in which
Company has granted or received manufacturing rights, most favored nations
pricing provisions or exclusive marketing or other rights relating to any
product, group of products, services, technology, Assets or territory;
(d) the employment or consultancy of any officer, employee, consultant
or agent or any other type of contract, commitment or understanding with
any officer, employee, consultant or agent which (except as otherwise
generally provided by applicable law) is not immediately terminable without
cost or other liability at or at any time after the Effective Date;
(e) an indenture, mortgage, promissory note, loan agreement, guarantee
or other agreement or commitment for the borrowing of money, for a line of
credit or, if involving payments in excess of $10,000 per annum, for a
leasing transaction of a type required to be capitalized in accordance with
Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board;
(f) a contract or commitment for capital expenditures individually in
excess of $10,000;
(g) any agreement or contract with a "disqualified individual" (as
defined in Section 280G(c) of the Code), which could result in a
disallowance of the deduction for any "excess parachute payment" (as
defined in Section 280G(b)(i) of the Code) under Section 280G of the Code;
(h) an agreement or arrangement for the sale of any Assets, properties
or rights having a value in excess of $10,000;
(i) an agreement which restricts Company from engaging in any aspect
of its business or competing in any line of business in any geographic
area;
26
(j) Company accounts for all of its software, hardware, consulting,
licensing, distribution and other similar agreements and contracts under
which Company provides services or sells or distributes goods or equipment
in accordance with GAAP;
(k) a list of all agreements with Company's vendors where Company is
an approved vendor with the United States Department of Defense or other
applicable Governmental Authority (the "Government Contracts");
(l) The Company has furnished to Parent true and complete copies of
all such agreements listed in Schedule 4.16 and each such agreement:
(i) is the legal, valid and binding obligation of Company and, to
the best knowledge of Company, the legal, valid and binding obligation
of each other party thereto, in each case enforceable in accordance
with its terms;
(ii) is in full force and effect; and
(iii) the other party or parties thereto is or are not, to the
knowledge of Company, in material default thereunder.
4.17 SUPPLIERS; RAW MATERIALS. Schedule 4.17 sets forth the names and
addresses of the ten largest suppliers of Company based on the aggregate value
of raw materials, supplies, merchandise and other goods and services ordered by
Company from such suppliers during the one year period ended December 31, 1999
and the six month period ended June 30, 2000.
4.18 CUSTOMERS. Schedule 4.18 sets forth for the year ended December 31,
1999 (i) a list of the top 10 customers (inclusive of distributors of Company
based on the aggregate value of goods and services ordered from Company by such
customers during each such period and (ii) the products purchased by each such
customer and the amount for which each such customer was invoiced during each
period. The Company has not received any notice and does not have any reason to
believe that any material customer (i) has ceased, or will cease, to use the
products, goods or services, (ii) has materially reduced or will materially
reduce, the use of products, goods or services, or (iii) has sought, or is
seeking, to materially
27
reduce the price it will pay for products, goods or services, which cessations
and reductions, either individually or in the aggregate, are reasonably likely
to result in a Material Adverse Effect on Company.
4.19 NO DEFAULTS, ETC. Except as set forth on Schedule 4.19(a) Company has
in all respects performed all the material obligations required to be performed
by it to date and is not in material default or alleged to be in material
default under: (a) its Certificate or by-laws; or (b) any material agreement,
lease, mortgage, indenture, contract, commitment, instrument or obligation to
which Company is a party or by which any of its Assets or rights are or may be
bound or affected, and there exists no event, condition or occurrence which,
with or without due notice or lapse of time, or both, would constitute such a
default by it of any of the foregoing. No current customer has notified, or to
the knowledge of Company expressed an intention to notify, Company or its
employees, officers or agents, that such customer will materially reduce the
dollar amount of business it will do with Company or cease doing business with
Company. Provided that Company obtain the consents which may be required to
consummate the transactions which are set forth on the Schedule 4.19(b), no such
mortgage, indenture, lease, contract, agreement, license, instrument, or order
limits in any material way the freedom of any Person acquiring control of
Company, whether directly or indirectly, or prevents Company from performing
this Agreement in accordance with its terms. The Company has not received any
notice from any party to any such contract with respect to such party's
unwillingness or inability to perform thereunder.
4.20 LITIGATION, OBSERVANCE OF STATUTES, REGULATIONS AND ORDERS. Except as
set forth on Schedule 4.20 there are no:
(a) actions, suits, claims, investigations or legal or administrative
or arbitration proceedings (collectively, "Actions") pending, or to the
knowledge of Company, threatened against Company, or to the knowledge of
Company facts which could give rise to any of the foregoing, whether at law
or in equity, or before or by any Governmental Authority;
28
(b) outstanding judgments, decrees, injunctions or orders of any
Governmental Authority or arbitrator against Company or disputes with
customers or vendors;
(c) violations of or defaults with respect to any Order of any
arbitrator or Governmental Authority and, there is no basis for there to be
declared any such violation or Default;
(d) to the knowledge of Company, Company officers, directors,
employees, agents, shareholders or representatives who have made, directly
or indirectly, with respect to the business of Company, any illegal
political contributions, payments from corporate funds not recorded in the
Books and Records of Company, payments from corporate funds that were
falsely recorded on the Books and Records of Company, payments from
corporate funds to governmental officials in their individual capacities
for the purpose of affecting their action or the action of the government
they represent to obtain special concessions or illegal payments from
corporate funds to obtain or retain business; or
(e) no holder of capital stock of any Person which was, at any time,
directly or indirectly a subsidiary of Company, or which merged with or
into Company or any direct or indirect subsidiary of Company, or a Person
from which Company, directly or indirectly, acquired substantially all of
such Person's Assets or a shareholder of such Person, has asserted any
claim against Company arising out of the acquisition of such Assets or of
such holder's capital stock and Company knows of no basis for any such
claim.
4.21 LICENSES, PERMITS, ETC. The Company possesses adequate licenses,
clearances, ratings, permits and franchises, and all rights with respect
thereto, to conduct its business as now conducted, and without any conflict with
the rights of others in any such license, clearance, rating, permit or
franchise. The Company has no knowledge of, nor has received notice of
termination, revocation or limitation of, or of the pendency or threatened
commencement of any proceeding to terminate, revoke or limit any such licenses,
clearances, ratings, permits or other approvals by the Governmental Authority or
other Person issuing same.
29
4.22 COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. Except as set forth on
Schedule 4.22, Company has complied within the last five (5) years and is
presently in compliance in all material respects with all material Federal,
state, local or foreign laws, ordinances, regulations and orders applicable to
it or its business, including, without limitation, the Environmental
Authorities, all Federal and state securities, or "blue sky" laws, and all laws
and regulations relating to occupational safety and health and the environment.
Except as set forth on Schedule 4.22, Company has all material authorizations,
security clearances, consents, approvals, licenses, and permits necessary to be
obtained from Governmental Authorities in the conduct of its business as
presently conducted and as currently proposed by Company to be conducted; and
such authorizations, consents, approvals, licenses, and permits are in full
force and effect, no violations are or have been recorded in respect of any
thereof and no proceeding is pending or, to the best knowledge of Company, or
threatened revoke or limit any thereof. All of Company's full-time and temporary
personnel who provide services in a manner or of the type that require specific
certifications or clearances have provided such services at all times while
having such certifications or clearances in full force and effect. Neither
Company has, nor any of its full-time or part-time personnel have, with respect
to each of their activities, actions, or services for or on behalf of Company,
been cited or alleged by the Environmental Authorities or other regulatory
authority within the last five (5) years as failing to comply with regulatory
requirements or guidelines.
4.23 LABOR RELATIONS; EMPLOYEES. Schedule 4.23 sets forth the name of all
full-time and part-time employees of Company and the primary locations at which
such employees provide their services as of the Closing Date. In addition,
except as set forth on Schedule 4.23;
(a) Company is not delinquent in payments to any of its employees or
consultants for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to date or amounts required
to be reimbursed to such Persons;
30
(b) neither Acquisition Sub nor the Surviving Corporation will by
reason of anything done prior to the Closing be liable to any employees or
consultants for severance pay or any other payments other than for ordinary
wages and salaries payable through Closing;
(c) Company is in compliance in all material respects with all
material Federal, state, local, and foreign laws and regulations respecting
labor, employment, and employment practices, terms and conditions of
employment and wages and hours;
(d) there is neither pending, nor threatened any labor dispute, strike
or work stoppage involving employees of Company (or otherwise) which
affects or which may affect Company's business or which may interfere with
its continued operations;
(e) there are no union organization efforts relating to employees of
Company or any representation question involving recognition as a
collective bargaining agent for any employees of Company;
(f) there is not pending or threatened any charge or complaint against
Company by the National Labor Relations Board or any representative
thereof,
(g) there have been no strikes, walkouts, or work stoppages involving
employees of Company in the last five (5) years;
(h) except as set forth on Schedule 4.23(h), there is no unfair labor
practice, sexual harassment or other employment-related complaint pending
or, to the knowledge of Company, threatened against Company or any employee
of Company. Schedule 4.23(h) assesses managements current belief in
connection with Company's liability with respect to any such complaint or
threat. No employee or consultant of Company is in material violation of
any term of any employment contract or consulting contract, confidentiality
agreement or any other contract or agreement relating to the relationship
of such employee or consulting contract with Company or any other party
because of the nature of the business conducted or proposed to be conducted
by Company or the execution and delivery of such agreement or contract by
such employee or consultant.
4.24 EMPLOYEE BENEFIT PLANS AND CONTRACTS.
31
(a) Schedule 4.24(a) identifies each "employee benefit plan," as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and all other material written or formal plans
or agreements involving direct or indirect compensation (including any
employment agreements entered into between Company and any Employee of
Company, but excluding workers' compensation, unemployment compensation,
other government-mandated programs and Company's salary and wage
arrangements) currently or previously maintained, contributed to or entered
into by Company or any ERISA Affiliate thereof for the benefit of any
Employee or former Employee under which Company or any ERISA Affiliate
thereof has any present or future obligation or liability (the "Employee
Plans"). The Company has provided to Parent true and complete copies of all
Employee Plans (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof. For purposes of the
preceding sentence, "ERISA Affiliate" shall mean any entity which is a
member of (A) a "controlled group of corporations," as defined in Section
414(b) of the Code, (B) a group of entities under "common control," as
defined in Section 414(c) of the Code, or (C) an "affiliated service
group," as defined in Section 414(m) of the Code or treasury regulations
promulgated under Section 414(o) of the Code, any of which includes
Company. Any Employee Plans which individually or collectively would
constitute an "employee pension benefit plan," as defined in Section 3(2)
of ERISA, but which are not Multiemployer Plans (collectively, the "Pension
Plans"), are identified as such in Schedule 4.24(a). For purposes of this
Section 4.24, "Employee" means any common law employee, consultant or
director of Company.
(b) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to the date hereof, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. The
Company does not know of any facts or circumstances that would materially
adversely affect such qualification prior to the Closing. The Company has
provided Parent with copies of the most recent Internal Revenue Service
determination letters with respect to any such
32
Employee Plans. Each Employee Plan has been maintained substantially in
compliance with its terms and with the requirements prescribed by any and
all statutes, orders, rules and regulations, including, without limitation,
ERISA and the Code, which are applicable to such Employee Plans.
(c) No Employee Plan constitutes or since the enactment of ERISA has
constituted a "multiemployer plan," as defined in Section 3(37) of ERISA (a
"Multiemployer Plan").
(d) Schedule 4.24(d) lists each employment, severance or other similar
contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which:
(i) is not an Employee Plan;
(ii) is entered into, maintained or contributed to, as the case
may be, by Company;
(iii) covers any Employee or former Employee; and
(iv) under which Company has any present or future obligation or
liability (excluding workers' compensation, unemployment compensation
or other government-mandated programs and Company's salary and wage
arrangements). Such contracts, plans and arrangements as are described
above are hereinafter referred to collectively as the "Benefit
Arrangements." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all material laws, statutes, rules, regulations,
orders and judgments which are applicable to such Benefit
Arrangements. Except as indicated on Schedule 4.24(d), no Benefit
Arrangement or Employee Plan provides benefits including, without
limitation, death, or medical benefits (whether or not insured), with
respect to any Employee or former Employee of Company beyond such
Employee's retirement or other
33
termination of service (other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any "employee
pension plan", as that term is defined in Section 3(2) of ERISA, or
(iii) benefits the full cost of which is borne by the current or
former Employee (or his or her beneficiary).
(e) The Company has provided, or will have provided, to individuals
entitled thereto who are current or former Employees of Company all
required notices within the applicable time period and coverage pursuant to
Section 4980B of the Code with respect to any "qualifying event" (as
defined in Section 4980B(f)(3) of the Code) occurring prior to and
including the Closing Date, and no tax payable on account of Section 4980B
of the Code has been incurred with respect to any current or former
Employees of Company.
(f) None of the Employee Plans is subject to Title IV of ERISA. There
are no pending or, to the best knowledge of Company, threatened claims
(other than routine claims for benefits), actions, suits or proceedings by,
or on behalf of or against any of the Employee Plans or any trusts related
thereto.
(g) With respect to each Employee Plan, neither Company nor any ERISA
Affiliate has engaged in a "prohibited transaction" (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA) that would
subject Company or Parent to any taxes, penalties or other liabilities
resulting from prohibited transactions under Section 4975 of the Code or
Section 409 or 502(i) of ERISA.
(h) Neither Company nor any ERISA Affiliate is a party to or obligated
under any agreement, plan, contract or other arrangements that will result,
separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code.
(i) Except to the extent set forth on Schedule 4.24(i) hereto, to the
extent any Employee Plan is subject to approval by any governmental agency
(or such approval is available under applicable law), such Employee Plan
has received such approval and such approval is current.
34
(j) The Company is not subject to, and no facts exist which could
subject Company to, any liability whatsoever which is directly or
indirectly related to any Employee Plan, including, but not limited to,
liability for benefits payments or related claims (other than the ordinary
usual claims by participants or beneficiaries which have been made for
benefits called for under the terms of such Employee Plans), any liability
for any Tax or related penalty under the Code, or liability for any damages
or penalties arising under Title I or Title IV of ERISA.
(k) Except as set forth on Schedule 4.24(k) hereto, no ERISA Welfare
Plan provides benefits to former employees of Company other than
continuation coverage required by Section 4980B of the Code and Section 601
of ERISA.
(1) There are no pending or, to the knowledge of Company, threatened
claims, suits or other proceedings with respect to any Employee Plan other
than the ordinary usual claims by participants or beneficiaries which have
been made for benefits called for under the terms of such Employee Plans
and which will be paid under such Employee Plans in the Ordinary Course.
(m) There is no requirement that Parent, Surviving Corporation or
Company make any further contributions to any Employee Plan after the
Closing Date, and each Employee Plan which provides benefits to or on
behalf of employees or former employees of Company may be terminated by
Parent, Surviving Corporation or Company in its sole discretion on or after
the Closing Date without liability of any kind or description whatsoever to
Parent, Company, Surviving Corporation, any of Parent's ERISA Affiliates,
or any other Person, entity or governmental agency; provided, however, that
Employee Plan benefits upon such termination are distributed to each
Employee participating in such Employee in accordance with the terms of
such Employee Plan and consistent with the requirements of ERISA and the
Code.
4.25 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will:
(a) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming
due to any
35
director, Shareholder, or employee of Company from Company, under any
Employee Plan, Benefit Arrangement or otherwise;
(b) increase any benefits otherwise payable under any Employee Plan or
Benefit Arrangement;
(c) result in the acceleration of the time of payment or vesting of
any such benefits; or
(d) violate any no shop, nonsolicitation, noncompetition or
nondisclosure agreement that Company may be a party to.
4.26 INSURANCE. The Company maintains policies of liability, theft,
fidelity, fire, product liability, workmen's compensation, indemnification of
directors and officers and other similar forms of insurance. Schedule 4.26 sets
forth and accurately describes such policies, and a history of all claims within
the last three (3) years in excess of $50,000 made by Company thereunder and the
status thereof. All such policies of insurance are in full force and effect and
all premiums with respect thereto are currently paid and, to the knowledge of
Company, no basis exists for termination or non-renewal of any thereof on the
part of the insurer. The amounts of coverage under such policies conform to the
requirements set forth in Company's customer contracts. The Company has not,
during the last three (3) fiscal years, been denied or had revoked or rescinded
any policy of insurance.
4.27 BROKERS. Except for that certain agreement dated August 30, 1999 by
and between the Company and Paxton Ventures Corp. a copy of which is attached
hereto as Exhibit 4.27, (the "Paxton Agreement"), Company has not, nor have any
of its officers, directors, shareholders or employees, employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by the Transaction
Documents. Under the terms of the Paxton Agreement, five (5%) percent of the
Merger Consideration to be received by holders of shares of Company Stock shall
instead be paid at Closing directly to Paxton Ventures Corp. Company will
indemnify and hold Parent and/or Acquisition Sub, their successors and assigns,
harmless from and against any claim or
36
liability arising from any breach of this representation by Company, or from any
claim or liability arising to Paxton Ventures Corp., as a result of this
Agreement, the Plan of Merger, the Transaction Documents, and the transactions
contemplated hereby and thereby.
4.28 RELATED TRANSACTIONS. Except for compensation to regular employees of
Company, no current or former director, officer or shareholder that is an
affiliate of Company or any associate (as defined in the rules promulgated under
the Exchange Act) thereof, is now, or has been during the last three (3) fiscal
years:
(a) a party to any transaction with Company which would be required to
be included in a Form 10K-SB or definitive proxy statement with the SEC
(including, but not limited to, any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real
or personal property from, or borrowing money from, or otherwise requiring
payments to, any such director, officer or affiliated shareholder of
Company or associate thereof), other than any transaction which has been
disclosed in a definitive proxy statement or report filed by Company in a
timely fashion within the SEC;
(b) the direct or indirect owner, including any ownership by a family
member, of a 10% or greater interest in any non-natural Person, which is,
or has been, a supplier, customer, or, within the last twelve (12) months,
competitor, of Company (other than non-affiliated holdings in a publicly
held companies); or
(c) a party to any transaction with Company whereby such Person
received compensation (other than dividends paid by a publicly held
corporation) from any other Person, which is, or has been, a supplier,
customer, or, within the last twelve (12) months, competitor of Company.
4.29 BOARD APPROVAL. The Board of Directors of Company has:
(a) approved the Transaction Documents to which Company is a party and
the transactions contemplated hereby and thereby;
(b) determined that the Merger is in the best interests of the
Shareholders and is on terms that are fair to such Shareholders; and
37
(c) recommended that the Shareholders approve the Merger in accordance
with the Plan of Merger and the New Jersey Statute. No other Company
approvals are required other than that of the Board of Directors and
Shareholders.
4.30 VOTE REQUIRED. The affirmative vote of at least a majority of the
outstanding shares voting of Company Stock approving the Merger, this Agreement,
the Plan of Merger, and the transactions contemplated hereby and thereby are the
only votes of the holders of any class or series of Company's capital stock
necessary to approve the Transaction Documents to which Company is a party and
the transactions contemplated hereby and thereby.
4.31 OFFICERS AND DIRECTORS. The duly elected, qualified and acting
officers and directors of Company are as set forth in Schedule 4.31.
4.32 INFORMATION SUPPLIED. The information supplied or to be supplied by
Company for inclusion in:
(a) the S-4 will not, at the time that the S-4 is filed with the SEC
and at the time that the S-4 becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and
(b) the Shareholders' Materials will not, at the dates mailed to the
Shareholders and at the effective date of the Shareholder Action, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading.
The Shareholders' Materials will comply as to form with the provisions of
all applicable laws, rules and regulations of all Governmental Authorities.
4.33 BANK ACCOUNTS; CREDIT AND CHARGE CARDS. Schedule 4.33 hereto contains
a true and complete list as of the date hereof (i) of all banks, trust companies
and savings and loan associations in which Company maintains an account (and the
account number thereof) or safe deposit vault and the names of all Persons
authorized to draw thereon and the balances on such accounts on the date hereof,
and (ii) of all credit and charge cards issued in the
38
name of Company or any of its employees or officers and for which Company has
any liability and the outstanding balances on each such card as of June 30,
2000.
4.34 COMPANY NOT AN INTERESTED SHAREHOLDER. As of the date of this
Agreement, neither Company nor, to the best of Company's knowledge, any of its
Affiliates is an "Interested Shareholder" of Parent as such term is defined in
Section 14A:10A-3 of the New Jersey Business Corporation Act.
4.35 INVESTMENT COMPANY ACT. The Company is not, and is not directly or
indirectly controlled by, or acting on behalf of, any Person which is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4.36 NO RIGHT OF ACTION. The execution and delivery of this Agreement and
the other agreements, documents and instruments contemplated hereby and the
completion of the transactions contemplated hereby and thereby, shall not cause
Parent, the Surviving Corporation, or any of their respective affiliates to be
liable for damages to any other Person or give such Person any equitable right
against any of them or Company or any of their respective Assets.
4.37 KNOWLEDGE DEFINITION. As used in this Agreement, "to the knowledge of
Company" and like phrases shall mean and include:
(a) actual knowledge; and
(b) that knowledge which a prudent businessperson (including the
officers, directors and other key employees of Company) would have obtained
in the management of his or her business affairs after reviewing this
Article IV in detail and making due inquiry and exercising reasonable
diligence with respect thereto. In connection therewith, the knowledge
(both actual and constructive) of Burt Ensley, the Company officer
executing this Agreement, shall be imputed to be the knowledge of Company.
4.38 DIRECTORS LIABILITIES. Except for attached Exhibit 4.27, the Company
does not, and will not as of the Effective Date, have any outstanding fees owed
to members of Company's board of directors (or their Affiliates).
39
4.39 FULL DISCLOSURE. No financial statement, Exhibit, Schedule or document
required by this Agreement to be prepared or furnished by or on behalf of
Company to Parent and/or Acquisition Sub in connection with this Agreement or
any other Transaction Document hereby or delivered pursuant hereto, contained or
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, misleading. The representations and warranties set
forth in this Article IV do not contain any material misstatement of fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub, jointly and severally, represent and warrant to
Company that:
5.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER.
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) Acquisition Sub is duly organized, validly existing and in good
standing under the laws of the State of New Jersey.
(c) Each of Parent and Acquisition Sub has all requisite corporate
power and authority to enter into the Transaction Documents to which either
is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
(d) Each of Parent and Acquisition Sub is duly qualified and in good
standing in all jurisdictions in which the failure to be so qualified and
in good standing could reasonably be expected to have a Material Adverse
Effect on Parent or Acquisition Sub. Parent has delivered to Company true
and complete copies of the Certificate and by-laws of each of Parent and
Acquisition Sub.
40
5.2 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Acquisition Sub for inclusion or incorporation by
reference in the S-4 will, at the time the S-4 is filed with the SEC and at the
time the S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.
5.3 CONTINUITY OF BUSINESS ENTERPRISE. It is the present intention of
Parent to continue at least one significant historic business line of Company or
to use at least a significant portion of Company's historic business Assets in a
business, in each case within the meaning of Treasury Regulation Section
1.368-1(d).
5.4 AUTHORITY; NO CONSENTS. The execution, delivery and performance by
Parent and Acquisition Sub of the Transaction Documents to which each is a party
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Acquisition Sub, and this Agreement and the other Transaction
Documents to which each is a party have been, and the Plan of Merger when
executed and delivered by Parent and Acquisition Sub will be, duly and validly
executed and delivered by Parent and Acquisition Sub, and this Agreement and the
other Transaction Documents to which each is a party are, and the Plan of Merger
when executed and delivered by the parties thereto will be, the valid and
binding obligations of Parent and Acquisition Sub, enforceable against Parent
and Acquisition Sub in accordance with their respective terms subject to
bankruptcy, fraudulent conveyance, insolvency, moratorium or similar laws
affecting the rights of creditors generally or general equitable principles.
Neither the execution, delivery and performance of the other Transaction
Documents to which each is a party, nor the consummation by Parent and
Acquisition Sub of the transactions contemplated hereby, or thereby, nor
compliance by Parent and Acquisition Sub with any provision hereof or thereof
will: (a) conflict with; (b) result in any violations of; (c) cause a default
under (with or without due notice, lapse of time or both); (d) give rise to any
right of termination, amendment, cancellation or acceleration of any obligation
contained in or the loss of any material benefit
41
under; or (e) result in the creation of any Encumbrance on or against, any
assets, right, or property of Parent or Acquisition Sub under any term,
condition or provision of: (x) any instrument or agreement to which Parent or
Acquisition Sub is a party, or, to the knowledge of Parent and Acquisition Sub,
by which Parent or Acquisition Sub, their respective properties, assets or
rights may be bound (except as shall have been waived or with respect to which
consent shall have been obtained prior to the Closing) except where the
foregoing would not result in a Material Adverse Effect on Parent; (y) any law,
statute, rule, regulation, order, writ, injunction, decree, permit, concession,
license or franchise of any Governmental Authority applicable to Parent or
Acquisition Sub or any of their respective properties, assets or rights except
where the foregoing would not result in a Material Adverse Effect on Parent; or
(z) the Certificate or by-laws of Parent or Acquisition Sub, respectively, as
amended through the date hereof. Except as contemplated by this Agreement or the
Plan of Merger, no permit, authorization, consent or approval of or by, or any
notification of or filing with, any Governmental Authority is required in
connection with the execution, delivery and performance by Parent and
Acquisition Sub of this Agreement, the Plan of Merger or the Transaction
Documents to which Parent and Acquisition Sub is a party or the consummation of
the transactions contemplated hereby or thereby, except for: (i) the filing with
the SEC of, (A) the S-4 with respect to the Merger Consideration and the shares
of Parent Common Stock reserved for issuance upon exercise of the Parent
Warrants and (B) such reports and information under the Exchange Act, and the
rules and regulations promulgated by the SEC thereunder, as may be required in
connection with this Agreement, the Plan of Merger and the transactions
contemplated hereby and thereby; (ii) such filings as may be required by the
NASDAQ with respect to Parent Common Stock and Parent Warrants to be issued in
connection with the Merger Consideration; (iii) the filing of such documents
with, and the obtaining of such orders from, various state securities and
blue-sky authorities as are required in connection with the transactions
contemplated hereby; (iv) the distribution of the Shareholders' Materials with
respect to the adoption by the Shareholders of this Agreement and the Plan of
Merger; (v) the filing of the Plan of Merger with the Treasurer of the State of
New
42
Jersey and appropriate documents with the relevant authorities of other states
in which Company is qualified to do business; and (vi) such other consents,
waivers, authorizations, filings, approvals and registrations which if not
obtained or made would not have a Material Adverse Effect on Parent or
materially impair the ability of Parent and Acquisition Sub to consummate the
transactions contemplated by this Agreement or the Plan of Merger, including,
without limitation, the Merger.
5.5 SEC DOCUMENTS. Parent has filed each report, schedule, registration
statement and definitive proxy statement with the SEC on or after December 31,
1999 (the "Parent SEC Documents"), which are all the documents (other than
preliminary material) that Parent was required to file (or otherwise did file
with the SEC on or after December 31, 1999). As of their respective dates, none
of Parent SEC Documents (including all exhibits and schedules thereto and
documents incorporated by reference therein) 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 light of the
circumstances under which they were made, not misleading, and Parent SEC
Documents complied when filed in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder.
5.6 FINANCIAL STATEMENTS. The financial statements of Parent included in
Parent SEC Documents (the "Parent Financial Statements"):
(a) complied as to form in all material respects with the then
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP,
consistently applied (except as may have been indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form
10-Q promulgated by the SEC);
(b) were in accordance with the books and records of Parent; and
43
(c) fairly present (subject, in the case of the unaudited statements,
to normal, nonrecurring audit adjustments) the financial position of Parent
as at the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended.
5.7 ABSENCE OF UNDISCLOSED LIABILITIES. At December 31, 2000 (a) Parent had
no Liability which was not provided for or disclosed on Parent SEC Documents for
the period ended December 31, 2000; and (b) all liability reserves established
by Parent and set forth on Parent Financial Statements were adequate, in the
good faith judgment of Parent, for all such Liabilities at the date thereof.
There were no material loss contingencies (as such term is used in FAS No. 5)
which were not adequately provided for on Parent Financial Statements as
required by FAS No. 5.
5.8 ABSENCE OF CHANGES. Since the filing with the SEC of Parent's most
recent 10-Q, Parent has not experienced any Material Adverse Effect.
5.9 FULL DISCLOSURE. No financial statement, Exhibit, Schedule or document
required by this Agreement to be prepared or furnished by or on behalf of Parent
or Acquisition Sub to Company in connection with this Agreement or any other
Transaction Document hereby or delivered pursuant hereto, contained or contains
any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties set forth in
this Article V do not contain any material misstatements of fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5.10 TAX MATTERS. The Parent:
(a) has filed and will file, in a timely and proper manner, consistent
with applicable laws, all Federal, state and local Tax returns and Tax
reports required to be filed by Parent through the Closing Date (the
"Parent Returns") with the appropriate governmental agencies in all
jurisdictions in which Parent Returns are required to be filed and have
paid or will
44
pay all amounts shown thereon to be due; and (b) has paid and shall timely
pay all Taxes required to have been paid on or before the Closing Date.
5.11 NO DEFAULTS, ETC. The Parent and Acquisition Sub have in all respects
performed all the material obligations required to be performed by it to date
and is not in material default or alleged to be in material default under: (a)
its Certificate or by-laws; or (b) any material agreement, lease, mortgage,
indenture, contract, commitment, instrument or obligation to which Parent and
Acquisition Sub is a party or by which any of its Assets or rights are or may be
bound or affected.
5.12 BOARD APPROVAL. The Board of Directors of Parent and Acquisition Sub
have approved the Transaction Documents to which Parent and Acquisition Sub are
a party and the transactions contemplated hereby and thereby.
5.13 PARENT COMMON STOCK. Any shares of Parent Common Stock issued in the
Merger pursuant to Article II of this Agreement shall at the Effective Date be
duly authorized, validly issued, fully paid, and nonassessable and in compliance
with the listing rules and regulations of the NASDAQ.
ARTICLE VI
VOTING AGREEMENT
6.1 AGREEMENT TO VOTE. Each Shareholder listed on Schedule 6.1 (the
"Insider Shareholder") hereby agrees that at any meeting of the Shareholders of
Company, however called, or in any action by written consent of the
Shareholders, such Insider Shareholder shall: (i) vote all Company Stock owned
or controlled by him in favor of this Agreement, the Plan of Merger, and the
Merger and the other transactions contemplated hereby and thereby, provided that
the Board of Directors of Company shall have approved such Merger and (ii) until
the termination of this Agreement pursuant to Article XIV, vote such shares
against any (A) merger, consolidation, share exchange, business combination or
other similar transaction pursuant to which control of Company would be
transferred to any Person other than Parent, or (B) sale, lease, exchange,
mortgage, pledge, transfer or other disposition of twenty percent (20%)
45
or more of the Assets of Company, taken as a whole, in a single transaction or
in a series of transactions. Notwithstanding the foregoing, this Section 6.1 (a)
shall be null and void and not binding on such Insider Shareholder unless the
Insider Shareholder will receive in the Merger Consideration of Parent Common
Stock in the same proportion or ratio as all other holders of Company Stock.
ARTICLE VII
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME, ADDITIONAL AGREEMENTS
7.1 ACCESS TO RECORDS AND PROPERTIES OF EACH PARTY; CONFIDENTIALITY. From
and after the date hereof until the Effective Date or the earlier termination of
this Agreement pursuant to Section 14.1 hereof (the "Executory Period"), Company
shall afford: (i) representatives of Parent or Acquisition Sub, free and full
access at all reasonable times upon reasonable notice to all properties, books
and records (including tax returns filed and those in preparation) of Company
provided that such activities shall not interfere with Company's normal
operations, in order that Parent and Acquisition Sub may have full opportunity
to make such investigations as they shall reasonably desire to make of the
business and affairs of Company. Additionally, Company will permit Parent and
Acquisition Sub to make such reasonable inspections of Company and its
respective operations during normal business hours, upon reasonable notice, as
Parent and Acquisition Sub may reasonably require and Company will cause its
officers to furnish to Parent and Acquisition Sub, such additional financial and
operating data and other information as to the business and properties of
Company as Parent and Acquisition Sub shall from time to time reasonably request
(it being understood that, subject to the terms of the Confidentiality
Agreement, Parent and Acquisition Sub shall be entitled to make copies of such
information and take notes with respect thereto). No investigation pursuant to
this Section 7.1, or made prior to the date hereof, shall affect or
46
otherwise diminish or obviate in any respect any of the representations and
warranties made in this Agreement.
7.2 OPERATION OF BUSINESS OF THE COMPANY. During the Executory Period,
Company will operate its business as now operated and only in the normal and
Ordinary Course and, consistent with such operation, will use its commercially
reasonable efforts to preserve intact its present business organization, to keep
available the services of its officers, consultants and employees and to
maintain satisfactory relationships with licensors, franchisees, licensees,
suppliers, contractors, distributors, customers and other Persons having
business dealings with it. Without limiting the generality of the foregoing,
during the Executory Period, Company shall not:
(a) take any action that would result in any of the representations
and warranties of Company herein becoming untrue or in any of the
conditions to the Merger not being satisfied.
(b) take or cause to occur any of the actions or transactions
described in Section 4.10 hereof.
7.3 NEGOTIATION WITH OTHERS.
(a) During the Executory Period, Company shall not, and Company shall not
permit any agent or other representative of Company to, directly or indirectly:
(i) solicit, initiate or engage in discussions or engage in
negotiations with any Person (whether such negotiations are initiated
by Company or otherwise) or take any other action to facilitate the
efforts of any Person, relating to the possible acquisition of Company
(whether by way of merger, purchase of capital stock, purchase or
lease of Assets or otherwise) or any material portion of its capital
stock or Assets (any such acquisition being referred to as an
"Acquisition Transaction");
(ii) provide information to any Person, other than Parent or
Acquisition Sub, relating to a possible Acquisition Transaction;
47
(iii) enter into an agreement with any Person, other than Parent
or Acquisition Sub , relating to or providing for a possible
Acquisition Transaction;
(iv) consummate an Acquisition Transaction with any Person other
than Parent or Acquisition Sub; or
(v) make or authorize any statement, recommendation or
solicitation in support of any possible Acquisition Transaction,
unless Parent or Acquisition Sub are a party to such Acquisition
Transaction.
7.4 PREPARATION OF S-4; OTHER FILINGS. As promptly as practicable after the
date of this Agreement, Parent shall at its sole cost and expense properly
prepare and file with the SEC a Registration Statement on Form S-4 with respect
to the Merger Consideration in which the Shareholder Statement will be included
as a prospectus. Each of Parent and Company shall use its best efforts to
respond to any comments of the SEC, to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing and to cause the
Shareholder Statement to be mailed to the Shareholders at the earliest
practicable time, but in any event within ten (10) Business Days (if permitted
under applicable law or regulation without any further requirements to prepare
and/or file any additional filings) after the S-4 has been declared effective by
the SEC. As promptly as practicable after the date of this Agreement, Parent and
Company shall properly prepare and file any other filings required under the
Exchange Act, the Securities Act or any other Federal or state laws and Parent
shall properly prepare and file any filings required under state securities or
"blue sky" laws, in each case, relating to the Merger and the transactions
contemplated by this Agreement and the Plan of Merger (collectively, the "Other
Filings"). The Company shall promptly furnish Parent with all information
concerning Company and the Shareholders as may be reasonably required in
connection with any action contemplated by this Section 7.4. Each Party will
notify the other Party promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the S-4 or any Other Filing or for
additional information and will supply the other Party with copies of all
correspondence between
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such Party or, any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to the
S-4, the Merger or any Other Filing. Each Party shall promptly provide the other
Party (or its counsel) copies of all filings made by such Party with any
Governmental Authority in connection with this Agreement, the Plan of Merger and
the transactions contemplated hereby and thereby. The S-4 and the Other Filings
shall comply in all material respects with all applicable requirements of law.
Whenever any event occurs which should be set forth in an amendment or
supplement to the S-4 or any Other Filing, Parent or Company, as the case may
be, shall promptly inform the other Party of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to Shareholders of Company, such amendment or supplement.
7.5 ADVICE OF CHANGES. The Company and Parent shall confer on a regular and
frequent basis with the other, report on operational matters and promptly advise
the other orally and in writing of any change, event or circumstance having, or
which, insofar as can reasonably be foreseen, could have, a Material Adverse
Effect on either such Person or which could impair (negatively or positively)
its financial projections or forecasts.
7.6 LETTER OF THE COMPANY'S ACCOUNTANTS. If requested by Parent, Company
shall use its reasonable efforts to cause to be delivered to Parent a letter of
Richard A. Eisner & Co., Company's independent accountant, dated a date within
two (2) Business Days before the date on which the S-4 shall become effective
and addressed to Parent, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4 (and,
if requested, a bring-down comfort letter at the closing of the Merger).
7.7 LETTER OF PARENT'S ACCOUNTANTS. If requested by Company, Parent shall
use its reasonable efforts to cause to be delivered to Company a letter of
Amper, Politziner & Mattia, P.C., Parent's independent public accountants, dated
a date within two (2) Business Days before the date on which the S-4 shall
become effective and addressed to Company, in form and substance reasonably
satisfactory to Company and customary in scope and substance
49
for letters delivered by independent public accountants in connection with
registration statements similar to the S-4 (and, if requested, a bring-down
comfort letter at the closing of the Merger).
7.8 SHAREHOLDERS' APPROVAL. The Company shall:
(a) call a special meeting of the Shareholders (the "Shareholders'
Meeting") within 30 days (or such other period as may be required by
applicable law) after the S-4 shall have been declared effective by the SEC
for the purpose of obtaining the approval of the Merger, this Agreement and
the Plan of Merger and the transactions contemplated hereby and thereby
(the "Shareholder Action"); and
(b) recommend that the Shareholders vote in favor of the Merger and
approve this Agreement and the Plan of Merger and take or cause to be taken
all such other action as may be required by the New Jersey Statute and any
other applicable law in connection with the Merger, this Agreement and the
Plan of Merger, in each case as promptly as possible. The Company shall
prepare and distribute any written notice and other materials relating to
the Shareholder Action, as required by and in accordance with the
Certificate and by-laws of Company, the New Jersey Statute and any other
Federal and state laws relating to the Merger, such Shareholders' Meeting
or any other transaction relating to or contemplated by this Agreement
(collectively, the "Shareholders' Materials"); provided, however, that
Parent and its counsel shall have the opportunity to review all
Shareholders' Materials prior to delivery to the Shareholders, and all
Shareholders' Materials shall be in form and substance reasonably
satisfactory to Parent and its counsel; provided further, however, that if
any event occurs which should be set forth in an amendment or supplement to
any Shareholders' Materials, Company shall promptly inform Parent thereof
(or, if such event relates solely to Parent, Parent shall promptly inform
Company thereof), and Company shall promptly prepare an amendment or
supplement in form and substance satisfactory to Parent in accordance with
the Certificate and by-laws of Company, the New Jersey Statute and any
other Federal or state laws.
7.9 LEGAL CONDITIONS TO MERGER. Each Party shall take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on such
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Party with respect to the Merger and will take all reasonable action necessary
to cooperate with and furnish information to the other Party in connection with
any such requirements imposed upon such other Party in connection with the
Merger. Each Party shall take all reasonable actions necessary:
(a) to obtain (and will take all reasonable actions necessary to
promptly cooperate with the other Party in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Authority, or other third party, required to be obtained or made by such
Party (or by the other Party) in connection with the Merger or the taking
of any action contemplated by this Agreement or the Plan of Merger;
(b) to defend, lift, rescind or mitigate the effect of any lawsuit,
order, injunction or other action adversely affecting the ability of such
Party to consummate the transactions contemplated hereby; and (c) to
fulfill all conditions precedent applicable to such Party pursuant to this
Agreement;
(c) if required, to complete all filings required under the Hart-Scott
Rodino Antitrust Improvements Act of 1976 ("HSR Act") in connection with
the Merger and the applicable waiting period with respect to each such
filing (including any extension thereof by reason of a request for
additional information) shall have expired by the date the Shareholder
Statement is first sent to the Shareholders of Company (the "Mailing
Date").
7.10 CONSENTS. Each Party shall use its commercially reasonable efforts,
and the other Party shall cooperate with such efforts, to obtain any consents
and approvals of, or effect the notification of or filing with, each Person or
authority, whether private or governmental, whose consent or approval is
required in order to permit the consummation of the Merger and the transactions
contemplated hereby and to enable the Surviving Corporation to conduct and
operate the business of Company substantially as presently conducted and as
proposed to be conducted.
7.11 EFFORTS TO CONSUMMATE. Subject to the terms and conditions herein
provided, each of the Parties hereto shall, in good faith, use reasonable effort
to do or cause to be
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done all such acts and things as may be necessary, proper or advisable,
consistent with all applicable laws and regulations, to consummate and make
effective the transactions contemplated hereby and by the Plan of Merger and to
satisfy or cause to be satisfied all conditions precedent that are applicable to
each such Party that are set forth in this Agreement as soon as reasonably
practicable (including, without limitation, in the case of Company cooperating
with (and executing and delivering appropriate certifications to) any Person who
has been requested by a party hereto to analyze (and/or furnish an opinion with
respect to) whether the Merger shall be treated as a tax-free reorganization
under the Code).
7.12 NOTICE OF PROSPECTIVE BREACH. Each Party hereto shall immediately
notify the other Party in writing upon the occurrence of any act, event,
circumstance or thing that is reasonably likely to cause or result in a
representation or warranty hereunder to be untrue at the Closing, the failure of
a closing condition to be achieved at the Closing, or any other breach or
violation hereof or default hereunder.
7.13 PUBLIC ANNOUNCEMENTS. Each of Company and Parent hereto agrees that it
shall consult with the other parties before issuing any press releases or
otherwise making any Public statements with respect to the Merger; and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or by obligations pursuant to any
listing agreement with any national securities exchange or as may be advised by
counsel to be desirable or appropriate, without the prior written consent of the
other. Each Party further agrees that no Party shall unreasonably withhold their
written consent to the issuance of a public disclosure referred to in this
Section 7.13.
7.14 NOTICE OF DEVELOPMENTS. Each party hereto will use all commercially
reasonable efforts to ensure that its respective representations and warranties
will be accurate and complete at the time this Agreement is executed. However,
notwithstanding the foregoing, each party shall at any time from the date of
this Agreement throughout the Closing notify the other party if the notifying
party becomes aware of any fact or condition that causes or constitutes a
52
breach of any of its representations and warranties as of the date of this
Agreement or of any development causing a breach of any of its representations
and warranties.
7.15 AGREEMENT REGARDING PROCEEDINGS. In the event of any threatened,
pending or completed claim, action, suit, investigation or any legal,
administrative or other proceeding (a "Proceeding") by any Governmental
Authority or other Person which questions the validity or legality of the
transactions contemplated by this Agreement or seeks to enjoin, restrain or
prohibit such transactions, or seeks damages in connection therewith, whether
before or after the Effective Date of the Merger, Parent, Acquisition Sub,
Company, and the Surviving Corporation agree, to the fullest extent permissible
by law, to cooperate in the defense thereof.
ARTICLE VIII
CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS
The obligations of each Party to perform this Agreement and the Plan of Merger
and to consummate the transactions contemplated hereby and thereby will be
subject to the satisfaction of the following conditions unless waived (to the
extent such conditions can be waived) by each other Party:
8.1 SHAREHOLDER APPROVAL; AGREEMENT OF MERGER. This Agreement, the Plan of
Merger, and the Merger shall have been approved and adopted by at least a
majority of the outstanding shares voting of Company Stock, and the Plan of
Merger shall have been executed and delivered by Acquisition Sub and Company and
filed with and accepted by the Treasurer of the State of New Jersey.
8.2 APPROVALS. All authorizations, consents, orders or approvals of, or
declarations or filings with or expiration of waiting periods imposed by any
Governmental Authority necessary for the consummation of the transactions
contemplated hereby shall have been obtained or made or shall have occurred.
8.3 LEGAL ACTION. No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any Federal or state court or other Governmental
Authority and remain in effect.
53
8.4 S-4. The S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceeding seeking a stop order.
8.5 LEGISLATION. No Federal, state, local or foreign statute, rule or
regulation shall have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated by this Agreement or the Plan of
Merger or any of the conditions to the consummation of such transactions.
8.6 TAX-FREE REORGANIZATION. The Company and Parent shall be reasonably
satisfied that the Merger shall be treated for Federal income Tax purposes as a
tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code,
by reason of Section 368(a)(2)(E) of the Code.
8.7 DISSENTING SHARES. Holders of no more than twenty-five (25%) percent of
the Company's Stock exercise dissenting shareholder's rights.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF PARENT AND ACQUISITION SUB
The obligations of Parent to perform this Agreement and to consummate the
transactions contemplated hereby and of Acquisition Sub to perform this
Agreement and the Plan of Merger and to consummate the transactions contemplated
hereby and thereby will be subject to the satisfaction of the following
conditions unless waived (to the extent such conditions can be waived) by Parent
and Acquisition Sub:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the any officer of the Company set forth in Article III and the representations
and warranties of Company set forth in Article IV hereof shall in each case be
true and correct in all respects as of the date of this Agreement, and as of the
effective date of the Shareholder Action and as of the Closing Date as though
made at and as of such dates, respectively.
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9.2 PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects the obligations required to be performed by
it under this Agreement and the Plan of Merger prior to or as of the Closing
Date.
9.3 AUTHORIZATION OF MERGER.
(a) As of the Mailing Date, all action necessary to authorize the
execution, delivery and performance of the Transaction Documents by Company
and the consummation of the transactions contemplated hereby and thereby
shall have been duly and validly taken by the Board of Directors and Parent
shall have received copies of all resolutions evidencing same certified by
the Secretary of Company. The Company shall have full power and right to
effect the Merger on the terms provided herein.
(b) As of the Effective Date, all action necessary to authorize the
execution, delivery and performance of the Transaction Documents by the
Shareholders and the consummation of the transactions contemplated hereby
and thereby shall have been duly and validly taken by the Shareholders, and
Parent shall have received copies of all resolutions evidencing same
certified by the Secretary of Company. The Shareholders of Company shall
have full power and right to effect the Merger on the terms provided
herein.
9.4 MERGER FILING. The Certificate of Merger shall be duly executed by
Company.
9.5 CERTIFICATE. Parent and Acquisition Sub shall have received a
certificate dated the Closing Date, signed by the President of Company as to the
satisfaction of the conditions contained in Sections 9.1 through 9.3.
9.6 GOOD STANDING CERTIFICATES. A certificate of the appropriate officials,
as of a recent date, of the due organization and good standing to do business
and tax standing of Company in New Jersey and in each jurisdiction wherein the
conduct of its business or the ownership of operation of Assets requires Company
to maintain qualification as a foreign corporation.
55
9.7 OPINION OF THE COMPANY'S COUNSEL. Parent and Acquisition Sub shall have
received an opinion in the form set forth on Exhibit 9.7, dated the Closing
Date, of Schwartz Simon Edelstein Celso & Kessler, LLP, counsel to Company.
9.8 ACCEPTANCE BY COUNSEL TO PARENT AND ACQUISITION SUB. The form and
substance of all legal matters contemplated hereby and of all papers delivered
hereunder shall be reasonably acceptable to Stern Greenberg & Kilcullen, a New
Jersey Partnership ("SGK"), counsel for Parent and Acquisition Sub.
9.9 CONSENTS AND APPROVALS. Parent and Acquisition Sub shall have received
duly executed copies of all consents set forth on Schedule 4.6, and other
consents and approvals contemplated by this Agreement, in form and substance
satisfactory to Parent and Acquisition Sub.
9.10 GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
Governmental Authority which are required for or in connection with the
execution and delivery by Company of the Transaction Documents and the
consummation by Company of the transactions contemplated hereby and thereby
shall have been obtained or made.
9.11 TRANSACTION DOCUMENTS. Each of the Transaction Documents shall be in
full force and effect as of the Effective Date in accordance with the respective
terms thereof, and each Person or entity who or which is required or
contemplated by the parties hereto to be a party to any Transaction Documents
who or which did not theretofore enter into such Transaction Documents shall
execute and deliver such Transaction Documents.
9.12 CONFIDENTIALITY, NON-COMPETITION AND NO SOLICITATION AGREEMENT. Burt
Ensley, with respect to himself only, shall have executed and delivered to
Parent a Noncompetition and Confidentiality Agreement in form and substance
reasonably acceptable to Parent, and as set forth in Exhibit 9.12 attached
hereto. Such agreement shall only contain those provisions as are set forth in
Article XI hereof.
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9.13 SCHEDULES. Each of Parent and Acquisition Sub shall have determined in
its sole discretion, exercised in good faith, that the respective observations
of Parent and Acquisition Sub made during their review of the schedules to this
Agreement disclosed no material information regarding Company unsatisfactory to
Parent or Acquisition Sub.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of Company to perform this Agreement and the Plan of
Merger, and to consummate the transactions contemplated hereby and thereby will
be subject to the satisfaction of the following conditions unless waived (to the
extent such conditions can be waived) by Company:
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Acquisition Sub set forth in Article V hereof shall be true and
correct in all material respects (except for any representation or warranty that
by its terms is qualified by materiality, in which case it shall be true and
correct in all respects) as of the date of this Agreement, and as of the Closing
Date as though made at and as of such dates, respectively.
10.2 PERFORMANCE OF OBLIGATIONS OF PARENT AND ACQUISITION SUB. Parent and
Acquisition Sub shall have performed in all material respects their respective
obligations required to be performed by them under this Agreement and the Plan
of Merger prior to or as of the Closing Date.
10.3 AUTHORIZATION OF MERGER. All action necessary to authorize the
execution, delivery and performance of the Transaction Documents by Parent, the
execution, delivery and performance of this Agreement and the Plan of Merger by
Acquisition Sub, and the consummation of the transactions contemplated hereby
and by the Plan of Merger shall have been duly and validly taken by the board of
directors of Parent and Acquisition Sub and by
57
Parent as the sole shareholder of Acquisition Sub, and Company shall have
received copies of all such resolutions certified by the respective Secretary of
Parent and Acquisition Sub.
10.4 MERGER FILING. The Certificate of Merger shall be duly executed by
Acquisition Sub.
10.5 CERTIFICATE. The Company shall have received a certificate dated the
Closing Date, signed by the President of each of Parent and Acquisition Sub as
to the satisfaction of the conditions contained in Sections 10.1 through 10.3,
except to the extent waived by Company.
10.6 GOOD STANDING CERTIFICATES. A certificate of the appropriate
officials, as of a recent date, of the due organization and good standing to do
business and tax standing of Parent in Delaware and Acquisition Sub in New
Jersey and in each jurisdiction wherein the conduct of its business or the
ownership of operation of its business requires such Person to maintain
qualification as a foreign corporation.
10.7 OPINION OF PARENT'S COUNSEL. Company shall have received an opinion
dated the Closing Date of DB&S counsel to Parent and Acquisition Sub in form and
substance reasonably satisfactory to Company, in the form annexed hereto as
Exhibit 10.6.
10.8 ACCEPTANCE BY COUNSEL TO COMPANY. The form and substance of all legal
matters contemplated hereby and of all papers delivered hereunder shall be
reasonably acceptable to Schwartz, Simon, Edelstein, Celso & Kessler, LLP.
10.9 CONSENTS AND APPROVALS. The Company shall have received duly executed
copies of all consents referenced in Section 5.4 and other consents and
approvals contemplated by this Agreement in form and substance reasonably
satisfactory to Company.
10.10 GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
Governmental Authority which are required for or in connection with the
execution and delivery by Parent and Acquisition Sub of the Transaction
Documents and the consummation by Parent and Acquisition Sub of the transactions
contemplated hereby and thereby shall have been obtained or made.
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10.11 TRANSACTION DOCUMENTS. Each of the Transaction Documents shall be in
full force and effect as of the Effective Date in accordance with the respective
terms thereof, and each Person who or which is required or contemplated by the
parties hereto to be a party to any Transaction Documents who or which did not
theretofore enter into such Transaction Documents shall execute and deliver such
Transaction Documents.
ARTICLE XI
CONFIDENTIALITY, NON-COMPETE AND NO SOLICITATION
11.1 CONFIDENTIALITY. From and after the date hereof, Burt Ensley agrees
not to divulge, communicate, use to the detriment of Parent, Acquisition Sub, or
Company or for the benefit of any other Person, or misuse in any way, any
confidential information or trade secrets included in or relating to Company or
its Assets including, without limitation, personnel information, secret
processes, know-how, customer lists or other technical data.
11.2 NON-COMPETE.
(a) Until the third anniversary of the Closing Date, Burt Ensley and
no Affiliate of Burt Ensley shall, anywhere in North America or Europe,
directly or indirectly, alone or in association with any other Person,
firm, corporation or other business organization (i) acquire or own in any
manner, any interest in any Person that is engaged in any facet of the
sale, manufacture, or production of plant based nutritional supplements
(the "Business") of Parent or Acquisition Sub or its subsidiaries or
affiliates (collectively, the "Purchasing Companies"), (ii) engage in any
facet of the Business of Company or compete in any way with the Business of
the Purchasing Companies, (iii) be employed in any capacity by, serve as an
employee of, or consultant or be an advisor to, or otherwise participate in
the management or operation of, any Person that (x) engages in any facet of
the Business of Parent, or (y) competes with the Business of Parent in any
way. As used herein, the term "Affiliate" shall mean any Person that is
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, Company or Burt Ensley.
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(b) The parties hereto intend that the covenants contained in this
Section 11.2 shall be construed as a series of separate covenants, one for
each state or country. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained in
Section 11.2(a) above. If, in any judicial proceeding, a court shall refuse
to enforce any of the separate covenants deemed included in Section
11.2(a), then such unenforceable covenant shall be deemed reduced in scope
or, if necessary, eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate
covenants to be enforced.
(c) The provisions of this Section 11.2 shall not apply to investments
by Burt Ensley in shares of stock traded on a national securities exchange
or on the national over-the-counter market which shall have an aggregate
market value, at the time of acquisition, of less than 5% of the
outstanding shares of such stock.
Burt Ensley acknowledges that the provisions of this Section 11.2, and the
period of time, geographic area and scope and type of restrictions on its
activities set forth herein, are reasonable and necessary for the protection of
Parent and the Acquisition Sub and are an essential inducement to Parent and the
Acquisition Sub entering into the Transaction Documents to which they are a
party and consummating the transactions contemplated thereby.
11.3 NO SOLICITATION. Burt Ensley shall not, from and after the Closing
Date, and for a period of three (3) years thereafter, directly or indirectly,
for himself or on behalf of any other Person, employ, engage or retain any
Person who, at any time during the preceding 12-month period, shall have been an
employee of Parent, Acquisition Sub, or Company, or contact any supplier,
customer or employee of Company for the purpose of soliciting or diverting any
such supplier, customer or employee of Parent, Acquisition Sub, or Company.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless Parent, Acquisition Sub and (after the Merger) Surviving
Corporation from
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and against, without duplication, all costs, fees, liabilities, Taxes, charges,
claims, expenses, losses and damages, including reasonable legal expenses and
costs of investigation (both of those incurred in connection with the defense or
prosecution of an indemnifiable claim and those incurred in connection with the
enforcement of this provision), as and when actually incurred or as and when
actually paid by Parent, Acquisition Sub, or Surviving Corporation or any of
their respective subsidiaries, successors, assignors, officers, employees,
directors, agents or affiliates, arising out of or in connection with any action
or proceeding (collectively "Losses") as a result of or arising in connection
with:
(a) the breach of any of Company's representations, warranties or
agreements contained in the Transaction Documents;
(b) the actual or threatened commencement of any proceeding, suit or
action against Parent, Surviving Corporation or any direct or indirect
Subsidiary thereof, or any director, officer, agent or employee of any of
them, relating to or arising from the Merger or Transaction Documents
which, if determined adversely thereto (regardless of the actual
determination thereof would result in a Loss (any such pending or
threatened suit or action being a "Covered Action"); or
(c) any and all actions, suits or proceedings, claims or demands
incident to any of the foregoing or such indemnities.
12.2 INDEMNIFICATION BY PARENT AND ACQUISITION SUB. Parent and Acquisition
Sub agree to indemnify and hold harmless Company from and against, without
duplication, all Losses arising out of or in connection with any action or
proceeding as a result of or arising in connection with the breach of any of
Parent's or Acquisition Sub's representations, warranties or agreements
contained in the Transaction Documents.
12.3 LOSS INDEMNITY PROCEDURE. Upon learning of the commencement of a
Covered Action or the actual receipt by the parties claiming a right of
indemnification (the "Indemnified Party") of information relating to the
purported existence of facts or circumstances which could result in the
commencement of a Covered Action or other incurrence
61
of Loss, the Indemnified Party shall promptly, but no later than fifteen (15)
days after learning of such commencement or receipt, give notice
("Indemnification Notice") thereof, with reasonable specificity of the facts as
then known to the party having the indemnification obligation (the "Indemnifying
Party"); provided, however, failure to give timely such notice shall not release
the Indemnifying Party of its obligations hereunder except, and only, to the
extent the Indemnifying Party suffers actual prejudice as a proximate result of
such failure.
(a) The Indemnifying Party shall have the right to assume the defense
of any such Covered Action by giving written notice (the "Assumption
Notice") to the Indemnified Party within 20 days after notice given
pursuant to this Section 12.4 which Assumption Notice shall state that (i)
the Indemnifying Party agrees that the claimant is entitled to
indemnification hereunder and that any resulting Loss for which it is or
they are liable; and (ii) it agrees or they agree to assume the defense
thereof in the name and on behalf of the Indemnified Party with counsel
reasonably satisfactory to the Indemnified Party, in either event at the
sole cost and expense of the Indemnifying Party; provided, however, (x) all
such costs and expenses of the foregoing counsel, if not paid by the
Indemnifying Party and instead paid by the Indemnified Party shall be
Losses for which the Indemnified Party is indemnified under this Section
12.4, (y) the Indemnified Party, notwithstanding the timely delivery of an
Assumption Notice, may participate in such Covered Action through counsel
separately selected and paid for by the Indemnified Party, and (z) if no
Assumption Notice is timely given, or despite the giving of the Assumption
Notice the defendants in any Covered Action include both the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall have
reasonably concluded that there may be legal defenses available to it which
are different from or additional to those available to the Indemnifying
Party, or if there is a conflict of interest which would prevent counsel
for the Indemnifying Party from also representing the Indemnified Party,
the Indemnified Party shall have the right to select one separate counsel
to conduct the defense of such action on its behalf, and all such costs and
expenses shall be paid by the Indemnifying Party and, if paid by the
Indemnified Party, shall be Losses under this Section 12.4. The Indemnified
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Party may take such action with respect to a Covered Action as it may deem
appropriate to protect against further damage or default, including
obtaining an extension of time to answer the complaint or other pleading or
filing an answer thereto.
(b) Subject to Section 12.4(a) above, no Indemnified Party shall
consent to the entry of any judgment or enter into any settlement relating
to a Loss without the written consent of the Indemnifying Party, which
shall not be unreasonably withheld or delayed.
12.4 DURATION OF INDEMNIFICATION. Liability for indemnification under this
Article XII, shall expire on the second anniversary of the Closing Date (or, in
the case of indemnification arising out of the breach of a representation or
warranty, the survival period of such representation or warranty under Section
15.1 below).
12.5 NO CLAIM AGAINST SURVIVING CORPORATION/COMPANY. In no event following
Closing may any officers or shareholders of the Company seek or assert any claim
whatsoever, whether for contribution or otherwise, against Surviving Corporation
arising out of any facts or any action or failure to act by Company existing or
occurring prior to or as of the Closing, including, without limitation, based
upon any breach of any representation, warranty, covenant or condition herein by
Company, whether by way of contribution based upon the gross negligence or
willful misconduct of Company or otherwise.
12.6 OTHER INDEMNIFICATION PROVISIONS.
(a) Unless otherwise specifically provided herein, the indemnification
provisions of this Article XII shall, absent fraud, be the sole and
exclusive remedy of the parties for any breach of any covenants,
representations or warranties made by any other Party in this Agreement and
each Party hereby waives all statutory, common law and other claims with
respect thereto, other than claims for indemnification pursuant to this
Article XII and claims based on fraud.
(b) Indemnification hereunder shall include liability for any special,
incidental, punitive or consequential damages to the extent the Indemnified
Party is required to pay such amount to a third party. Except as expressly
provided in the preceding sentence, there
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shall be no indemnification by any party for any special, incidental,
punitive or consequential damages.
(c) In calculating amounts payable to an Indemnified Party, the amount
of the indemnified Losses shall be computed net of (i) payments that the
Indemnified Party actually receives under any insurance policy with respect
to such Losses, (ii) the net amount of any prior or subsequent recovery by
the Indemnified Party from any third party with respect to such Losses, and
(iii) any Tax benefit to the Indemnified Party with respect to such Losses.
ARTICLE XIII
PAYMENT OF CERTAIN FEES AND EXPENSES
13.1 PAYMENT OF CERTAIN FEES AND EXPENSES.
(a) Except as set forth below in this Section 13.1, Parent and Company
shall pay its own expenses that are incidental to negotiation, preparation,
execution, delivery of the Transaction Documents and the Closing whether or
not this Agreement and the transactions contemplated hereby are actually
consummated; it being understood that Company shall not be permitted to
incur more than $50,000 of legal fees and accounting fees in connection
with the negotiation, preparation, execution and delivery of the
Transaction Documents and the Closing ("Permitted Transaction Costs").
(b) If (i) this Agreement is terminated by Parent or Acquisition Sub
pursuant to Section 14.1(b) (except Section 8.2 through Section 8.6 to the
extent Company uses its reasonable commercial efforts to see the conditions
of Section 8.2 through Section 8.6 fulfilled) or Section 14.1(c) (except
Section 9.8, Section 9.10 and Section 9.15 to the extent Company uses its
reasonable commercial efforts to see the conditions of Section 9.8, Section
9.10 and Section 9.15 fulfilled) and (ii) Company enters into an
acquisition transaction involving a third party within one year after such
termination, then Company agrees to pay Parent within sixty (60) days
following the entering into of such acquisition transaction (A) $50,000
plus (B) all out-of-pocket expenses (including, without limitation, all
attorneys' fees, investment banking fees, printing costs, governmental
filing and other governmental fees, and finder's fees and expenses)
incurred
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by Parent and Acquisition Sub in connection with the transactions
contemplated by this Agreement (collectively the "BreakUp Fee") as
reimbursement for the lost profit opportunity of Parent and the time and
expense of Parent's executives. Parent and Acquisition Sub hereby waive any
and all right, claim, or interest for any fees or expenses incurred by
Parent or Acquisition Sub in any prior proposed transaction between Company
and Parent and/or Acquisition Sub. Company hereby waives any and all right,
claim, or interest for any fees or expenses incurred by Company in any
prior proposed transaction between Company and Parent and/or Acquisition
Sub.
ARTICLE XIV
TERMINATION, AMENDMENT, MODIFICATION AND WAIVER
14.1 TERMINATION. This Agreement may be terminated, and the Merger
abandoned, notwithstanding the approval by Parent, Acquisition Sub and Company
of this Agreement, at any time prior to the Effective Date, by:
(a) the mutual consent of Parent, Acquisition Sub, and Company.
(b) Parent, Acquisition Sub, or Company, if the conditions set forth
in Article VIII hereof shall not have been met and the Merger has not
occurred by August 15, 2001, which date may be extended at the discretion
of Parent or Acquisition Sub, except if such conditions have not been met
solely as a result of the action or inaction of the party seeking to
terminate; or(ii) the other party or parties have materially breached at
the time made a representation and warranty, covenant or agreement set
forth herein and such breach is not cured (if curable) within 15 days
following written notice thereof from the non-breaching party;
(c) Parent and Acquisition Sub if the conditions set forth in Article
IX hereof shall not have been met (or waived by the Person(s) entitled to
satisfaction thereof), and Company if the conditions set forth in Article X
hereof shall not have been met (or waived by the Person(s) entitled to
satisfaction thereof), in either case by August 15, 2001, which date may be
extended at the discretion of Parent or Acquisition Sub, except if such
conditions have not been met solely as a result of the action or inaction
of the party seeking to terminate. Notwithstanding
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the provisions of this Section 14.1(c), Company shall have the right to
terminate this Agreement and abandon the Merger after August 15, 2001,
except if the Merger cannot be completed by such date solely as a result of
the action or inaction of Company.
(d) Parent and Acquisition Sub on the one hand, or Company on the
other hand, if such party or parties shall have determined in its or their
sole discretion, exercised in good faith, that the Merger contemplated by
this Agreement and the Plan of Merger has become impracticable by reason of
the institution of any litigation, proceeding, or investigation to restrain
or prohibit the consummation of the Merger, so long as such litigation,
proceeding or investigation has not been instituted, initiated, commenced,
or undertaken without the approval of the party or parties seeking to
terminate the Agreement.
(e) Parent or Acquisition Sub if during the thirty (30) day period
after the date of this Agreement, Parent shall have determined in its sole
discretion, exercised in good faith, that the respective observations of
Parent and Acquisition Sub made during their due diligence process
disclosed information regarding Company unsatisfactory to it and such
information is (i) material and (ii) not adequately disclosed in this
Agreement.
Any termination pursuant to this Section 14.1 shall be effected by written
notice from the party or parties so terminating to the other parties hereto.
14.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 14.1, this Agreement shall be of no further
force or effect and no party hereto, nor its shareholders, directors, officers
or affiliates, shall have any liability in connection herewith; provided,
however, that Article XII, Article XIII, this Section 14.2 and Article XV shall
survive the termination of this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 SURVIVAL; EFFECT OF DISCLOSURE. Except as otherwise specifically
provided herein all statements, representations, warranties and covenants shall
survive the Closing for two (2) years, regardless of any inspection or discovery
whether by reason of due
66
diligence or otherwise, and shall remain in effect continuously during such
period; provided that the representations, warranties and covenants set forth in
(a) Sections 3.4, 4.4 and 4.28 shall survive indefinitely and remain in effect
continuously after the Closing and (b) Sections 4.11, 4.14 and 4.25 shall
survive and remain in effect continuously after the Closing for the lesser of
(i) seven (7) years and the (i) statute of limitations applicable to the subject
representation, warranty or covenant. None of Company, Parent or Acquisition Sub
shall be liable or bound in any manner by representations, warranties,
covenants, or agreements pertaining to the subject matter of this Agreement,
whether express or implied, or any other matter whatsoever, which are made or
furnished by any Person representing or purporting to represent Company, Parent
or Acquisition Sub unless and only to the extent that such representations,
warranties, covenants, or agreements are expressly and specifically set forth in
this Agreement or the Exhibits or Schedules hereto or in any certificate or
other agreement, document or instrument delivered pursuant to the provisions of
this Agreement.
15.2 ENTIRE AGREEMENT. This Agreement and the Plan of Merger (including the
Schedules and the Exhibits attached hereto) and the other writings referred to
herein contain the entire agreement among the parties hereto with respect to the
transactions contemplated hereby and supersede all prior agreements or
understandings, written or oral, among the parties with respect thereto.
15.3 DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
15.4 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested or by telecopier, with
confirmation as provided above addressed as follows:
if to Parent or Acquisition Sub, to:
Integrated Health Technologies, Inc.
225 Long Avenue
67
Hillside, NJ 07205
Attention: Seymour Flug, President
Telephone: (973) 926-0816
Telecopier: (973) 926-1735
with a copy to:
Stern Greenberg & Kilcullen
75 Livingston Avenue
Roseland, NJ 07068
Attention: Kevin M. Kilcullen, Esq.
Telephone: (973) 535-1900
if to Company, to:
Nucycle Therapy, Inc.
1 Deer Park Drive, Suite M
Monmouth Junction, NJ 08052
Attention: Burt Ensley
Telephone: (732) 438-0900
Telecopier: (732) 438-1209
with a copy to:
Schwartz Simon Edelstein Celso & Kessler LLP
Ten James Street
Florham Park, NJ 07932
Attention: John B. Mariano, Jr., Esq.
Telephone: (973) 301-0001
Telecopier: (973) 301-0203
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received: (a) in the case of personal
delivery or telecopy, on the date of such delivery; (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent; and (c) in the case of mailing, on the third business day following
the date on which the piece of mail containing such communication was posted.
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15.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts by original or facsimile signature, each such counterpart shall be
an original instrument, and all such counterparts together shall constitute one
and the same agreement.
15.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the New Jersey Statute and with the laws of the State of New
Jersey applicable to contracts made and to be performed wholly therein without
regard to such state's principles of conflicts of law.
15.7 BENEFITS OF AGREEMENT. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and shall not confer any rights or
benefits on any other persons or entities. This Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto;
provided, however, that anything contained herein to the contrary
notwithstanding, Acquisition Sub may assign and delegate any or, ill of its
rights and obligations hereunder to any other direct or indirect wholly-owned
subsidiary of Parent.
15.8 PRONOUNS. As used herein, all pronouns shall include the masculine,
feminine, neither, singular and plural thereof whenever the context and facts
require such construction.
15.9 WAIVER, AMENDMENT AND MODIFICATION.
(a) No failure or delay on the part of any of the parties hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of
any other right, power, or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to
the parties hereto at law, in equity or otherwise.
(b) No amendment, supplement or modification of or to any provision in
this Agreement, or any waiver of any such provision or consent to any
departure by any party from the terms of any such provision may be made
orally. Any (i) amendment, supplement or modification hereto, (ii) consent
hereunder or (iii) waiver of any provision (collectively,
69
"Modification") of this Agreement or of any of the Notes shall be effective
if given pursuant to a written agreement signed by the parties to this
Agreement.
15.10 SPECIFIC PERFORMANCE. The parties hereto agree that if for any reason
any party hereto shall have failed to perform its obligations under this
Agreement, then any other party hereto seeking to enforce this Agreement against
such nonperforming party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief.
15.11 SEVERABILITY. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof. The parties hereto further agree to replace such
invalid, illegal or unenforceable provision of this Agreement with a valid,
legal and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid, illegal or unenforceable
provision.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
and Plan of Reorganization to be executed on its behalf as of the day and year
first above written.
INTEGRATED HEALTH TECHNOLOGIES, INC.
By: /s/ Seymour Flug
----------------------------------
Name: Seymour Flug
Title: President
CHEM ACQUISITION CORP.
BY: /s/ Seymour Flug
----------------------------------
Name: Seymour Flug
Title: President
NUCYCLE THERAPY, INC.
BY: /s/ Burt D. Ensley
----------------------------------
Name: Burt D. Ensley
Title: President and C.E.O.
71
AGREEMENT AND PLAN OF REORGANIZATION
DATED
AS OF March 5th, 2001
AMONG
INTEGRATED HEALTH TECHNOLOGIES, INC.
CHEM ACQUISITION CORP.
AND
NUCYCLE THERAPY, INC.