SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: - November 19, 2001
BRL HOLDINGS, INC.
(Exact name of registrant as specified in charter)
Delaware 000-15260 88-0218411
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Jurisdiction of Commission File I. R. S. Employer
Incorporation Number Identification Number
340 Granite Street, Suite 200, Manchester, NH 03102
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(Address of principal executive offices)
Registrant's telephone number:
(603) 641-8443
Item 1. Changes in Control of Registrant
Effective November 9th, 2001, BRL Holdings, Inc. ("the Company") acquired 100%
of the stock of AssureTec Systems, Inc. ("AssureTec") in a stock for stock
transaction ("the Acquisition"). To complete the Acquisition, the Company issued
3,177,000 restricted shares of restricted common stock. Further, 2,325,000
options for a like number of shares of common stock were issued to employees and
consultants of AssureTec to replace options issued by AssureTec. 1,050,000 of
these options are subject to continuing employment of the management team and
the remaining 1,275,000 are subject to the management team meeting specific
technical and financial milestones. Under terms of the Acquisition, all persons
receiving shares and options issued under the Acquisition waived any rights to
spin-off shares, if any such shares are issued by the Company, resulting from
the Company's continuing sponsorship of three independent business units.
Prior to the Acquisition, Dr. Reeves, President and CEO of the Company,
including the shares owned by Sandra Reeves his wife, beneficially owned 38% of
the stock of the Company. Following the Acquisition, Dr. Reeves owns 37% of the
Company's fully diluted shares, including shares held by his wife. Mr. Bruce
Monk, the Company's new President, owns 1,000,000 post Acquisition shares and
controls an additional 1,000,000 post Acquisition option shares representing 27%
of the fully diluted equity of AssureTec. At June 30, 2001, prior to the
Acquisition, Officers and Directors of the Company, including the shares
controlled by Dr. Reeves' wife, owned 50.9% of the fully diluted equity.
Following the Acquisition, Officers and Directors including Dr. Reeves, Mr. Monk
and other Officers and Directors beneficially control 2,772,306 shares and
2,256,800 option shares representing 69.6% of the fully diluted equity exclusive
of the 477,401 shares (6.6%) owned or controlled by Mrs. Reeves.
Prior management of the Company continues to hold three seats of four seats on
the Company's Board of Directors and the Company's shareholders prior to the
Acquisition, including shares issued to them in the Acquisition, now own 64% of
the Company's common stock on a fully diluted basis. The Company believes the
Acquisition does not represent a change of control of the Company.
Item 2. Acquisition of 100% of AssureTec Systems, Inc.
The Company acquired the stock held in AssureTec by issuing 1,000 shares of the
Company's common stock for each share of AssureTec stock outstanding. The
transaction was a stock for stock transaction whereby the purchase price was
equal to the number of restricted shares of the Company's stock paid to each
AssureTec stockholder. AssureTec is now a wholly owned subsidiary of the
Company. The Acquisition will be accounted for in accordance with the purchase
method of accounting. AssureTec was newly organized in October of 2001 and had
no business operations, no liabilities and only minimal capitalization.
Consequently, the Company will not be filing financial statements for Assure Tec
in connection with this Form 8-K filing. The operations of both the Company and
AssureTec will continue to be headquartered in Manchester, New Hampshire. Dr.
Reeves will continue as the CEO and the Company named Bruce Monk as its
President to lead it in the development and sale of AssureTec's identity
verification systems and sub-systems for the travel and border management
markets. These systems incorporate a combination of biometrics, document
validation, and data verification in a manner that both enhances security and
addresses privacy concerns. Later, the Company will focus on products, already
under development, which will meet the security needs of a wide variety of
commercial applications. In 1991 Mr. Monk founded Imaging Automation of Bedford,
NH, developer of BorderGuard, an imaging-based device used to authenticate
travel documents. In October of 2000, Mr. Monk terminated his employment with
Imaging Automation.
AssureTec has advanced proprietary technology and a strong and experienced
management and technical team. The Company has targeted several major
corporations regarding a strategic partnership to deliver, operate and support
total systems solutions incorporating the Company's identity verification
technologies. AssureTec's objective is to become a leader in providing reliable
real-time solutions to deter unauthorized entry/exit across borders and to track
or intercept the movement of potentially dangerous individuals and products
throughout the world's transportation systems.
The Company is developing its initial product (SecureID(C)) that can
automatically validate driver's licenses and virtually any travel document
issued worldwide. The Company believes its proprietary approach will give it the
ability to adapt and update its systems to easily incorporate the most current
biometric methods and various types of advanced security features that may be
incorporated into documents from time to time. Most importantly, as opposed to
new card technologies which may be available sometime in the future, the
Company's validation technology gives the Company the ability to evaluate
currently issued documents and associated databases immediately to provide the
best possible identity verification. The systems that are implemented will
become even more effective during and after the period, estimated by the Company
to be at least ten years that it will take to change the current infrastructure
to add secure authentication capabilities.
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A prototype SecureID unit has been designed and assembled with beta release
planned for the first quarter 2002. By year-end 2002 the Company expects to
release its SecureID II product that will be more versatile and will incorporate
a variety of biometrics and document alteration detection technology.
SecureID II will incorporate systems software which will allow it to integrate
"best of breed" tools as such are built-in by issuing authorities or developed
by the Company and outside biometric and smart card providers. The Company is
currently in discussions with several leading biometric companies and expects to
license one or several devices for incorporation into early product releases.
The Company expects the events of September 11th to forever change the landscape
of travel and border control within the United States and around the world.
On-line databases, earlier estimated to be available in ten to twenty years,
will become accessible to the Company's devices and systems much earlier.
Development of systems to incorporate these emerging security technologies has
become a priority of the United States and other governments. As a result, the
Company will focus significant effort to become a major player in competing for
government systems development projects.
The Company's mission is to create versatile identity verification devices and
systems needed for 21st century domestic and international security. The Company
believes its systems will allow the general public to move freely within the
country and across borders while providing automatic, real-time and reliable
interdiction of those persons who are wanted for criminal activities or
represent a serious potential risk to commit criminal acts.
The Company expects to accomplish its mission by developing and marketing a
range of products and system solutions that will provide a major deterrent to
most types of identity and product fraud. The first product, SecureID, and
associated software AssureID(C), will allow improved security by ensuring that
the identity of a traveler is verified and that the person is not wanted by any
government agency, thus providing a strong deterrent to terrorism. Verifying
that the identity document used is valid and has not been altered followed by
checking, through biometric comparison, the identity of the presenter, achieves
this protection. Comparison of the information captured during the process with
various local and distributed completes final validation. These products will
represent a comprehensive solution for illegal entry into a country as well as
unauthorized travel within the United States.
Currently, AssureTec is operating primarily by accruals of management salaries
and cash advances by management and directors of the Company. The Company is
actively seeking investment funds to continue the activities of AssureTec.
Absent achieving significant funding from sale of the Company's stock and or
investment by one or several strategic partners, AssureTec cannot continue to
pursue its goals and objectives.
MANAGEMENT TEAM
The Company has sought to create a management and key employee team that has
experience in the security market and relevant technical and operations
experience.
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RICHARD SCHUBERT has been Chairman of the Board of Directors of the Company
since July 1992. Mr. Schubert is currently a business consultant. From December
1990 through September 1995, Mr. Schubert was the President of The Points of
Light Foundation, a foundation created to encourage Americans to become directly
involved in consequential community service in respect of critical social
issues. He served as President of the American Red Cross (1983-1989) and was a
former Vice Chairman and President of Bethlehem Steel until 1982. Mr. Schubert
has extensive experience in law, business and government. During his career with
Bethlehem Steel, which began in 1961, he was appointed to serve in the public
sector as Assistant to the Under Secretary of Labor (1970) Solicitor of the
Department of Labor (1971) and Under Secretary of Labor (1973). Mr. Schubert is
a member of the Council of Foreign Relations and he serves as a director of a
number of philanthropic and business organizations. Mr. Schubert graduated Cum
Laude from Eastern Nazarene College in Quincy, Massachusetts with a Bachelor of
Arts degree, and from Yale Law School with a Bachelor of Law degree. Mr.
Schubert serves on a number of boards, both philanthropic and traditional. Mr.
Schubert will assist the Company in recruiting strategic new board members for
the Board of Directors and expects to play an active role in assisting the
Company in establishing corporate and government strategic relationships.
R. BRUCE REEVES, Ph.D. has been the Chief Executive Officer and Director of the
Company since May 1993. Dr. Reeves has over twenty-five years of experience in
start-up ventures, and spent over ten years in high-tech business and product
development, including five years (1964-1969) with General Electric Company on
several new business development operations. From 1969 to 1979 Dr. Reeves was a
Principal in a high tech start up company and several syndicated real estate
partnerships. From 1989 to 1996, Dr. Reeves devoted his full time to the
business of the Company, its predecessor, Fluid Life Systems, Inc. ("FLS") and
the biotech subsidiary. Since 1996, Dr. Reeves has provided oversight of the
Company's biotech business on a part time basis and also worked with a number of
start-ups and early stage companies in the areas of capital formation, strategic
planning and public company administration. In 1998, Dr. Reeves successfully led
the acquisition of Meridian Instruments, a leading developer of laser based
imaging instrumentation. Dr. Reeves subsequently sold the Meridian manufacturing
assets to Genomic Systems, a biotechnology genomic instrumentation company. Dr.
Reeves is also currently an officer of RT Robertson Consultants, Inc., a family
owned consulting firm which provides management services to a number of
companies, including the Company, on an as needed basis.
BRUCE MONK joined the Company as its President and Chief Operating Officer and
Director. Mr. Monk has than 20 years of senior management level experience in
engineering, marketing and sales management in the high technology field. In
February 1991 Mr. Monk founded Imaging Automation, Inc. From 1991 until November
2000, Mr. Monk served as an officer and director overseeing the development of
document recognition and authentication products. Mr. Monk will lead the
Company's efforts to develop a leadership position in creating versatile
imaging- based document authentication devices and systems. Prior to founding
Imaging Automation, Mr. Monk founded Chorus Data Systems and also served in
development, engineering and sales positions with Analogic, Sanders Associates
and Hewlett Packard.
RICHARD WHITNEY has been a Director of the Company since July 1992. Mr. Whitney
served as a general partner of The Venture Fund of Washington (the "Fund") from
1989 until August of 1994. Mr. Whitney served in the Commerce Department as
Assistant to the Secretary of Commerce for two years through late 1971. Mr.
Whitney has managed venture funds since 1972, beginning with direct
responsibility for the management of the Direct Investment Fund at Overseas
Private Investment Corporation. In the mid-1970's, he served as Executive Vice
President of Narragansett Capital. In 1977, with others, Mr. Whitney purchased a
controlling interest in Columbia Ventures, Inc., an SBIC located in Washington,
DC. Mr. Whitney has served as President and a Director of that company since
1978. Mr. Whitney will assist the Company in capital formation activities and
will consult for the Company on a part time basis as it expands its government
activities and interests.
VINCENT SPOTO has joined the Company as its Vice President, Business
Development. Mr. Spoto has served as CEO of several early stage technology
companies, successfully raising capital and establishing strategic partners. Mr.
Spoto continues to serve on the board of directors of several of these
companies. Mr. Spoto will focus on strategic partnering for the Company and will
assist it in capital formation and public relations.
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A copy of the Agreement and Plan of Reorganization dated October 19th, 2001 is
attached to this Form 8K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRL Holdings, Inc.
/s/ R. Bruce Reeves, President
Dated: November 15, 2001
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BRL HOLDINGS, INC.,
AND
ASSURE TEC SYSTEMS, INC.
Dated as of October 19, 2001
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of October
19, 2001, among BRL HOLDINGS, INC., a Delaware corporation ("HOLDINGS") and
ASSURE TEC SYSTEMS, INC., a Delaware corporation ("ASSURE TEC"), and the
stockholders of ASSURE TEC ("Stockholders").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"),
HOLDINGS and ASSURE TEC intend to enter into a business combination
transaction.
B. The Board of Directors of ASSURE TEC and HOLDINGS have each: (i)
determined that the intended business combination is consistent with
and in furtherance of their respective long-term business strategy of
their company and fair to, and in the best interests of, their company
and its stockholders; (ii) approved this Agreement And Plan Of
Reorganization (hereinafter "Agreement") and other transactions
contemplated by this Agreement.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 (a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The terms defined in this Article shall have the following respective meanings
for all purposes of this Agreement:
1.1 "Affiliate" means, with respect to any Person, any family member and
any other Person controlling, controlled by or under common control
with such Person.
1.2 "HOLDINGS Common Stock" refers to the shares of common stock of
HOLDINGS to be received by the stockholders of ASSURE TEC in exchange
for their shares of ASSURE TEC Common Stock.
1.3 Intentionally deleted
1.4 Intentionally deleted
1.5 "Closing" means the consummation and effectuation of the transactions
contemplated herein pursuant to the terms and conditions of this
Agreement. The Closing shall be held on the date and the location
specified in Section 2.2.
1.6 "Closing Date" means the date on which the Closing actually occurs
pursuant to Section 2.2.
1.7 "Code" refers to the Internal Revenue Code of 1986, as amended.
1.8 "Delaware Law" refers to the Delaware General Corporation Law.
1.9 "Disclosure Schedule" means the disclosure schedule executed by each
party (referencing the appropriate section of paragraph numbers) that
are delivered to the other parties on or prior to the date of this
Agreement.
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1.10 Intentionally deleted
1.11 "Exchange Act" refers to the Securities Exchange Act of 1934, as
amended.
1.12 "Exchange Agent" refers to the bank, trust company or transfer agent
selected pursuant to Section 2.7(a) to handle the exchange of the
certificates of ASSURE TEC Common Stock for the shares of HOLDINGS
Common Stock.
1.13 "Consideration" refers to the HOLDINGS shares to be issued ratably for
acquiring 100% of the outstanding shares of ASSURE TEC. The number of
HOLDINGS shares to be exchanged with each ASSURE TEC interest holder is
equal to the number of ASSURE TEC Common Stock outstanding immediately
prior to the Closing Date multiplied by 1,000 (the "Exchange Ratio").
This becomes the total number of HOLDINGS shares to be paid for 100% of
the ASSURE TEC shares of stock outstanding. For purposes of determining
the number of shares of ASSURE TEC Common Stock that are outstanding,
each share that may be issued upon the exercise of stock options or
warrants will be deemed to be issued and outstanding although only
actually issued ASSURE TEC shares will be initially exchanged for
HOLDINGS shares at closing.
1.14 Intentionally deleted
1.15 "GAAP" means generally accepted accounting principles as in effect in
the United States on June 30, 2001.
1.16 "Governmental Entity" refers to any court, administrative agency,
commission, governmental or regulatory authority, domestic or foreign.
1.17 "Knowledge" means, with respect to a party hereto or with respect to
any matter in question, that any of the Chairman, Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, General
Counsel or Controller of such party, has actual knowledge of such
matter.
1.18 "Material Adverse Effect" when used in connection with an entity means
any change, event, violation, inaccuracy, circumstance or effect that
is materially adverse to the business, assets (including intangible
assets), capitalization, financial condition or results of operations
of such entity and its subsidiaries taken as a whole.
1.19 "Acquisition" refers to the acquisition of all outstanding stock of
ASSURE TEC by HOLDINGS following which ASSURE TEC shall be a wholly
owned subsidiary of HOLDINGS.
1.20 "OTCBB" refers to the OTC Bulletin Board that is operated by the
National Association of Securities Dealers but is separate from the
NASDAQ stock market.
1.21 "Person" shall mean any individual, corporation (including any
non-profit corporation), general partnership, limited partnership,
limited liability partnership, joint venture, estate, trust, company
(including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental
Entity.
1.22 Intentionally deleted
1.23 "ASSURE TEC Common Stock" refers to the common stock of ASSURE TEC. The
ASSURE TEC Common Stock will be exchanged for HOLDINGS Common Stock as
defined in Section 1.13.
1.24 "ASSURE TEC Stock Option Plan" shall have the meaning set forth in
Section 2.6(b).
1.25 "ASSURE TEC Preferred Stock" shall have the meaning set forth in
Section 2.6(a). Currently, ASSURE TEC has no preferred stock.
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1.26 "Intentionally deleted"
1.27 "SEC" means the United States Securities and Exchange Commission.
1.28 "Securities Act" means the Securities Act of 1933, as amended.
1.29 Intentionally deleted
1.30 "Surviving Corporation" shall refer to HOLDINGS, the corporation that
will survive the acquisition of 100% of the ASSURE TEC Common Stock by
HOLDINGS.
1.31 "Taxes" shall have the meaning set forth in Section 3.16.
ARTICLE 2
THE ACQUISITION
2.1 The Acquisition. On the Closing Date and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of
Delaware Law, HOLDINGS shall acquire 100% of the shares of ASSURE TEC
and ASSURE TEC shall become a wholly owned subsidiary of HOLDINGS (the
"Acquisition") and HOLDINGS shall continue as the surviving
corporation.
2.2 Closing Date. Subject to the provisions of this Agreement, the parties
hereto shall cause the Acquisition to be consummated by exchanging all
of the documents and stock certificates required by this Agreement to
be exchanged (the "Closing"). The closing of the Acquisition shall take
place at the offices of John Lowy P.C., at a time and date to be
specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set
forth in Article 7 (the "Closing Date").
2.3 Effect of the Acquisition. At the Closing Date, the effect of the
Acquisition shall be as provided in this Agreement and the applicable
provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Closing Date, all the voting
stock of ASSURE TEC shall vest in HOLDINGS and ASSURE TEC shall become
a wholly owned subsidiary of HOLDINGS.
2.4 Articles of Incorporation; Bylaws.
(a) At the Closing Date, the Certificate of
Incorporation of HOLDINGS, as in effect immediately prior to the
Closing Date and as amended pursuant to Subsection (b) below, shall be
the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of
Incorporation.
(b) At or before the Closing Date, HOLDINGS shall have
authorized 50 million common shares and 5,000,000 shares of preferred
stock.
(c) The Bylaws of HOLDINGS, as in effect immediately
prior to the Closing Date, shall be, at the Closing Date, remain the
Bylaws of both HOLDINGS and AssureTec until thereafter amended.
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2.5 Directors and Officers. The directors of HOLDINGS shall be the
directors of HOLDINGS and ASSURE TEC combined immediately prior to the
Closing Date, until their respective successors are duly elected or
appointed and qualified. The officers of HOLDINGS shall be the officers
of ASSURE TEC immediately prior to the Closing Date, until their
respective successors are duly appointed. At the next HOLDINGS
Stockholders' Meeting, the stockholders shall elect nominees approved
by the combined HOLDINGS Board of Directors then serving on the Closing
Date.
2.6 Effect on Capital Stock. At the Closing Date, by virtue of the
Acquisition and without any action on the part of HOLDINGS, ASSURE TEC
or the holders of any of the securities of ASSURE TEC:
(a) Conversion of ASSURE TEC Common Stock At least 80% of the
issued and outstanding shares of Common Stock, $.001 par value, of
ASSURE TEC (the "ASSURE TEC Common Stock") issued and outstanding
immediately prior to the Closing Date will be exchanged (subject to
Sections 2.6(e) and (f)) for shares of HOLDINGS Common Stock as defined
in Section 1.13. The number of shares to be exchanged with each ASSURE
TEC interest holder is equal to the number of shares of ASSURE TEC
Common Stock outstanding immediately prior to the Closing Date times
1,000 (the "Exchange Ratio"). This shall be the total number of
HOLDINGS shares to be paid for 100% of the ASSURE TEC shares of stock
outstanding. For purposes of determining the number of shares of ASSURE
TEC Common Stock that are outstanding, each share that may be issued
upon the exercise of stock options or warrants will be deemed to be
issued and outstanding. However, only issued ASSURE TEC shares will be
exchanged for HOLDINGS shares at the Closing.
The HOLDINGS Common Stock will be issued upon surrender of the
certificate representing such share of ASSURE TEC Common Stock in the
manner provided in Section 2.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if
required) in the manner provided in Section 2.9). Each share of
Preferred Stock of ASSURE TEC (the "ASSURE TEC Preferred Stock") that
is issued and outstanding immediately prior to the Closing Date will be
exchanged for one share of preferred stock of HOLDINGS that will have
the same terms and conditions as the ASSURE TEC Preferred Stock. Prior
to the issuance of any shares of ASSURE TEC Preferred Stock, the Boards
of Directors of ASSURE TEC and HOLDINGS shall approve the form of the
provisions of the Articles of Incorporation of ASSURE TEC and the
Certificate of Incorporation of HOLDINGS that will set forth the terms
and conditions of those shares of ASSURE TEC Preferred Stock and the
preferred stock of HOLDINGS into which those shares will be converted.
(b) Stock Options and Warrants. At the Closing Date,
all options and warrants to purchase ASSURE TEC Common Stock then
outstanding (the "ASSURE TEC Stock Options") shall be exchanged by
HOLDINGS for HOLDINGS options. When they become assumed by HOLDINGS:
(1) each ASSURE TEC Stock Option will be exercisable (or will become
exercisable in accordance with its terms) for the number of whole
shares of HOLDINGS Common Stock equal to the product of the number of
shares of ASSURE TEC Common Stock that were issueable upon exercise of
such ASSURE TEC Stock Option immediately prior to the Closing Date
multiplied by the Exchange Ratio, rounded to the nearest whole number
of shares of HOLDINGS Common Stock, and (2) the per share exercise
price for the shares of HOLDINGS Common Stock issuable upon exercise of
such assumed ASSURE TEC Stock Option will be equal to the the exercise
price per share of ASSURE TEC Common Stock at which such ASSURE TEC
Stock Option was exercisable immediately prior to the Closing Date.
(c) Capital Stock of HOLDINGS. Each share of HOLDINGS
Common Stock issued and outstanding immediately prior to the Closing
Date shall remain unchanged as a result of the Acquisition.
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(d) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect appropriately the effect of any stock
split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into HOLDINGS Common Stock or
ASSURE TEC Common Stock), reorganization, re-capitalization,
reclassification or other like change with respect to HOLDINGS Common
Stock or ASSURE TEC Common Stock occurring on or after the date hereof
and prior to the Closing Date.
(e) Fractional Shares. No fraction of a share of
HOLDINGS Common Stock will be issued by virtue of the Acquisition, but
in lieu thereof each holder of shares of ASSURE TEC Common Stock who
would otherwise be entitled to a fraction of a share of HOLDINGS Common
Stock (after aggregating all fractional shares of HOLDINGS Common Stock
that otherwise would be received by such holder) shall receive from
HOLDINGS a number of shares rounded to the nearest whole share (i.e.,
fractions of less than .5 will be rounded down and fractions of .5 or
more will be rounded up).
2.7 Surrender of Certificates.
(a) Exchange Agent. HOLDINGS's current transfer agent
shall act as the exchange agent (the "Exchange Agent") for the Common
Stock of HOLDINGS. The conversion of ASSURE TEC Preferred Stock into
shares of HOLDINGS Preferred Stock will be performed by HOLDING'S
Exchange Agent.
(b) HOLDINGS to Provide Common Stock. Promptly after
the Closing Date (but in no event later than three (3) business days
thereafter), HOLDINGS shall make available to its Exchange Agent for
exchange in accordance with this Article 2, the shares of HOLDINGS
Common Stock issueable pursuant to Section 2.6 in exchange for
outstanding shares of ASSURE TEC Common Stock at the Exchange Ratio,
and cash in an amount sufficient for payment of any dividends or
distributions to which holders of shares of ASSURE TEC Common Stock may
be entitled pursuant to Section 2.7(d).
(c) Exchange Procedures. Promptly after the Closing
Date (but in no event later than five (5) business days thereafter),
HOLDINGS shall cause the Exchange Agent to mail to each holder of
record (as of the Closing Date) of a certificate or certificates (the
"Certificates"), which immediately prior to the Closing Date
represented outstanding shares of ASSURE TEC Common Stock whose shares
were converted into shares of HOLDINGS Common Stock pursuant to Section
2.6 and any dividends or other distributions pursuant to Section
2.7(d), (i) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall contain such other provisions as HOLDINGS
may reasonably specify); and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of HOLDINGS Common Stock and any dividends or other
distributions pursuant to Section 2.7(d).
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Upon surrender of Certificates for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by HOLDINGS,
together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of HOLDINGS Common
Stock into which their shares of ASSURE TEC Common Stock were converted
at the Closing Date and at the Exchange Ratio, and any dividends or
distributions payable pursuant to Section 2.7(d), and the Certificates
so surrendered shall be tendered to HOLDINGS.
(d) Distributions With Respect to Un-exchanged Shares.
No dividends or other distributions declared or made after the date of
this Agreement with respect to HOLDINGS Common Stock with a record date
after the Closing Date will be paid to the holders of any
un-surrendered Certificates with respect to the shares of HOLDINGS
Common Stock represented thereby until the holders of record of such
Certificates shall surrender such Certificates. Subject to applicable
law, following surrender of any such Certificates, the Exchange Agent
shall deliver to the record holders thereof, without interest,
certificates representing whole shares of HOLDINGS Common Stock issued
in exchange therefore along with payment of the amount of any such
dividends or other distributions with a record date after the Closing
Date payable with respect to such whole shares of HOLDINGS Common
Stock.
(e) Transfers of Ownership. If certificates
representing shares of HOLDINGS Common Stock are to be issued in a name
other than that in which the Certificates surrendered in exchange
therefore are registered, it will be a condition of the issuance
thereof that the Certificates so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to HOLDINGS or any agent
designated by it any transfer or other taxes required by reason of the
issuance of certificates representing shares of HOLDINGS Common Stock
in any name other than that of the registered holder of the
Certificates surrendered, or established to the satisfaction of
HOLDINGS or any agent designated by it that such tax has been paid or
is not payable.
(f) No Liability. Notwithstanding anything to the
contrary in this Section 2.7, neither the Exchange Agent, HOLDINGS, nor
any party hereto shall be liable to a holder of shares of HOLDINGS
Common Stock or ASSURE TEC Common Stock for any amount properly paid to
a public official pursuant to any applicable abandoned property,
escheat or similar law.
(g) Stockholder Waiver. Each and every
individual ASSURE TEC stockholder of record on the Effective Date, as a
condition of participating in the Acquisition, shall execute a
Stockholder Waiver in the form of Exhibit B. This Stockholder Waiver
shall provide that all holders of shares issued, as a part of the
Acquisition by HOLDINGS, shall forfeit any rights to receive stock
dividends and distributions of any spin-off of subsidiaries then
existing as of the Effective Date. This waiver shall not affect any
other distributions of shares or cash other than those resulting
directly from the referenced HOLDINGS subsidiaries.
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2.8 No Further Ownership Rights in ASSURE TEC Common Stock. All shares of
HOLDINGS Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 2.7(d))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of ASSURE TEC Common Stock, and there shall
be no further registration of transfers on the records of HOLDINGS of
shares of ASSURE TEC Common Stock which were outstanding immediately
prior to the Closing Date. If after the Closing Date Certificates are
presented to HOLDINGS for any reason, they shall be canceled and
exchanged as provided in this Article 2, all subject to the provision
of the previous Section 2.7 (g).
2.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the
holder thereof, certificates representing the shares of HOLDINGS Common
Stock into which the shares of ASSURE TEC Common Stock represented by
such Certificates were converted pursuant to Section 2.6 and cash for
any dividends or distributions payable pursuant to Section 2.7(d);
PROVIDED, HOWEVER, that HOLDINGS may, in its discretion and as a
condition precedent to the issuance of such certificates representing
shares of HOLDINGS Common Stock, cash and other distributions, require
the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against HOLDINGS, the Surviving Corporation or
the Exchange Agent with respect to the Certificates alleged to have
been lost, stolen or destroyed.
2.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the
Acquisition shall constitute a re-organization within the meaning of
Section 368(a)(1)(B) of the Code. The parties hereto adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
(b) It is intended by the parties hereto that the Acquisition
shall be treated as a purchase for accounting purposes.
2.11 Taking of Necessary Action; Further Action. If, at any time after the
Closing Date, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest HOLDINGS with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
ASSURE TEC, the officers and directors of ASSURE TEC will take all such lawful
and necessary further action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ASSURE TEC
ASSURE TEC represents and warrants to HOLDINGS, subject to such exceptions as
are specifically disclosed in the ASSURE TEC Disclosure Schedule (referencing
the appropriate section and paragraph numbers) delivered by ASSURE TEC to
HOLDINGS on or prior to the date of this Agreement, as follows:
3.1 Organization and Qualification; Subsidiaries. ASSURE TEC is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted. ASSURE TEC has applied for an IRS employer tax identification
number, which has not issued as of this date. ASSURE TEC is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Approvals") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, have a Material Adverse
Effect on ASSURE TEC. ASSURE TEC is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
ASSURE TEC. ASSURE TEC does not directly or indirectly own any equity or similar
interest in, or any interest convertible or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business, association or entity.
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3.2 Articles of Incorporation and Bylaws. ASSURE TEC has previously
furnished to HOLDINGS a complete and correct copy of its Articles of
Incorporation and Bylaws as amended to date. Such Articles of Incorporation and
Bylaws are in full force and effect. ASSURE TEC is not in violation of any of
the provisions of its Articles of Incorporation or Bylaws.
3.3 Capitalization. The authorized capital stock of ASSURE TEC consists
of 10,000 shares of ASSURE TEC Common Stock, no par value, and there is no
Preferred Stock authorized ("ASSURE TEC Preferred Stock"). Section 3.3 of the
ASSURE TEC Disclosure Schedule sets forth a list of the shares that are issued
and all outstanding options and warrants. As of the date hereof, 3,476 shares
and an additional 2,600 options for a total fully diluted 6,076 shares of
AssureTec common stock are issued. As of the date hereof, no shares of ASSURE
TEC Preferred Stock are issued or outstanding. Except as set forth in the ASSURE
TEC Disclosure Schedule, no change in such capitalization has occurred. Except
as set forth in this Section 3.3 or in the ASSURE TEC Disclosure Schedule, as of
the date of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or un-issued capital stock of ASSURE TEC or obligating ASSURE TEC to issue or
sell any shares of capital stock of, or other equity interests in, ASSURE TEC.
All shares of ASSURE TEC Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issueable, shall be duly authorized, validly issued, fully paid
and non-assessable. There are no obligations, contingent or otherwise, of ASSURE
TEC to repurchase, redeem or otherwise acquire any shares of ASSURE TEC Common
Stock or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
3.4 Authority Relative to This Agreement. ASSURE TEC has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, subject to obtaining the approval of the
stockholders of ASSURE TEC of the Acquisition, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by ASSURE TEC
and the consummation by ASSURE TEC of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of ASSURE TEC and no other corporate proceedings on the part of ASSURE TEC are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the HOLDINGS, the approval and
adoption of this Agreement by holders of a majority of the outstanding shares of
ASSURE TEC Common Stock in accordance with the Delaware law and ASSURE TEC's
Articles of Incorporation and Bylaws). This Agreement has been duly and validly
executed and delivered by ASSURE TEC and, assuming the due authorization,
execution and delivery by HOLDINGS, constitutes legal and binding obligations of
ASSURE TEC, enforceable against ASSURE TEC in accordance with their respective
terms.
3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by ASSURE TEC
do not, and the performance of this Agreement by ASSURE TEC shall not, (i)
conflict with or violate its Articles of Incorporation or Bylaws, (ii) subject
to obtaining the approval of ASSURE TEC's stockholders of the Acquisition and
compliance with the requirements set forth in Subsection (b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to ASSURE TEC or by which its or any of its properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair ASSURE
TEC's rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of ASSURE TEC pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which ASSURE TEC is a party or by which ASSURE
TEC or its properties are bound or affected.
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(b) The execution and delivery of this Agreement by ASSURE TEC
do not, and the performance of this Agreement by ASSURE TEC shall not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (A) for applicable
requirements, if any, of the Securities Act, the Exchange Act, state securities
laws, and of foreign Governmental Entities and the rules and regulations
thereunder, the rules and regulations of NASDAQ, and the filing and recordation
of the Certificate of Acquisition as required by Delaware Law and (B) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, (i) would not prevent consummation of the
Acquisition or otherwise prevent ASSURE TEC from performing its obligations
under this Agreement or (ii) could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on ASSURE TEC.
3.6 Compliance; Permits.
(a) ASSURE TEC is not in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to ASSURE TEC or by which its properties is bound or affected, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which ASSURE TEC is a
party or by which ASSURE TEC or its properties is bound or affected, except for
any conflicts, defaults or violations which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on ASSURE TEC.
To the knowledge of ASSURE TEC, no investigation or review by any governmental
or regulatory body or authority is pending or threatened against ASSURE TEC, nor
has any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each such case, those the outcome of which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on ASSURE TEC.
(b) ASSURE TEC holds all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to operation of the business of ASSURE TEC (collectively, the "ASSURE
TEC Permits"). ASSURE TEC is in compliance in all respects with the terms of the
ASSURE TEC Permits, except where failure to comply could not reasonably be
expected to have a Material Adverse Effect on ASSURE TEC.
3.7 Financial Statements.
(a) The ASSURE TEC Disclosure Schedule contains a proforma
balance sheet of ASSURE TEC as of October 2, 2001 and represents ASSURE TEC has
had no operations since its formation (collectively referred to as the "ASSURE
TEC Financial Statements").
(b) All such financial statements have been prepared in
accordance with GAAP consistently applied throughout the periods involved. As of
the date of any of such balance sheets, except as and to the extent reflected or
reserved against therein, ASSURE TEC did not have any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet or the
notes thereto prepared in accordance with GAAP, and all assets reflected therein
are properly reported and present fairly the value of the assets of ASSURE TEC
in accordance with GAAP. Such statements of operations present fairly the
results of operations of ASSURE TEC for the periods indicated. Such statements
of changes in financial position present fairly the information, which should be
presented therein in accordance with GAAP.
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(c) The financial and other books and records of ASSURE TEC are
in all material respects complete and correct and have been maintained in
accordance with good business and accounting practice.
3.8 No Undisclosed Liabilities. ASSURE TEC does not have any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the financial statements
prepared in accordance with GAAP (including, without limitation, in accordance
with the revenue recognition principles thereof) which are, individually or in
the aggregate, material to the business, results of operations or financial
condition of ASSURE TEC taken as a whole, except (i) liabilities provided for in
ASSURE TEC's proforma balance sheet as of October 2, 2001, (ii) banking,
accounting, legal and printing fees associated with the Acquisition.
3.9 Absence of Certain Changes or Events. Since its formation on October
2nd, 2001, except as set forth in the ASSURE TEC Disclosure Schedule, there has
not been: (i) any Material Adverse Effect on ASSURE TEC, (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of ASSURE TEC's capital stock, or
any purchase, redemption or other acquisition by ASSURE TEC of any of ASSURE
TEC's capital stock or any other securities of ASSURE TEC or any options,
warrants, calls or rights to acquire any such shares or other securities, (iii)
any split, combination or reclassification of any of ASSURE TEC's capital stock,
(iv) any granting by ASSURE TEC of any increase in compensation or fringe
benefits, except for normal increases of cash compensation in the ordinary
course of business consistent with past practice, or any payment by ASSURE TEC
of any bonus, except for bonuses made in the ordinary course of business
consistent with past practice, or any granting by ASSURE TEC of any increase in
severance or termination pay or any entry by ASSURE TEC into any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving ASSURE TEC of
the nature contemplated hereby, (v) entry by ASSURE TEC into any licensing or
other agreement with regard to the acquisition or disposition of any material
intellectual property other than licenses in the ordinary course of business
consistent with past practice, (vi) any material change by ASSURE TEC in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (vii) any revaluation by ASSURE TEC of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business.
3.10 Absence of Litigation. There are no material claims, actions, suits
or proceedings pending or, to the knowledge of ASSURE TEC, threatened (or, to
the knowledge of ASSURE TEC, any governmental or regulatory investigation
pending or threatened) against ASSURE TEC as to which ASSURE TEC has received
any written notice or assertion, or any properties or rights of ASSURE TEC,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign.
3.11 Employee Benefit Plans. Other than as provided in the ASSURE TEC Disclosure
Schedule, ASSURE TEC is not a party to any oral or written (i) contract for the
employment of any officer or employee that is not terminable or 30 days (or
less) notice, (ii) profit sharing, bonus, deferred compensation, pension or
retirement plan, agreement or arrangement; or (iii) collective bargaining
agreement. The only employee fringe or benefit plan, commitment or other
arrangements (whether or not set forth in a written document and including,
without limitation, all "employee benefit plans" within the meaning of Section
3(3)
15
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that covers any active, former employee, director or consultant of
ASSURE TEC, or with respect to which ASSURE TEC has or may in the future have
liability, are listed in the ASSURE TEC Disclosure Schedule (the "Plans").
ASSURE TEC has provided to HOLDINGS: (i) correct and complete copies of all
documents embodying each Plan including (without limitation) all amendments
thereto, all related trust documents, and all material written agreements and
contracts relating to each such Plan and any other information requested by
HOLDINGS regarding the Plan.
3.12 Labor Matters. There is no litigation pending or, to the knowledge of
ASSURE TEC, threatened, between ASSURE TEC and any of their respective
employees. As of the date of this Agreement, ASSURE TEC is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by ASSURE TEC nor does ASSURE TEC know of any activities or
proceedings of any labor union to organize any such employees. As of the date of
this Agreement, ASSURE TEC has no knowledge of any strikes, slowdowns, work
stoppages or lockouts, or threats thereof, by or with respect to any employees
of ASSURE TEC.
3.13 Ability to Transfer ASSURE TEC Shares Each of the stockholders of
ASSURE TEC stockholders listed at Section 3.3 of the Disclosure Schedule has the
full power and authority to transfer his or her shares of ASSURE TEC common
stock to HOLDINGS in accordance with this Agreement. Upon the transfer by each
such ASSURE TEC stockholder of his or her ASSURE TEC common stock to HOLDINGS,
HOLDINGS shall be the owner of such ASSURE TEC common stock clear of any and all
claims, liens and encumbrances of any kind or nature whatsoever; and upon the
transfer to HOLDINGS of each common stock certificate of ASSURE TEC by each
ASSURE TEC stockholder, HOLDINGS shall be the owner of 100% of the issued and
outstanding shares of ASSURE TEC, free and clear of any and all claims, liens
and encumbrances of any kind or nature whatsoever.
3.14 Restrictions on Business Activities. There is no material agreement,
judgment, injunction, order or decree binding upon ASSURE TEC which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of ASSURE TEC, any acquisition of property by ASSURE TEC
or the conduct of business by ASSURE TEC as currently conducted.
3.15 Title to Property. ASSURE TEC owns plans and designs for its proposed
products free and clear of all liens, charges and encumbrances except liens for
taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially detract from the value of or interfere with the
present use of the license affected thereby; and all licenses which ASSURE TEC
holds and which are required for the operation of its ASSURE TEC business are in
good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such licenses, any existing material default or
event of default (or any event which with notice or lapse of time, or both,
would constitute a material default and in respect of which ASSURE TEC has not
taken adequate steps to prevent such default from occurring). All the plants,
structures and equipment of ASSURE TEC, are in good operating condition and
repair, in all material respects.
3.16 Taxes. Prior to the Effective Date, ASSURE TEC will have timely filed
all tax returns required to be filed by it (other than those that are not,
individually or in the aggregate, material), have paid all Taxes (as defined
below) shown thereon to be due and have provided adequate accruals in all
material respects in accordance with GAAP in its financial statements for any
Taxes that have not been paid, whether or not shown as being due on any returns.
In addition, (i) no material claim for unpaid Taxes that are currently, or will
be prior to the Closing Date, due and payable has become a lien against the
property of ASSURE TEC or is being asserted against ASSURE TEC, (ii) no audit of
any material Tax Return of ASSURE TEC is being conducted by a tax authority,
(iii) no extension of the statute of limitations on the assessment of any Taxes
has been granted by ASSURE TEC or any of its subsidiaries and is currently in
effect and (iv) there is no agreement, contract or arrangement to which ASSURE
TEC is a party that may result in the payment of any amount that would not be
deductible pursuant to Sections 280G, 162(a) (by reason of being unreasonable in
amount), 162(b) through (p) or 404 of the Code. As used herein, "Taxes" shall
16
mean all taxes of any kind, including, without limitation, those on or measured
by or referred to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority, domestic or foreign. As used herein, "Tax
Return" shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
3.17 Environmental Matters. To the best of its knowledge, ASSURE TEC (i)
has obtained all applicable permits, licenses and other authorizations which are
material to the business of ASSURE TEC and required under Federal, state or
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by ASSURE TEC (or its respective agents); (ii) are in
material compliance with all terms and conditions of such required permits,
licenses and authorizations, and also are in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such laws or contained in any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved there under; (iii) as of the date hereof, are
not aware of nor have received notice of any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued material compliance or which would give rise
to any material common law or statutory liability, or otherwise form the basis
of any claim, action, suit or proceeding, based on or resulting from ASSURE
TEC's (or any of its respective agents) manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, or release into the environment, of any pollutant, contaminant, or
hazardous or toxic material or waste; and (iv) have taken all actions necessary
under applicable requirements of Federal, state or local laws, rules or
regulations to register any products or materials required to be registered by
ASSURE TEC (or any of its respective agents) thereunder.
3.18 Intangible Assets. The ASSURE TEC Disclosure Schedule contains a
true and complete list of all patents and patent applications (pending or in the
process of preparation), domestic or foreign, patent rights, trademarks, trade
names and licenses under the patents of others, trade secrets, secret processes
and other proprietary rights of every kind and nature used or necessary for use
by ASSURE TEC in its business as presently conducted, or controlled in whole or
in part by ASSURE TEC or directly or indirectly owned or controlled in whole or
in party by ASSURE TEC or any of ASSURE TEC's officers, directors or key
employees. To the best of ASSURE TEC's knowledge, all such patents, patent
applications, patent rights and licenses are valid and effective in accordance
with their terms, and all such trade names, trade secrets, secret processes and
other proprietary rights are valid and effective. ASSURE TEC has not received
any notice of any claim of infringement. Except as disclosed in the ASSURE TEC
Disclosure Schedule, there are no agreements, contracts or obligations under
which ASSURE TEC is obligated with respect to, or is using, any patents, patent
applications, patent rights, trademarks, trade names, licenses under the patents
of others, trade secrets, secret processes or other proprietary rights. The
trade secrets and "know-how" of ASSURE TEC are in such form and of such quality
that, following the Closing, ASSURE TEC will be able to continue to sell the
products heretofore provided by ASSURE TEC. 3.19 Agreements, Contracts and
Commitments. Except as set forth in the ASSURE TEC Disclosure Schedule, ASSURE
TEC is not a party to and is not bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer, director or member of ASSURE TEC's Board of
Directors, other than those that are terminable by ASSURE TEC on no more than
thirty days notice and which do so with no express (whether by contract or by
policy) liability or financial obligation to ASSURE TEC;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
17
(c) any agreement, contract or commitment containing any covenant
limiting in any respect the right of ASSURE TEC to engage in any line of
business or to compete with any person; or
(d) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by ASSURE TEC after the date of this
Agreement of a material amount of assets not in the ordinary course of business
or pursuant to which ASSURE TEC has any material ownership interest in any
corporation, partnership, joint venture or other business enterprise.
ASSURE TEC is not and, to ASSURE TEC's knowledge, no other party to a ASSURE TEC
Contract (as defined below), is in breach, violation or default under, and
ASSURE TEC has not received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which ASSURE TEC is a party or by which
it is bound that are required to be disclosed in the ASSURE TEC Disclosure
Schedule pursuant to this Section 3.20 hereof (any such agreement, contract or
commitment, a "ASSURE TEC Contract") in such a manner as would permit any other
party to cancel or terminate any such ASSURE TEC Contract, or would permit any
other party to seek material damages or other remedies (for any or all of such
breaches, violations or defaults, in the aggregate).
3.20 Insurance. ASSURE TEC maintains no insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of ASSURE TEC (collectively, the "Insurance
Policies") which are of the type and in amounts customarily carried by persons
conducting businesses similar to those of ASSURE TEC.
3.21 Directors and Officers. The ASSURE TEC Disclosure Schedule contains a
complete list of the current Board of Directors and executive officers of ASSURE
TEC
3.22 Stockholder List. The ASSURE TEC Disclosure Schedule contains an
alphabetical list, as of the date hereof, of all of the stockholders of ASSURE
TEC and the number of shares of ASSURE TEC Common Stock owned by each of them.
All of such stock certificates have stop transfer orders and restrictive legends
placed upon them.
3.23 Transfer Agent. ASSURE TEC acts as its own transfer agent.
3.24 Stock Transfer Records. The stock transfer books and stock ledgers of
ASSURE TEC are in good order, complete, accurate, and up to date, and with all
necessary signatures, and set forth all stock and securities issued, transferred
and surrendered. No duplicate certificate has been issued at any time heretofore
without an indemnity agreement and/or bond being posted. No transfer has been
made without surrender of the proper certificate duly endorsed. All certificates
so surrendered have been duly cancelled and are attached to the proper stubs
with all necessary stock powers attached hereto.
3.25 Corporate Record Books. The corporate record books of ASSURE TEC are
in good order, complete, accurate, up to date, with all necessary signatures,
and set forth all meetings and actions set forth in all certificates of votes of
stockholders or directors furnished to anyone at any time.
18
3.26 Related Party Transactions Except as set forth in the ASSURE TEC
Disclosure Schedule, neither any officer nor any director or employee of ASSURE
TEC, nor any spouse or child of any of them, has any direct or indirect interest
in any competitor, supplier, or customer of ASSURE TEC or in any person from
whom or to whom ASSURE TEC leases any real or personal property, or in any other
person with whom ASSURE TEC is doing business.
3.27 Lack of Disputes. There is currently no material and adverse
dispute, pending or, to the knowledge of ASSURE TEC, threatened, anticipated or
contemplated of any kind with any customer, supplier, source of financing,
employee, landlord, or licensee of ASSURE TEC.
3.28 Board Approval. The Board of Directors of ASSURE TEC has, as of the
date of this Agreement (i) approved this Agreement and the transactions
contemplated hereby and thereby, (ii) determined that the Acquisition is in the
best interests of the stockholders of ASSURE TEC and is on terms that are fair
to such stockholders and (iii) recommended that the stockholders of ASSURE TEC
approve this Agreement and the Acquisition.
3.29 INTENTIONALLY DELETED
3.30 Disclosures. None of the representations or warranties by ASSURE TEC
herein and no statement contained in any certificate, Schedule or other writing
furnished by ASSURE TEC in connection herewith contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
HOLDINGS represents and warrants to ASSURE TEC, subject to such exceptions as
are set forth in the HOLDINGS SEC Reports or specifically disclosed in the
HOLDINGS Disclosure Schedule (referencing the appropriate section and paragraph
number) delivered by HOLDINGS to ASSURE TEC on or prior to the date of this
Agreement, as follows:
4.1 Organization and Qualification; Subsidiaries. Each of HOLDINGS
and its subsidiaries are corporations duly organized, validly existing and in
good standing under the laws of Delaware and has the requisite corporate power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each of HOLDINGS and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals would not, individually or in
the aggregate, have a material adverse effect on HOLDINGS. Each of HOLDINGS and
its subsidiaries are duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a material adverse effect on HOLDINGS.
HOLDINGS does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business, association or entity.
4.2 Certificate of Incorporation and Bylaws. HOLDINGS has previously
furnished to ASSURE TEC a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date. Such Certificate of Incorporation
and Bylaws and equivalent organizational documents of each subsidiary are in
full force and effect. Neither HOLDINGS nor any subsidiaries are in violation of
any of the provisions of its Certificate of Incorporation or Bylaws.
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4.3 Capitalization. The authorized capital stock of HOLDINGS consists of
50,000,000 shares of HOLDINGS Common Stock, par value $.01 per share and
5,000,000 shares of Preferred Stock. At the close of business on October 19,
2001 (i) HOLDINGS shares of Common Stock issued and outstanding were 1,433,939
shares, all of which are validly issued, fully paid and non-assessable, (ii)
90,458 shares Common Stock were reserved for issuance upon the exercise of
outstanding options ("HOLDINGS Options") to purchase HOLDINGS Common Stock and
(iii) 12,600 shares of HOLDINGS Common Stock are reserved for issuance to
certain directors, officers, consultants and advisors of HOLDINGS. All of the
outstanding shares of HOLDINGS's capital stock have been duly authorized and
validly issued and are fully paid and non-assessable. None of the Preferred
Stock has been issued and none is outstanding. All shares of HOLDINGS Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall, and the shares of HOLDINGS Common Stock to be issued pursuant to the
HOLDINGS will be, duly authorized, validly issued, fully paid and
non-assessable. Except as set forth in the HOLDINGS Disclosure Schedule, no
change in such capitalization has occurred. Except as set forth in this Section
4.3 or in the HOLDINGS Disclosure Schedule, as of the date of this Agreement,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or un-issued capital stock
of HOLDINGS or obligating HOLDINGS to issue or sell any shares of capital stock
of, or other equity interests in, HOLDINGS. There are no obligations, contingent
or otherwise, of HOLDINGS to repurchase, redeem or otherwise acquire any shares
of HOLDINGS Common Stock or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity.
4.4 Authority Relative to This Agreement. HOLDINGS has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by HOLDINGS and the consummation by HOLDINGS of the transactions contemplated
hereby has been duly and validly authorized by all necessary corporate action on
the part of HOLDINGS and no other corporate proceedings on the part of HOLDINGS
are necessary to authorize this Agreement, or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
HOLDINGS and, assuming the due authorization, execution and delivery by ASSURE
TEC, constitutes legal and binding obligations of HOLDINGS, enforceable against
HOLDINGS in accordance with their respective terms.
4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by HOLDINGS do
not, and the performance of this Agreement by HOLDINGS shall not, (i) conflict
with or violate the Certificate of Incorporation, Bylaws or equivalent
organizational documents of HOLDINGS or any subsidiary, (ii) subject to
compliance with the requirements set forth in Section 4.5.(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to HOLDINGS or any subsidiary or by which its properties are bound or affected,
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
HOLDINGS's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of HOLDINGS pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which HOLDINGS or any subsidiary is a party or
by which HOLDINGS or any subsidiary or any of their respective properties are
bound or affected.
(b) The execution and delivery of this Agreement by HOLDINGS
does not, and the performance of this Agreement by HOLDINGS shall not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity except (i) for applicable requirements,
if any, of the Securities Act, the Exchange Act, state securities laws, and the
rules and regulations thereunder, the rules and regulations of NASDAQ, and the
filing and recordation of the Certificate of Acquisition as required by the
Delaware Law; and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, (a) would
not prevent consummation of the Acquisition or otherwise prevent HOLDINGS from
performing its obligations under this Agreement, or (b) could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
HOLDINGS.
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4.6 Compliance; Permits.
(a) HOLDINGS is not in conflict with, or in default or violation
of, (i) any law, rule, regulation, order, judgment or decree applicable to
HOLDINGS or by which its properties is bound or affected, or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which HOLDINGS is a party or by
which HOLDINGS or its properties is bound or affected, except for any conflicts,
defaults or violations which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on HOLDINGS. To the
knowledge of HOLDINGS, no investigation or review by any governmental or
regulatory body or authority is pending or threatened against HOLDINGS, nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each such case, those the outcome of which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on HOLDINGS.
(b) HOLDINGS holds all permits, licenses, variances, exemptions,
orders and approvals from governmental authorities which are material to
operation of the business of HOLDINGS (collectively, the "HOLDINGS Permits").
HOLDINGS is in compliance in all respects with the terms of the HOLDINGS
Permits, except where failure to comply could not reasonably be expected to have
a Material Adverse Effect on HOLDINGS.
4.7 Financial Statements.
(a) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the HOLDINGS financial
statement was prepared in accordance with GAAP (including, without limitation,
in accordance with the revenue recognition provisions thereof) applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-K of the Exchange Act) and each fairly
presents the consolidated financial position of HOLDINGS and its subsidiaries as
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal adjustments which were not or
are not expected to be material in amount.
4.8 No Undisclosed Liabilities. HOLDINGS does not have any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP (including, without
limitation, in accordance with the revenue recognition principles thereof) which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of HOLDINGS taken as a whole, except (i)
liabilities provided for in HOLDINGS's balance sheet as of June 30th, 2001, (ii)
liabilities incurred since June 30th, 2001 in the ordinary course of business
consistent with past practices or (iii) banking, accounting, legal and printing
fees associated with the Acquisition.
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4.9 Absence of Certain Changes or Events. Since its formation, except as
set forth in the HOLDINGS Disclosure Schedule, there has not been: (i) any
Material Adverse Effect on HOLDINGS, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of HOLDINGS's capital stock, or any purchase,
redemption or other HOLDINGS by HOLDINGS of any of HOLDINGS's capital stock or
any other securities of HOLDINGS or any options, warrants, calls or rights to
acquire any such shares or other securities, (iii) any split, combination or
reclassification of any of HOLDINGS's capital stock, (iv) any granting by
HOLDINGS of any increase in compensation or fringe benefits, except for normal
increases of cash compensation in the ordinary course of business consistent
with past practice, or any payment by HOLDINGS of any bonus, except for bonuses
made in the ordinary course of business consistent with past practice, or any
granting by HOLDINGS of any increase in severance or termination pay or any
entry by HOLDINGS into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving HOLDINGS of the nature contemplated hereby, (v) any
material change by HOLDINGS in its accounting methods, principles or practices,
except as required by concurrent changes in GAAP, or (vi) any revaluation by
HOLDINGS of any of its assets, including, without limitation, writing down the
value of capitalized inventory or writing off notes or accounts receivable other
than in the ordinary course of business.
4.10 Absence of Litigation. Except as set forth in the HOLDINGS SEC
Reports, there are no material claims, actions, suits or proceedings pending or,
to the knowledge of HOLDINGS, threatened (or to the knowledge of HOLDINGS, any
governmental or regulatory investigation pending or threatened) against HOLDINGS
or any subsidiary as to which HOLDINGS or any subsidiary has received any
written notice or assertion, or any properties or rights of HOLDINGS or any
subsidiary, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign.
4.11 Employee Benefit Plans. HOLDINGS is not a party to any oral
or written (i) contract for the employment of any officer or employee that is
not terminable or 30 days (or less) notice, (ii) profit sharing, bonus, deferred
compensation, pension or retirement plan, agreement or arrangement; or (iii)
collective bargaining agreement. The only employee fringe or benefit plan,
commitment or other arrangements (whether or not set forth in a written document
and including, without limitation, all "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) that covers any active, former employee, director or
consultant of HOLDINGS, or with respect to which HOLDINGS has or may in the
future have liability, are listed in the HOLDINGS Disclosure Schedule (the
"Plans"). HOLDINGS has provided to ASSURE TEC: (i) correct and complete copies
of all documents embodying each Plan including (without limitation) all
amendments thereto, all related trust documents, and all material written
agreements and contracts relating to each such Plan and any other information
requested by ASSURE TEC regarding the Plan.
4.12 Labor Matters. There is no litigation pending or, to the knowledge of
HOLDINGS, threatened, between HOLDINGS, its subsidiaries and any of their
respective employees. As of the date of this Agreement, HOLDINGS is not a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by HOLDINGS nor does HOLDINGS know of any activities or
proceedings of any labor union to organize any such employees. As of the date of
this Agreement, HOLDINGS has no knowledge of any strikes, slowdowns, work
stoppages or lockouts, or threats thereof, by or with respect to any employees
of HOLDINGS.
4.13 Intentionally deleted
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4.14 Restrictions on Business Activities. There is no material agreement,
judgment, injunction, order or decree binding upon HOLDINGS which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of HOLDINGS, any HOLDINGS of property by HOLDINGS or the
conduct of business by HOLDINGS as currently conducted.
4.15 Title to Property. HOLDINGS owns no real property. HOLDINGS has good
and defensible title to all of its material properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet due
and payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby; and all leases pursuant to which HOLDINGS lease from
others material amounts of real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing material default or event of default (or any
event which with notice or lapse of time, or both, would constitute a material
default and in respect of which HOLDINGS has not taken adequate steps to prevent
such default from occurring). All the plants, structures and equipment of
HOLDINGS, are in good operating condition and repair, in all material respects.
4.16 Taxes. As of the Closing Date, HOLDINGS will have timely filed all
tax returns required to be filed by it (other than those that are not,
individually or in the aggregate, material), have paid all Taxes (as defined
below) shown thereon to be due and have provided adequate accruals in all
material respects in accordance with GAAP in its financial statements for any
Taxes that have not been paid, whether or not shown as being due on any returns.
In addition, (i) no material claim for unpaid Taxes that are currently, or will
be prior to the Closing Date, due and payable has become a lien against the
property of HOLDINGS or is being asserted against HOLDINGS, (ii) no audit of any
material Tax Return of HOLDINGS is being conducted by a tax authority, (iii) no
extension of the statute of limitations on the assessment of any Taxes has been
granted by HOLDINGS or any of its subsidiaries and is currently in effect and
(iv) there is no agreement, contract or arrangement to which HOLDINGS is a party
that may result in the payment of any amount that would not be deductible
pursuant to Sections 280G, 162(a) (by reason of being unreasonable in amount),
162(b) through (p) or 404 of the Code. As used herein, "Taxes" shall mean all
taxes of any kind, including, without limitation, those on or measured by or
referred to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority, domestic or foreign. As used herein, "Tax
Return" shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
4.17 Environmental Matters. To the best of its knowledge, HOLDINGS (i) has
obtained all applicable permits, licenses and other authorizations which are
material to the business of HOLDINGS and required under Federal, state or local
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by HOLDINGS (or its respective agents); (ii) are in material
compliance with all terms and conditions of such required permits, licenses and
authorizations, and also are in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; (iii) as of the date hereof, are not aware
of nor have received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued material compliance or which would give rise to any
material common law or statutory liability, or otherwise form the basis of any
claim, action, suit or proceeding, based on or resulting from HOLDINGS's (or any
of its respective agents) manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, or
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste; and (iv) have taken all actions necessary under
applicable requirements of Federal, state or local laws, rules or regulations to
register any products or materials required to be registered by HOLDINGS (or any
of its respective agents) thereunder.
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4.18 Intangible Assets. The HOLDINGS Disclosure Schedule contains a
true and complete list of all patents and patent applications (pending or in the
process of preparation), domestic or foreign, patent rights, trademarks, trade
names and licenses under the patents of others, trade secrets, secret processes
and other proprietary rights of every kind and nature used or necessary for use
by HOLDINGS in its business as presently conducted, or controlled in whole or in
part by HOLDINGS or directly or indirectly owned or controlled in whole or in
party by HOLDINGS or any of HOLDINGS's officers, directors or key employees. To
the best of HOLDINGS's knowledge, all such patents, patent applications, patent
rights and licenses are valid and effective in accordance with their terms, and
all such trade names, trade secrets, secret processes and other proprietary
rights are valid and effective. To the best of HOLDINGS's knowledge, the conduct
of HOLDINGS's business does not infringe upon the patents, trademarks, trade
secrets, or copyrights or other intellectual property rights, of any other
party. HOLDINGS has not received any notice of any claim of infringement. Except
as disclosed in the HOLDINGS Disclosure Schedule, there are no agreements,
contracts or obligations under which HOLDINGS is obligated with respect to, or
is using, any patents, patent applications, patent rights, trademarks, trade
names, licenses under the patents of others, trade secrets, secret processes or
other proprietary rights. The trade secrets and "know-how" of HOLDINGS are in
such form and of such quality that, following the Closing, HOLDINGS will be able
to continue to sell the products heretofore provided by HOLDINGS.
4.19 Agreements, Contracts and Commitments. The HOLDINGS Disclosure
Schedule contains a true and correct list of all material contracts, agreements
or other understandings or arrangements, written or oral, or commitments
therefor, relating to HOLDINGS, its business and assets or liabilities
(collectively, the "HOLDINGS Contracts"). Except as set forth in the HOLDINGS
Disclosure Schedule, HOLDINGS is not a party to and is not bound by:
(a) Any employment or consulting agreement, contract or
commitment with any officer, director or member of HOLDINGS's Board of
Directors, other than those that are terminable by HOLDINGS on no more than
thirty days notice and which do so with no express (whether by contract or by
policy) liability or financial obligation to HOLDINGS;
(b) Any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) Any agreement, contract or commitment containing any
covenant limiting in any respect the right of HOLDINGS to engage in any line of
business or to compete with any person or granting any exclusive distribution
rights; or
(d) Any agreement, contract or commitment currently in force
relating to the disposition or Acquisition by HOLDINGS after the date of this
Agreement of a material amount of assets not in the ordinary course of business
or pursuant to which HOLDINGS has any material ownership interest in any
corporation, partnership, joint venture or other business enterprise.
HOLDINGS is not and, to HOLDINGS's knowledge, no other party to a HOLDINGS
Contract, is in breach, violation or default under, and HOLDINGS has not
received written notice that it has breached, violated or defaulted under, any
of the material terms or conditions of any of the HOLDINGS Contracts in such a
manner as would permit any other party to cancel or terminate any such HOLDINGS
Contract, or would permit any other party to seek material damages or other
remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
24
4.20 Insurance. HOLDINGS does not carry any insurance since it has no
employees and has not been an operating company. Prior to the Effective Date,
HOLSINGS and ASSURE TEC shall agree upon appropriate insurance and coverage.
4.21 Directors, Officers and Affiliates. The HOLDINGS Disclosure Schedule
contains a complete list of the current Board of Directors and executive
officers of HOLDINGS and all persons who are an Affiliate of HOLDINGS.
4.22 Prior Sales. The HOLDINGS Disclosure Schedule contains a true,
correct and complete current list of the names and addresses of the purchasers
of any securities of HOLDINGS that have been privately offered and sold by
HOLDINGS within the last two years from the date of this Agreement, the prices
paid by the purchasers of those securities and a brief description of the facts
upon which HOLDINGS relied in claiming an exemption from the registration
requirements of the state and federal securities laws in making those sales.
4.23 Stockholder List. The HOLDINGS Disclosure Schedule contains an
alphabetical list, as of a date within thirty (30) days from the date hereof, of
all of the stockholders of record of HOLDINGS and the number of shares of
HOLDINGS Common Stock owned by each of them. That list also indicates which
stock certificates have stop transfer orders and restrictive legends placed upon
them.
4.24 Transfer Agent and Market Makers. The HOLDINGS Disclosure Schedule
contains the name of the transfer agent and any market makers for the securities
of HOLDINGS and a description of any affiliation between those persons and
HOLDINGS or any officer or director of HOLDINGS.
4.25 Stock Transfer Records. The stock transfer books and stock ledgers of
HOLDINGS are in good order, complete, accurate, and up to date, and with all
necessary signatures, and set forth all stock and securities issued, transferred
and surrendered. No duplicate certificate has been issued at any time heretofore
without an indemnity agreement and/or bond being posted. No transfer has been
made without surrender of the proper certificate duly endorsed. All certificates
so surrendered have been duly cancelled and are attached to the proper stubs
with all necessary stock powers attached hereto.
4.26 Corporate Record Books. The corporate record books of HOLDINGS are in
good order, complete, accurate, up to date, with all necessary signatures, and
set forth all meetings and actions set forth in all certificates of votes of
stockholders or directors furnished to anyone at any time.
4.27 Related Party Transactions Except as set forth in the HOLDINGS
Disclosure Schedule, neither any officer nor any director or employee of
HOLDINGS, nor any spouse or child of any of them, has any direct or indirect
interest in any competitor, supplier, or customer of HOLDINGS or in any person
from whom or to whom HOLDINGS leases any real or personal property, or in any
other person with whom HOLDINGS is doing business.
4.28 Lack of Disputes. There is currently no material and adverse
dispute, pending or, to the knowledge of HOLDINGS, threatened, anticipated or
contemplated of any kind with any customer, supplier, source of financing,
employee, landlord, or licensee of HOLDINGS.
4.29 Board Approval. The Board of Directors of HOLDINGS has, as of the
date hereof, (i) approved this Agreement, the Acquisition Agreement and the
transactions contemplated hereby and (ii) determined that the Acquisition is in
the best interests of the stockholders of HOLDINGS and is on terms that are fair
to such stockholders.
4.30 Vote Required. No stockholder vote is required of the HOLDINGS stockholders
to effect the actions to be taken by HOLDINGS under this Agreement and the
transactions contemplated hereby.
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4.31 Disclosures. None of the representations or warranties by HOLDINGS
herein and no statement contained in any certificate, Schedule or other writing
furnished by HOLDINGS in connection herewith contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE 5
CONDUCT PRIOR TO THE CLOSING DATE
5.1 Conduct of Business By ASSURE TEC. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Closing Date, ASSURE TEC shall, except to
the extent that HOLDINGS shall otherwise consent in writing, carry on its
business, in all material respects, in the usual, regular and ordinary course,
in substantially the same manner as heretofore conducted and in compliance with
all applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings.
In addition, except as permitted by the terms of this Agreement, and except as
provided in Section 5.1 of the ASSURE TEC Disclosure Schedule, without the prior
written consent of HOLDINGS, which consent will not be unreasonably withheld or
delayed, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Closing Date, ASSURE TEC shall not do any of the following:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock, or re-price options granted under any employee,
consultant, director or other stock plans or authorize cash payments in exchange
for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to HOLDINGS, or adopt any new severance plan;
(c) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(d) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing of, any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than (x) the issuance delivery and/or sale of
shares of ASSURE TEC Common Stock pursuant to the exercise of stock options or
warrants therefore outstanding as of the date of this Agreement.
26
(e) Cause, permit or propose any amendments to its Articles of
Incorporation or Bylaws;
(f) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of ASSURE TEC
other than (i) in connection with the financing of ordinary course trade
payables consistent with past practice or (ii) in the ordinary course of
business;
(g) Make any individual or series of related payments outside of
the ordinary course of business in excess of $50,000, other than banking,
accounting, legal and printing fees associated with the Acquisition,
(h) Except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which ASSURE TEC is a party or
waive, release or assign any material rights or claims there under;
(i) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(j) Engage in any action that could reasonably be expected to cause the
Acquisition to fail to qualify as a "reorganization" under Section 368(a)(1)(B)
of the Code;
(k) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(l) Agree in writing or otherwise to take any of the actions described
in subsections (a) through (k) above.
5.2 Conduct of Business by HOLDINGS.
(a) During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Closing Date, HOLDINGS shall, except to the extent that ASSURE TEC shall
otherwise consent in writing, carry on its business, in all material respects,
in the usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in compliance with all applicable laws and regulations,
pay its debts and taxes when due subject to good faith disputes over such debts
or taxes, and pay or perform other material obligations when due.
(b) In addition, except as permitted by the terms of this Agreement,
without the prior written consent of ASSURE TEC, which consent will not be
unreasonably withheld or delayed, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Closing Date, HOLDINGS shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(1) Accelerate, amend or change the period of
exercisability of options or restricted stock, or re-price options
granted under any employee, consultant, director or other stock plans
or authorize cash payments in exchange for any options granted under
any of such plans;
27
(2) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding, or policies existing, on the
date hereof and as previously disclosed in writing or made available to ASSURE
TEC, or adopt any new severance plan;
(3) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(4) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing of, any shares of capital stock or any securities
convertible into shares of capital stock, or subscriptions, rights, warrants or
options to acquire any shares of capital stock or any securities convertible
into shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible securities,
other than the issuance delivery and/or sale of shares of HOLDINGS Common Stock
pursuant to the exercise of stock options or warrants therefore outstanding as
of the date of this Agreement;
(5) Cause, permit or propose any amendments to its Articles of
Incorporation or Bylaws;
(6) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of HOLDINGS;
(7) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of HOLDINGS;
(8) Adopt or amend any employee benefit plan or employee stock purchase
or employee stock option plan, or enter into any employment contract or
collective bargaining agreement, pay any special bonus or special remuneration
to any director or employee, or increase the salaries or wage rates or fringe
benefits (including rights to severance or indemnification) of its directors,
officers, employees or consultants other than in the ordinary course of
business, consistent with past practice, or change in any material respect any
management policies or procedures;
(9) Make any individual or series of related payments outside of the
ordinary course of business in excess of $10,000, other than banking,
accounting, legal and printing fees associated with the Acquisition;
28
(10)Except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which HOLDINGS is a party or
waive, release or assign any material rights or claims thereunder;
(11) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(12) Engage in any action that could reasonably be expected to cause
the Acquisition to fail to qualify as a "reorganization" under Section
368(a)(1)(B) of the Code;
(13) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(14) Agree in writing or otherwise to take any of the actions described
in subsections (1) through (13) above.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Filings; Board Recommendations. As promptly as practicable after the
date of this Agreement, each of ASSURE TEC and HOLDINGS will prepare and file
any other filings required to be filed by it under the Exchange Act, the
Securities Act or any other Federal, foreign or state securities or related laws
relating to the Acquisition and the transactions contemplated by this Agreement
(the "Other Filings"). Specifically, but not by way of limitation, HOLDINGS will
file one or more Forms 8-K describing the Acquisition of ASSURE TEC. Each of
ASSURE TEC and HOLDINGS will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of any
request by the SEC or its staff or any other government officials for amendments
or supplements to the Information Statement or any Other Filing or for
additional information and will supply the other with copies of all
correspondence between 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 Information Statement, the Acquisition or any Other
Filing. Each of ASSURE TEC and HOLDINGS will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 6.1(a) to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to any Filing, ASSURE TEC or HOLDINGS, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or mailing to
stockholders of ASSURE TEC, such amendment or supplement.
6.2 Meeting of ASSURE TEC Directors.
(a) The Board of Directors of ASSURE TEC shall recommend that
each ASSURE TEC stockholder approve his or her exchange of ASSURE TEC shares for
HOLDINGS shares. Neither the Board of Directors of ASSURE TEC nor any committee
thereof shall withdraw, amend or modify, or propose or resolve to withdraw,
amend or modify in a manner adverse to HOLDINGS, the recommendation of the Board
of Directors of ASSURE TEC that each ASSURE TEC stockholders approve his or her
exchange of ASSURE TEC shares for HOLDINGS shares.
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6.3 INTENTIONALLY DELETED
6.4 Confidentiality; Access to Information.
(a) Access to ASSURE TEC Information. ASSURE TEC will afford
HOLDINGS and its accountants, counsel and other representatives reasonable
access during normal business hours to the properties, books, records and
personnel of ASSURE TEC during the period prior to the Closing Date to obtain
all information concerning the business of ASSURE TEC as HOLDINGS may reasonably
request. No information or knowledge obtained by HOLDINGS in any investigation
pursuant to this Section will affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of the parties
to consummate the HOLDINGS.
(b) Access to HOLDINGS Information. HOLDINGS will afford
ASSURE TEC and its accountants, counsel and other representatives reasonable
access during normal business hours to the properties, books, records and
personnel of HOLDINGS during the period prior to the Closing Date to obtain all
information concerning the business of HOLDINGS as ASSURE TEC may reasonably
request. No information or knowledge obtained by ASSURE TEC in any investigation
pursuant to this Section will affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of the parties
to consummate the Acquisition.
6.5 Public Disclosure. HOLDINGS and ASSURE TEC will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Acquisition, this
Agreement or an Acquisition Proposal and will not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with a national securities exchange or
NASDAQ. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
6.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Acquisition and the other transactions contemplated by
this Agreement, including using reasonable efforts to accomplish the following:
(i) the taking of all reasonable acts necessary to cause the conditions
precedent set forth in Article 7 to be satisfied, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the defending of any suits, claims,
actions, investigations or proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed and (iv)
the execution or delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, each of
30
HOLDINGS and ASSURE TEC and its Board of Directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to the
Acquisition, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Acquisition and the
other transactions contemplated by this Agreement may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Acquisition, this
Agreement and the transactions contemplated hereby. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall be deemed to require
HOLDINGS or ASSURE TEC or any subsidiary or affiliate thereof to agree to any
divestiture by itself or any of its affiliates of shares of capital stock or of
any business, assets or property, or the imposition of any material limitation
on the ability of any of them to conduct their businesses or to own or exercise
control of such assets, properties and stock.
(b) ASSURE TEC shall give prompt notice to HOLDINGS of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of ASSURE TEC to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 7.3(a) or 7.3(b) would not be satisfied, PROVIDED, HOWEVER,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c) HOLDINGS shall give prompt notice to ASSURE TEC of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of HOLDINGS to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 7.2(a) or 7.2(b) would not be satisfied, PROVIDED, HOWEVER,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
6.7 Third Party Consents. As soon as practicable following the date
hereof, HOLDINGS and ASSURE TEC will each use its commercially reasonable
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
6.8 Stock Options and Employee Benefits.
(a) At the Closing Date, each outstanding option to purchase
shares of ASSURE TEC Common Stock (each, "ASSURE TEC Stock Option") under the
ASSURE TEC Stock Option Plan, whether or not exercisable, whether or not vested,
at the request of each optionholder, be exchanged for a stock option of HOLDINGS
in such manner that HOLDINGS (i) is "assuming a stock option in a transaction to
which Section 424(a) applied" within the meaning of Section 424 of the Code, or
(ii) to the extent that Section 424 of the Code does not apply to any such
ASSURE TEC Stock Options, would be a transaction within Section 424 of the Code.
Each ASSURE TEC Stock Option so assumed by HOLDINGS under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
options immediately prior to the Closing Date (including, without limitation,
any repurchase rights or vesting provisions), except that (1) each ASSURE TEC
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Stock Option will be exercisable (or will become exercisable in accordance with
its terms) for the number of whole shares of HOLDINGS Common Stock equal to the
product of the number of shares of ASSURE TEC Common Stock that were issueable
upon exercise of such ASSURE TEC Stock Option immediately prior to the Closing
Date multiplied by the Exchange Ratio, rounded down to the nearest whole number
of shares of HOLDINGS Common Stock and (2) the per share exercise price for the
shares of HOLDINGS Common Stock issueable upon exercise of such assumed ASSURE
TEC Stock Option will be equal to the quotient determined by dividing the
exercise price per share of ASSURE TEC Common Stock at which such ASSURE TEC
Stock Option was exercisable immediately prior to the Closing Date by the
Exchange Ratio, rounded up to the nearest whole cent.
(b) It is intended that ASSURE TEC Stock Options assumed by
HOLDINGS shall qualify following the Closing Date as incentive stock options as
defined in Section 422 of the Code to the extent ASSURE TEC Stock Options
qualified as incentive stock options immediately prior to the Closing Date and
the provisions of this Section 6.8 shall be applied consistent with such intent.
(c) From and after the Closing Date, HOLDINGS shall grant all
employees credit for all service (to the same extent as service with HOLDINGS is
taken into account with respect to similarly situated employees of HOLDINGS)
with ASSURE TEC prior to the Closing Date for eligibility and vesting purposes.
6.9 Form S-8. HOLDINGS agrees to file a registration statement on Form
S-8 for the shares of HOLDINGS Common Stock issueable with respect to assumed
ASSURE TEC service Stock Options as soon as is reasonably practicable after the
Closing Date (but in any event within five (5) business days of the Closing
Date) and intends to maintain the effectiveness of such registration statement
thereafter for so long as any of such options or other rights remain
outstanding.
6.10 OTCBB and NASDAQ Listings. HOLDINGS will, as soon as practicable
after qualifying therefore, seek to have all of the common stock of HOLDINGS
listed on the NASDAQ Small Cap Market.
6.11 ASSURE TEC Investment Agreement. ASSURE TEC will deliver or cause to
be delivered to HOLDINGS before the Closing, from each ASSURE TEC Stockholder,
when such person exchanges his or her shares, an executed Investment Agreement
in substantially the form attached hereto as EXHIBIT A (the "ASSURE TEC
Investment Agreement"), each of which will be in full force and effect as of the
Closing Date. HOLDINGS will place appropriate legends on the certificates
evidencing any HOLDINGS Common Stock to be received by each ASSURE TEC
stockholder pursuant to the terms of this Agreement, and will issue appropriate
stop transfer instructions to the transfer agent for the HOLDINGS Common Stock,
consistent with the terms of the ASSURE TEC Investment Agreement.
6.12 Comfort Letter of HOLDINGS's Auditors. Prior to the Closing, HOLDINGS
shall cause Good, Swartz, Brown & Berns, certified public accountants to
HOLDINGS, to provide a letter reasonably acceptable to ASSURE TEC, relating to
their audit of the financial statements relating to HOLDINGS contained in or
incorporated by reference in the HOLDINGS annual report on Form 10K.
6.13 Comfort Letter of ASSURE TEC's Auditors. Prior to the Closing, ASSURE
TEC shall cause the certified public accountants to ASSURE TEC, to provide a
letter reasonably acceptable to HOLDINGS, relating to their audit of the
financial statements relating to ASSURE TEC contained in or incorporated by
reference in any public filings of HOLDINGS.
32
6.14 Intentionally deleted
6.15 ASSURE TEC Accountants' Consent. ASSURE TEC shall cause their
certified public accountants to provide, upon request, an accountants' consent
for the inclusion, in the Proxy Statement/Prospectus, of audit report(s) for the
periods required to be included in such Proxy Statement/Prospectus (irrespective
of whether an audit for such period is required under SEC rules) (the
"Accountants' Consent"). The inclusion of a going concern qualification in the
Inception Audit shall not be deemed to result in a breach of the covenant set
forth in this Section 6.15.
ARTICLE 7
CONDITIONS TO THE ACQUISITION
7.1 Conditions to Obligations of Each Party to Effect the Acquisition.
The respective obligations of each party to this Agreement to effect the
Acquisition shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Acquisition illegal or
otherwise prohibiting consummation of the Acquisition.
(b) Tax Opinion. HOLDINGS shall have received a written opinion
from its tax counsel, in form and substance reasonably satisfactory to them, to
the effect that the Acquisition will constitute a reorganization within the
meaning of Section 368(a)(1)(B) of the Code and such opinion shall not have been
withdrawn. The parties to this Agreement agree to make such reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
7.2Additional Conditions to Obligations of ASSURE TEC. The obligation of
ASSURE TEC to consummate and effect the Acquisition shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by ASSURE TEC:
(a) Representations and Warranties. Each representation and
warranty of HOLDINGS contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on the
Closing Date except, (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on HOLDINGS, (B) for changes contemplated
by this Agreement and (C) for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct except as does not constitute a Material Adverse Effect on HOLDINGS
as of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
HOLDINGS Disclosure Schedule made or purported to have been made after the date
of this Agreement shall be disregarded). ASSURE TEC shall have received a
certificate with respect to the foregoing signed on behalf of HOLDINGS by an
authorized officer of HOLDINGS.
(b) Agreements and Covenants. HOLDINGS shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and ASSURE TEC shall have received a certificate to such effect signed on
behalf of HOLDINGS by an authorized officer of HOLDINGS.
33
(c) Material Adverse Effect. No Material Adverse Effect with respect to
HOLDINGS shall have occurred since the date of this Agreement.
(d) Net Worth of HOLDINGS. That net worth shall be shown on a balance
sheet prepared by HOLDINGS's independent auditors.
(e) Stockholders Signatures. ASSURE TEC Stockholders owning at least
80% of the issued and outstanding shares of ASSURE TEC shall sign this
Agreement, the Investment Agreement (Exhibit A) and the Stockholder Waiver
(Exhibit B) and shall have presented their ASSURE TEC stock certificates for
exchange, with signature(s) witnessed by a second party.
(f) Representations by Principal Stockholder. Dr. R. Bruce Reeves,
President and a principal stockholder of HOLDINGS, will execute and deliver to
ASSURE TEC a certificate in which he warrants and represents that, to the best
of his knowledge after due investigations, the representations and warranties
made herein by HOLDINGS are true and correct.
7.3 Additional Conditions to the Obligations of HOLDINGS. The obligations
of HOLDINGS to consummate and effect the Acquisition shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by HOLDINGS:
(a)Representations and Warranties. Each representation and warranty of
ASSURE TEC contained in this Agreement: (i) shall have been true and correct as
of the date of this Agreement, and (ii) shall be true and correct on and as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on ASSURE TEC, (B) for changes contemplated
by this Agreement, and (C) for those representations and warranties which
address matters only as of a particular date (which representations shall have
been true and correct except as does not constitute a Material Adverse Effect on
ASSURE TEC as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded, and (ii) any update of or modification to the
ASSURE TEC Disclosure Schedule made or purported to have been made after the
date of this Agreement shall be disregarded). HOLDINGS shall have received a
certificate with respect to the foregoing signed on behalf of ASSURE TEC by an
authorized officer of ASSURE TEC.
(b) Agreements and Covenants. ASSURE TEC shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and HOLDINGS shall have received a certificate to such effect signed on
behalf of ASSURE TEC by the Chief Executive Officer and the Chief Financial
Officer of ASSURE TEC.
34
(c) Material Adverse Effect. No Material Adverse Effect with respect to
ASSURE TEC and its subsidiaries shall have
occurred since the date of this Agreemen
(d) Stockholders Signatures. ASSURE TEC Stockholders owning at least
80% of the issued and outstanding shares of ASSURE TEC shall sign this
Agreement, the Investment Agreement (Exhibit A) and the Stockholder Waiver
(Exhibit B) and shall have presented their ASSURE TEC stock certificates for
exchange, with signature(s) witnessed by a second party.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date, whether before or after the requisite approvals of the Boards
of Directors of ASSURE TEC or HOLDINGS:
(a) by mutual written consent duly authorized by the Boards of
Directors of HOLDINGS and ASSURE TEC;
(b) by either ASSURE TEC or HOLDINGS if the Acquisition shall
not have been consummated by November 10, 2001 for any reason; PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Acquisition to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either ASSURE TEC or HOLDINGS if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Acquisition, which order, decree, ruling or other action is
final and nonappealable;
(d) by either ASSURE TEC or HOLDINGS if the required approval of
ASSURE TEC's Stockholders owning at least 80% of ASSURE TEC's issued and
outstanding shares contemplated by this Agreement shall not have been obtained
(PROVIDED that the right to terminate this Agreement under this Section 8.1(d)
shall not be available to ASSURE TEC where the failure to obtain such ASSURE TEC
stockholder approval shall have been caused by the action or failure to act of
ASSURE TEC and such action or failure to act constitutes a breach by ASSURE TEC
of this Agreement);
(e) by ASSURE TEC, upon a breach of any representation,
warranty, covenant or agreement on the part of HOLDINGS set forth in this
Agreement, or if any representation or warranty of HOLDINGS shall have become
untrue, in either case such that the conditions set forth in Section 7.2(a) or
Section 7.2(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, PROVIDED that if
such inaccuracy in HOLDINGS's representations and warranties or breach by
HOLDINGS is curable by HOLDINGS through the exercise of its commercially
reasonable efforts, then ASSURE TEC may not terminate this Agreement under this
Section 8.1(f) for thirty days after delivery of written notice from ASSURE TEC
to HOLDINGS of such breach, provided HOLDINGS continues to exercise commercially
reasonable efforts to cure such breach (it being understood that ASSURE TEC may
not terminate this Agreement pursuant to this paragraph (f) if it shall have
materially breached this Agreement or if such breach by HOLDINGS is cured during
such thirty day period); or
35
(f) by HOLDINGS, upon a breach of any representation, warranty,
covenant or agreement on the part of ASSURE TEC set forth in this Agreement, or
if any representation or warranty of ASSURE TEC shall have become untrue, in
either case such that the conditions set forth in Section 7.3(a) or Section
7.3(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in ASSURE TEC's representations and warranties or breach by ASSURE
TEC is curable by ASSURE TEC through the exercise of its commercially reasonable
efforts, then HOLDINGS may not terminate this Agreement under this Section
8.1(g) for thirty days after delivery of written notice from HOLDINGS to ASSURE
TEC of such breach, provided ASSURE TEC continues to exercise commercially
reasonable efforts to cure such breach (it being understood that HOLDINGS may
not terminate this Agreement pursuant to this paragraph (g) if it shall have
materially breached this Agreement or if such breach by ASSURE TEC is cured
during such thirty day period).
8.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 8.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 8.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 8.2, Section 8.3 and Article 9 (General Provisions), each of
which shall survive the termination of this Agreement, and (ii) nothing herein
shall relieve any party from liability for any willful breach of this Agreement.
No termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
8.3 Fees and Expenses. Except as set forth in this Section 8.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Acquisition is consummated. As used herein, HOLDINGS expenses shall
refer to expenses that relate to periods after the date of this Agreement.
(a) Expenses to be paid by ASSURE TEC. ASSURE
TEC shall pay the following expenses relating to the
Acquisition: the legal fees of its securities
counsel, all audit costs concerning the pre-closing
and post-closing audit of ASSURE TEC, (including the
cost of producing any audited or unaudited pro-forma
financial statements and/or any audited or unaudited
stub financial statements for ASSURE TEC);
(b) Expenses to be paid by HOLDINGS. HOLDINGS shall pay the
costs related to initiating the following actions: the legal fees of its
securities counsel; the cost of an opinion letter by legal counsel regarding
present or past litigation; audit fees to its auditors for pre-closing audit
work concerning HOLDINGS only; the cost of preparation of board minutes and
resolutions of HOLDINGS; cover letter to transfer agent; various letters to
NASD, and other regulatory agencies (concerning the required advance notices of
the transaction; preparing and filing the Form 8-K describing the Acquisition of
ASSURE TEC; preparing and sending to HOLDINGS stockholders and others of the
notice of the acquisition of ASSURE TEC; a letter to apply for a new CUSIP
number; assistance to ASSURE TEC on choice and printing of a new stock
certificate; and a draft of a transmittal form for the new name replacement
stock certificate.
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(c) Intentionally deleted
8.4 Amendment. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of HOLDINGS and ASSURE TEC.
8.5 Extension; Waiver. At any time prior to the Closing Date any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE 9
GENERAL PROVISIONS
9.1 Non-Survival of Representations and Warranties. The representations
and warranties of ASSURE TEC and HOLDINGS contained in this Agreement shall
terminate at the Closing Date, and only the covenants that by their terms
survive the Closing Date shall survive the Closing Date.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to HOLDINGS, to:
BRL HOLDINGS, INC.
340 Granite St., Suite 200
Manchester, N.H. 03102-4004
Attn: Dr. Bruce Reeves, Ph. D., President/CEO
Telephone: (603) 641-8443
Fax: (603) 641-9535
with a copy to:
John Lowy, P.C.
645 Fifth Ave., 4th Floor
New York, NY 10022
Attention: John Lowy
Telephone: (212) 371-7799
Fax: (212) 371-8527
(b) if to ASSURE TEC, to:
Bruce C. Monk, President
AssureTec Systems, Inc.
340 Granite Street, Suite 200
Manchester, NH 03104
37
9.3 Interpretation. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"the business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.5Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the ASSURE TEC Disclosure
Schedule and the HOLDINGS Disclosure Schedule (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 6.10.
9.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
9.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof;
provided that issues involving the corporate governance of any of the parties
hereto shall be governed by their respective jurisdictions of incorporation.
9.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
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9.11 Waiver of Jury Trial. EACH OF HOLDINGS AND ASSURE TEC HEREIN
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF HOLDINGS OR ASSURE TEC IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
individually and or by their duly authorized respective officers this 19 day of
October 2001 but to be effective as of the date first written above.
ASSURE TEC, INC.
By:
/s/ Bruce C. Monk
Bruce C. Monk, President
BRL Holdings, Inc.
By: /s/ R. Bruce Reeves
Dr. R. Bruce Reeves, President/CEO
ASSURE TEC Stockholder Individually (Counterpart signature page)
- ------------------------ ------------------- ------------ -----
Name Number of AssureTec Signature Date
Shares owned
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