EXHIBIT 2.1
EXECUTION VERSION
================================================================================
AGREEMENT OF MERGER
AND
PLAN OF REORGANIZATION
AMONG
CCP WORLDWIDE, INC.,
CCP ACQUISITION CORP.
AND
DYADIC INTERNATIONAL, INC.
SEPTEMBER 28, 2004
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TABLE OF CONTENTS
Page
1. The Merger...............................................................................................2
1.1 Merger..........................................................................................2
1.2 Effective Time..................................................................................2
1.3 Certificate of Incorporation, By-laws, Directors and Officers...................................3
1.4 Assets and Liabilities..........................................................................3
1.5 Manner and Basis of Converting Shares...........................................................3
1.6 Adjustment of the Exchange Ratio................................................................6
1.7 Surrender and Exchange of Certificates..........................................................6
1.8 Dissenting Shares...............................................................................7
1.9 Parent Common Stock.............................................................................7
1.10 Further Assurances..............................................................................8
2. Representations and Warranties of the Company............................................................8
2.1 Organization, Subsidiaries, Standing, Qualifications; etc.......................................8
2.2 Authority; No Conflicts; Consents...............................................................9
2.3 Capital Stock..................................................................................10
2.4 Indebtedness...................................................................................10
2.5 Company Shareholders...........................................................................10
2.6 Corporate Acts and Proceedings.................................................................10
2.7 Compliance with Laws and Instruments...........................................................11
2.8 Binding Obligations............................................................................11
2.9 Broker's and Finder's Fees.....................................................................12
2.10 Financial Statements...........................................................................12
2.11 Absence of Undisclosed Liabilities.............................................................12
2.12 Changes........................................................................................13
2.13 Schedule of Assets and Contracts...............................................................13
2.14 Employees......................................................................................15
2.15 Tax Returns and Audits.........................................................................16
2.16 Intellectual Property..........................................................................16
2.17 Employee Benefit Plans; ERISA..................................................................17
2.18 Title to Property and Encumbrances.............................................................18
2.19 Condition of Properties........................................................................18
2.20 Insurance Coverage.............................................................................19
2.21 Litigation.....................................................................................19
2.22 Bankruptcy, Litigation and Investigation.......................................................19
2.23 Interested Party Transactions..................................................................19
2.24 Hazardous Waste................................................................................20
2.25 Receivables....................................................................................20
2.26 Inventories....................................................................................20
2.27 Customers, Suppliers and Independent Contractors...............................................20
2.28 Product Warranty...............................................................................20
2.29 Purchase Commitments and Outstanding Bids......................................................21
2.30 Questionable Payments..........................................................................21
2.31 Obligations to or by Shareholders..............................................................21
2.32 Duty to Make Inquiry...........................................................................21
2.33 Disclosure.....................................................................................21
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TABLE OF CONTENTS
(Continued)
Page
3. Representations and Warranties of Parent and Acquisition................................................21
3.1 Organization; Subsidiaries; Standing; Qualification, etc.......................................22
3.2 Authority; No Conflicts; Consents..............................................................22
3.3 Capitalization of Parent.......................................................................24
3.4 Parent Common Stockholders.....................................................................25
3.5 Broker's and Finder's Fees.....................................................................25
3.6 Acquisition....................................................................................25
3.7 Validity of Shares.............................................................................25
3.8 Securities Laws Reporting and Compliance.......................................................26
3.9 Parent Financial Statements....................................................................27
3.10 Financial Controls.............................................................................28
3.11 Governmental Consents..........................................................................28
3.12 Compliance with Laws and Other Instruments.....................................................28
3.13 No General Solicitation........................................................................29
3.14 Absence of Undisclosed Liabilities.............................................................29
3.15 Changes........................................................................................29
3.16 Schedule of Assets and Contracts...............................................................30
3.17 Employees......................................................................................31
3.18 Tax Returns and Audits.........................................................................31
3.19 Employee Benefit Plans; ERISA..................................................................32
3.20 Bankruptcy, Litigation and Investigation.......................................................33
3.21 Interested Party Transactions..................................................................33
3.22 Questionable Payments..........................................................................33
3.23 Duty to Make Inquiry...........................................................................34
3.24 Accountants....................................................................................34
3.25 Minute Books...................................................................................34
3.26 Complete Copies of Materials...................................................................34
3.27 Reorganization.................................................................................34
3.28 Disclosure.....................................................................................34
3.29 Compliance with Laws and Instruments...........................................................35
3.30 Execution and Delivery of Split-Off Documents and Offering Documents...........................35
4. Conduct of Company Pending the Merger...................................................................36
4.1 Company Actions Pending the Merger.............................................................36
4.2 Prohibited Actions by Company Pending the Merger...............................................36
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TABLE OF CONTENTS
Page
5. Conduct of Business by Parent, Acquisition and CCP Pending the Merger...................................37
5.1 Parent, Acquisition and CCP Actions Pending the Merger.........................................37
6. Additional Agreements...................................................................................38
6.1 Access and Confidential Information............................................................38
6.2 Further Actions to Close Merger................................................................38
6.3 Publicity......................................................................................39
6.4 Notification of Certain Matters................................................................39
6.5 Tax Returns; Cooperation.......................................................................39
6.6 Reorganization.................................................................................40
6.7 Form 8-K; Other Filings........................................................................40
6.8 Offering Memorandum............................................................................40
6.9 Company Information Statement..................................................................41
6.10 Parent Information Statement...................................................................41
6.11 Regulatory Approval by Parent..................................................................41
6.12 Notices from Governmental Agencies.............................................................41
6.13 Registration of Shares and Other Securities....................................................42
6.14 Appointment of Directors.......................................................................42
6.15 Lock-Up Letters................................................................................42
6.16 Amendment and Restatement of Parent Corporate Charter and By-Laws..............................43
6.17 Novation Agreements. Novation Request..........................................................43
6.18 Tompkins Indemnification and Escrow Account....................................................43
6.19 Additional Representations, Warranties and Covenants of the Shareholders.......................43
6.20 Novation of Engagement Agreement...............................................................44
6.21 Termination of Stock Plan......................................................................44
6.22 Parent Common Stock and Net Worth Adjustments..................................................44
6.23 Company Delivery of Documents..................................................................45
6.24 Assumption of Company Commitment to Issue Parent Warrants......................................45
7. Conditions of Parties' Obligations......................................................................45
7.1 Conditions Precedent to Each Party's Obligation to Effect the Merger...........................45
7.2 Conditions Precedent to Obligations of Parent..................................................46
7.3 Conditions Precedent to Obligation of the Company..............................................47
7.4 Frustration of Closing Conditions..............................................................50
8. Non-Survival of Representations and Warranties..........................................................50
9. Amendment of Agreement..................................................................................51
10. Definitions.............................................................................................51
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TABLE OF CONTENTS
Page
11. Closing.................................................................................................59
12. Termination Prior to Closing............................................................................60
12.1 Termination of Agreement.......................................................................60
12.2 Termination of Obligations.....................................................................61
13. Miscellaneous...........................................................................................61
13.1 Notices........................................................................................61
13.2 Entire Agreement...............................................................................62
13.3 Expenses.......................................................................................62
13.4 Time...........................................................................................62
13.5 Severability...................................................................................62
13.6 Successors and Assigns; Assignment.............................................................62
13.7 No Third Parties Benefited.....................................................................62
13.8 Counterparts...................................................................................62
13.9 Recitals, Schedules and Exhibits...............................................................63
13.10 Section Headings and Gender....................................................................63
13.11 Governing Law..................................................................................63
13.12 Specific Performance; Remedies.................................................................63
13.13 Submission to Jurisdiction; Process Agent; No Jury Trial.......................................63
13.14 Amendment......................................................................................64
13.15 Electronic Signatures..........................................................................64
13.16 Construction...................................................................................65
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
First Section
Exhibit Reference Name of Exhibit
- ------- --------- ---------------
Exhibit A Recital B Split-Off Agreement
Exhibit B Recital E Form of Articles of Merger
Exhibit C Section 1.3(a) Company Articles of Incorporation
Exhibit D Section 1.3(b) Company By-Laws
Exhibit E Section 1.5(b) Form of Company Restricted Stock Novation Agreement
Exhibit F Section 1.5(c) Form of Company Option Novation Agreement
Exhibit G Section 1.5(d) Form of Company Warrant Novation Agreement
Exhibit H Section 1.5(e) Form of Company Convertible Security Novation Agreement
Exhibit I Section 2.2(a) Form of Emalfarb Voting Agreement
Exhibit J Section 3.2(a) Offering Placement Agency Agreement
Exhibit K Section 3.2(a) Offering Subscription Agreement
Exhibit L Recital B Form of Parent Warrants
Exhibit M Section 3.2(d) Form of Allison Voting Agreement
Exhibit N (Reserved)
Exhibit O Section 6.15 Form of Tompkins and Emalfarb Post-Merger Lock-Up Agreements
Exhibit P Section 6.16 Form of Amended and Restated Certificate of Incorporation of
Parent
Exhibit Q Section 6.16 Form of Amended and Restated By-Laws of Parent
Exhibit R Section 6.18 Form of Tompkins Indemnification and Escrow Agreement
Exhibit S Section 6.19 Form of Letter of Transmittal For Existing Company Shareholders
Exhibit T Section 7.2(a) Form of Company Closing Certificate
Exhibit U Section 7.2(e) Form of Legal Opinion of Counsel to the Company
Exhibit V Section 7.2(e) Form of Legal Opinion of Special Counsel to the Company
Exhibit W Section 7.3(a) Form of Parent and Acquisition Closing Certificate
Exhibit X Section 7.3(a) Form of CCP Closing Certificate
Exhibit Y Section 7.3(d) Form of Parent Board Member Resignation
Exhibit Z Section 7.3(d) Form of Parent Officer Resignation
Exhibit AA Section 7.3(f) Form of Legal Opinion of Counsel to Parent, CCP and Acquisition
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SCHEDULES
Schedule 1.3(c) Officers and Directors of Surviving Corporation following Merger
Schedule 1.5(c) Dyadic International, Inc. 2001 Compensatory Equity Plan
Schedule 1.5(h) Contemplated Capitalization of Parent After Merger, Split-Off and Private
Placement Offering
Schedule 2.1 List of Company Subsidiaries
Schedule 2.5A List of Holders of Company Equity Securities
Schedule 2.5B Existing Agreements Regarding Company Equity Securities
Schedule 2.7 Company Required Approvals
Schedule 2.9 Company Brokers
Schedule 2.10 Company Financial Statements
Schedule 2.11 Undisclosed Liabilities of the Company and Material Adverse Effect Events
Schedule 2.12 Business Conduct by Company Outside Ordinary Course of Business
Schedule 2.13(a) Company Real Estate Leases
Schedule 2.13(b)(i) Company Labor Union Agreements
Schedule 2.13(b)(ii) Company Purchase Agreements for Fixed Assets, Materials, Supplies or Equipment
Schedule 2.13(b)(iii) Company Employment and Consulting Agreements
Schedule 2.13(b)(iv) Company Compensatory Plans and Arrangements Other than Company Employee Benefit
Plans
Schedule 2.13(b)(v) Company Loan Agreements
Schedule 2.13(b)(vi) Company Guarantees
Schedule 2.13(b)(vii) Company Leases
Schedule 2.13(b)(viii) Company Lessor Agreements
Schedule 2.13(b)(ix) Agreements with Holders of Company Equity Securities Not Listed In Schedule 2.5A
Schedule 2.13(b)(x) Company Agreements with Affiliates
Schedule 2.13(b)(xi) Company Agreements Containing Royalty Obligations
Schedule 2.13(b)(xii) Company Covenants Not to Compete
Schedule 2.13(b)(xiii) Company Distribution Agreements
Schedule 2.13(b)(xiv) Company Confidentiality Agreements
Schedule 2.13(b)(xv) Other Company Material Agreements
Schedule 2.13(b)(xvi) Company Agreements Requiring Consents of Third Parties
Schedule 2.13(c) Company Insurance Policies
Schedule 2.13(d) Company Bank Accounts
Schedule 2.14 Company Obligations to Employees, Officers and Directors
Schedule 2.16 Patents and Other Intangible Assets of the Company
Schedule 2.17 Company Employee Benefit Plans
Schedule 2.21 Company Litigation
Schedule 2.23 Company Interested Party Transactions
Schedule 2.28 Company Product Warranties
Schedule 2.31 Company Obligations to Shareholders
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Schedule 3.3 List of Options or Convertible Securities
Schedule 3.4 List of Holders of Parent Equity Securities
Schedule 3.8 Blue-Sky Filings and Exemptions
Schedule 3.14 Other Liabilities
Schedule 3.15 Changes Since Parent Balance Sheet Date
Schedule 3.16 Parent Agreements and Bank Accounts
Schedule 3.19 Parent Employee Benefit Plans
Schedule 3.21 Interested Party Transactions
Schedule 3.24 Non-Audit Services by Auditors
Schedule 6.23 Missing Documents
vii
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered as of September 28, 2004, by and among CCP
WORLDWIDE, INC., a Delaware corporation ("Parent"), CCP ACQUISITION CORP., a
Florida corporation ("Acquisition"), which is a wholly owned Subsidiary of
Parent, and DYADIC INTERNATIONAL, INC., a Florida corporation (the "Company").
Certain capitalized terms used in this Agreement are defined in the glossary
contained in Section 10 hereof.
WITNESSETH:
A. The Company is engaged in the development, manufacture and sale
of biological products, and the development, licensing and other distribution of
certain enabling proprietary technologies. The Company desires to raise equity
capital to be used for working capital purposes, for the development and
commercialization of its enabling proprietary technologies, to expand its
industrial enzymes business, and for other business purposes.
B. Parent is a publicly reporting company pursuant to Section 15(d)
of the Exchange Act. Parent has proposed:
(i) to raise capital to fund the operating and other business
activities of the Company by means of an offering of units of securities
of Parent (the "Private Placement Offering"), comprised of (x) shares of
$.001 par value common Stock of Parent ("Parent Common Stock") and (y)
warrants to purchase shares of Parent Common Stock ("Parent Warrants"),
that is exempt from the registration requirements of the Securities Act;
(ii) that a "Merger" (as hereinafter defined) be consummated
by and among Acquisition and the Company (Acquisition having been formed
by Parent solely for that purpose), so that as a result of the Merger: (x)
the Company will survive and become a wholly owned subsidiary of Parent;
and (y) the shareholders of the Company immediately prior to the "Merger
Effective Time" (as hereinafter defined) ("Existing Company Shareholders")
will own shares of a public reporting company, representing a majority of
Parent's issued and outstanding Parent Common Stock; and
(iii) to split-off its only other Subsidiary, Custom Craft
Packaging, Inc., a North Carolina corporation ("CCP"), through the sale of
all of the outstanding capital stock of CCP (the "Split-Off") upon the
terms and conditions of a split-off agreement by and among Parent, David
R. Allison ("Allison"), the Company and CCP dated of even date herewith
substantially in the form of EXHIBIT A attached hereto (the "Split Off
Agreement").
C. The Board of Directors of each of Acquisition, Parent and the
Company have each determined that it is fair to, and in the best interests of,
their respective corporations and shareholders for Acquisition to be merged with
and into the Company upon the terms and subject to the conditions set forth in
this Agreement.
D. The Board of Directors of each of Parent and CCP have each
determined that it is fair to, and in the best interests of, their respective
corporations and shareholders for CCP be split-off from Parent upon the terms
and subject to the conditions set forth in the Split-Off Agreement.
E. The Board of Directors of Acquisition and the Board of Directors
of the Company have each approved this Agreement and the merger of Acquisition
with and into the Company in accordance with the Florida Business Corporation
Act (the "FBCA") and upon the terms and subject to the conditions set forth
herein and in the Articles of Merger substantially in the form attached as
EXHIBIT B hereto (the "Articles of Merger").
F. Parent, Acquisition, and the Company desire that the Merger
qualifies as a "plan of reorganization" under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and not subject the holders of
Equity Securities of the Company to tax under the Code.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly and mutually acknowledged,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. The Merger.
1.1 Merger. Subject to the terms and conditions of this Agreement
and the Articles of Merger, Acquisition shall be merged with and into the
Company (the "Merger") in accordance with Section 607.1101 of the FBCA. At the
Merger Effective Time, the separate legal existence of Acquisition shall cease,
and the Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of Florida under the name Dyadic
International (USA), Inc. or such other alternate name as shall be approved by
the Company. With respect to references in the Agreement relating to any
obligations or duties of the Company accruing after the Merger Effective Date,
the usage of the defined term "Company" as opposed to "Surviving Corporation"
shall not operate to negate any such obligation or duties.
1.2 Effective Time. The Merger shall become effective on the date
and at the time the Articles of Merger are filed with the Department of State of
the State of Florida in accordance with Section 607.1109 of the FBCA. The time
at which the Merger shall become effective as aforesaid is referred to
hereinafter as the "Merger Effective Time." Subject to the terms and conditions
of the Agreement, the Company and Acquisition shall duly execute and file the
Articles of Merger with the Secretary of State of the State of Florida as part
of the Closing as contemplated hereby and as described in Section 11 hereof.
2
1.3 Certificate of Incorporation, By-laws, Directors and Officers.
(a) The Articles of Incorporation of the Company, as in effect
immediately prior to the Merger Effective Time, attached as EXHIBIT C hereto,
shall be the Articles of Incorporation of the Surviving Corporation from and
after the Merger Effective Time until further amended in accordance with
applicable law, except that (i) the name of the Company shall be changed to
Dyadic International (USA), Inc. and (ii) the provisions of Article THIRD 2(b)
shall be deleted.
(b) The By-laws of the Company, as in effect immediately prior
to the Merger Effective Time, attached as EXHIBIT D hereto, shall be the By-laws
of the Surviving Corporation from and after the Merger Effective Time until
amended in accordance with applicable law, the Articles of Incorporation and
such By-laws.
(c) The directors and officers listed in SCHEDULE 1.3(C)
hereto shall be the directors and officers of the Surviving Corporation, and
each shall hold his respective office or offices from and after the Merger
Effective Time until his successor shall have been elected and shall have
qualified in accordance with applicable law, or as otherwise provided in the
Articles of Incorporation or By-laws of the Surviving Corporation.
1.4 Assets and Liabilities. At the Merger Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the constituent corporations;
and all and singular, the rights, privileges, powers and franchises of each of
the constituent corporations, and all property, real, personal and mixed, and
all debts due to any of the constituent corporations on whatever account, as
well for stock subscriptions as all other things in action or belonging to each
of the constituent corporations shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of the several and respective constituent corporations,
and the title to any real estate vested by deed or otherwise in any of such
constituent corporations shall not revert or be in any way impaired by the
Merger; but all rights of creditors and all liens upon any property of any of
the constituent corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the respective constituent corporations shall
thenceforth attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
1.5 Manner and Basis of Converting Shares.
(a) Acquisition Common Stock Conversion. At the Merger
Effective Time, each share of common stock, par value $0.01 per share, of
Acquisition that shall be outstanding immediately prior to the Merger Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive one share of common
stock, no par value per share, of the Surviving Corporation, so that at the
Merger Effective Time, Parent shall be the holder of all of the issued and
outstanding shares of the Surviving Corporation.
3
(b) Conversion of Company Common Stock. At the Merger
Effective Time, subject to the provisions of Sections 1.6 and 1.8 hereof, each
share of no par value common stock of the Company ("Company Common Stock")
issued and outstanding prior to the Merger Effective Time (other than (x) shares
of Company Common Stock cancelled in accordance with Section 1.5(c) hereof and
(y) "Dissenting Shares" (as defined in Section 1.8 hereof), shall, by virtue of
the Merger and without any action on the part of the holders thereof, be
converted into the right to receive validly issued, fully paid and nonassessable
shares of Parent Common Stock on the basis of a ratio of one (1) share of Parent
Common Stock for each share of Company Common Stock (the "Exchange Ratio"),
provided, however, that if the Company has an agreement with any Existing
Company Shareholder (a "Company Restricted Stock Agreements") regulating such
holder's ownership and rights to transfer any shares of Company Common Stock
("Company Restricted Stock"), then the shares of Parent Common Stock issuable to
that Existing Company Shareholder in respect of shares of that Company
Restricted Stock shall continue to be bound by the terms and provisions of that
Company Restricted Stock Agreement as applied to that Company Restricted Stock.
Prior to the Merger Effective Time, Parent and the Company will execute and
deliver to each holder of shares of Company Restricted Stock an agreement
substantially in the form of EXHIBIT E attached hereto (the "Company Restricted
Stock Novation Agreement"), to be effective upon the completion of the Merger
and evidencing Parent's foregoing assumption of the Company Restricted Stock
Agreement with that Existing Company Shareholder by Parent, and will use
commercially reasonable efforts to obtain the execution and return of the
Company Restricted Stock Novation Agreement by such holder prior to the Merger
Effective Time. No fractional shares of Parent Common Stock will be issued, and
the shares of Parent Common Stock to be issued pursuant to this Section 1.5(c)
in accordance with the Exchange Ratio shall be rounded up to the nearest whole
share of Parent Common Stock.
(c) Conversion of Company Options. At the Merger Effective
Time, subject to the provisions of Sections 1.6 hereof, each outstanding option
to purchase shares of Company Common Stock under the Option Plan attached hereto
as SCHEDULE 1.5(C) (the "Company Option Plan") or created pursuant to any other
option agreement between the Company and any other Person (each a "Company
Option"), whether vested or unvested, shall be, in connection with the Merger,
assumed by Parent. Each Company Option so assumed by Parent shall continue to
have, and be subject to, the same terms and conditions set forth in the Option
Plan and/or as provided in the respective option agreements governing such
Company Options immediately prior to the Merger Effective Time, except that (A)
such Company Option shall be exercisable for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon the exercise of such Company Option
immediately prior to the Merger Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock and
(B) the per share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Company Option shall be equal to the quotient
determined by dividing the exercise price of the Company Common Stock at which
such Company Option was exercisable immediately prior to the Merger Effective
Time by the Exchange Ratio, rounded to the nearest whole cent (with one-half
($0.005) cents being rounded upward to the nearest whole cent). It is the
intention of the parties that the Company Options assumed by Parent qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent that Company Options qualified as incentive stock
options immediately prior to the Effective Time. Prior to the Merger Effective
Time, Parent and the Company will execute and deliver to each holder of Company
Options an agreement in the form of EXHIBIT F attached hereto (a "Company Option
Novation Agreement"), to be effective upon the completion of the Merger and
evidencing the foregoing assumption of such Company Option by Parent, and will
use commercially reasonable efforts to obtain the execution and return of the
Company Restricted Stock Novation Agreement by such holder prior to the Merger
Effective Time.
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(d) Conversion of Company Warrants. At the Merger Effective
Time, subject to the provisions of Sections 1.6 hereof, each outstanding warrant
to purchase shares of Company Common Stock pursuant to any agreement between the
Company and any other Person (each a "Company Warrant"), whether vested or
unvested, shall be, in connection with the Merger, assumed by Parent. Each
Company Warrant so assumed by Parent shall continue to have, and be subject to,
the same terms and conditions provided in the warrant agreement governing such
Company Warrant immediately prior to the Merger Effective Time, except that (A)
such Company Warrant shall be exercisable for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon the exercise of such Company Warrant
immediately prior to the Merger Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock and
(B) the per share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Company Warrant shall be equal to the quotient
determined by dividing the exercise price of the Company Common Stock at which
such Company Warrant was exercisable immediately prior to the Merger Effective
Time by Exchange Ratio, rounded to the nearest whole cent (with one-half
($0.005) cents being rounded up to the nearest whole cent). Prior to the Merger
Effective Time, Parent and the Company will execute and deliver to each holder
of Company Warrants an agreement in the form of EXHIBIT G attached hereto (a
"Company Warrant Novation Agreement"), to be effective upon the completion of
the Merger and evidencing the foregoing assumption of such Company Warrant by
Parent, and will use commercially reasonable efforts to obtain the execution and
return of the Company Warrant Novation Agreement by such holder prior to the
Merger Effective Time.
(e) Conversion of Company Convertible Securities. At the
Merger Effective Time, the terms of any outstanding indebtedness that is
convertible into shares of Company Common Stock (a "Company Convertible
Security") shall be adjusted as necessary to provide that, at the Merger
Effective Time, each Company Convertible Security outstanding immediately prior
to the Merger Effective Time shall be deemed to constitute and shall become the
right to purchase, on substantially equivalent economic terms and provisions as
were applicable under such Company Convertible Security, the same number of
shares of Parent Common Stock as the holder of such Company Convertible Security
would have been entitled to receive pursuant to the Merger had such holder
exercised such Company Convertible Security in full immediately prior to the
Merger Effective Time. Promptly following the Merger Effective Time, Parent will
issue to each holder of Company Convertible Securities a document evidencing the
foregoing assumption of such obligations to issue Parent Common Stock upon the
exercise of any conversion rights under each Company Convertible Security by
Parent. Prior to the Merger Effective Time, Parent will execute and deliver to
each holder of Company Convertible Securities an agreement in the form of
EXHIBIT H attached hereto (a "Company Convertible Security Novation Agreement"),
to be effective upon the completion of the Merger and evidencing the foregoing
assumption of such Company Convertible Security by Parent, and will use
commercially reasonable efforts to obtain execution and return of the Company
Convertible Security Novation Agreement by such holder prior to the Merger
Effective Time.
5
(f) Cancellation of Company Owned Company Common Stock. At the
Merger Effective Time, each share of Company Common Stock held in the treasury
of the Company immediately prior to the Merger Effective Time shall be cancelled
and cease to exist.
(g) Cessation of Transfers of Company Common Stock. After the
Merger Effective Time, there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
(h) Capitalization of Parent Immediately Following Merger.
SCHEDULE 1.5(H) shall be prepared jointly by Parent and the Company immediately
prior to the Closing and shall set forth the capitalization of Parent
immediately following the Closing after giving effect to the Merger, the
Split-Off and the Private Placement Offering.
1.6 Adjustment of the Exchange Ratio. If, subsequent to the date of
this Agreement and prior to the Merger Effective Time, any stock split,
combination, reclassification or stock dividend with respect to the Parent
Common Stock, any change or conversion of Parent Common Stock into other
securities, or any other dividend or distribution with respect to the Parent
Common Stock occurs or, if a record date with respect to any of the foregoing
occurs, the parties shall make appropriate and proportionate adjustments to the
Exchange Ratio and thereafter all references to the Exchange Ratio shall be
deemed to be the Exchange Ratio as so adjusted.
1.7 Surrender and Exchange of Certificates. As soon as practicable,
after the Merger Effective Time and upon (i) surrender of a certificate or
certificates representing shares of Company Common Stock that were outstanding
immediately prior to the Merger Effective Time (except for Dissenting Shares) to
the Parent and (ii) delivery to the Parent of an executed Letter of Transmittal
(as described in Section 6.19 hereof), Parent shall deliver to the record holder
of the Company Common Stock surrendering such certificate or certificates and
Letter of Transmittal, a certificate or certificates registered in the name of
such shareholder representing the number of shares of Parent Common Stock that
such shareholder shall be entitled to receive pursuant to Section 1.5 hereof. As
of the Merger Effective Time, each share of Company Common Stock issued
outstanding immediately prior to the Merger Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and until the
certificate or certificates evidencing such shares are surrendered together with
the Letter of Transmittal as contemplated by this Section 1.7 and Section 4
hereof, each certificate that immediately prior to the Merger Effective Time
represented any outstanding shares of Company Common Stock shall be deemed at
and after the Merger Effective Time to represent only the right to receive upon
surrender as aforesaid the consideration specified in Section 1.5 hereof for the
holder thereof or to perfect any rights of appraisal that such holder may have
pursuant to the applicable provisions of the FBCA and to elect to have such
shares be Dissenting Shares.
6
1.8 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, shares of Company Common Stock that are outstanding immediately prior
to the Merger Effective Time and that are held of record by shareholders who
shall not have voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 607.1302 of the FBCA (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
consideration set forth in Section 1.5 hereof. Such shareholders shall be
entitled to receive such consideration as is determined to be due with respect
to such Dissenting Shares in accordance with the provisions of Sections 607.1323
through 607.1331 of the FBCA, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such shares under Sections
607.1321, 607.1323 and 607.1326 of the FBCA, shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Merger
Effective Time, the right to receive the shares of Parent Common Stock specified
in Section l.5 hereof, without any interest thereon, upon surrender, in the
manner provided in Section 1.7 of the certificate or certificates that were
formerly evidenced by such Dissenting Shares and compliance with other
provisions of the FBCA, and such shares shall not be Dissenting Shares for
purposes of this Agreement.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, any
other instruments served pursuant to the FBCA and received by the Company in
connection therewith and (ii) prompt notice of proceedings with respect to
demands for appraisal under the FBCA.
1.9 Parent Common Stock. Parent agrees that it will cause the shares
of Parent Common Stock into which the Company Common Stock is converted at the
Merger Effective Time pursuant to Section 1.5 hereof and the shares of Parent
Common Stock that may be acquired after the Merger Effective Time pursuant to
Section 1.5 to be available for such purposes. Parent further agrees that
immediately prior to the Merger Effective Time there will be 1,653,138 shares of
Parent Common Stock issued and outstanding not including (i) the shares of
Parent Common Stock to be issued in the Private Placement Offering and (ii) the
shares of Parent Common Stock owned by Allison to be redeemed pursuant to the
consummation of the Split-Off. All securities issued pursuant to the Merger will
be "restricted" stock and be subject to all applicable re-sale restrictions
specified by federal and state securities laws.
7
1.10 Further Assurances. From time to time, from and after the
Merger Effective Time, as and when requested by Parent, Acquisition or their
respective successors or assigns, the proper officers and directors of the
Company as of the Merger Effective Time shall, for and on behalf and in the name
of the Company or otherwise, shall execute and deliver all such deeds, bills of
sale, assignments and other instruments and shall take or cause to be taken such
further actions as Parent, Acquisition or their respective successors or assigns
may deem necessary or desirable in order to confirm or record or otherwise
transfer to the Surviving Corporation title to and possession of all of the
properties, rights, privileges, powers, franchises and immunities of the Company
or otherwise to carry out fully the provisions and purposes of this Agreement
and the Articles of Merger.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Acquisition as follows:
2.1 Organization, Subsidiaries, Standing, Qualifications; etc.
(a) SCHEDULE 2.1 hereto lists each Subsidiary of the Company
(each a "Company Subsidiary"), the jurisdiction of its incorporation or
organization, and the Persons owning the outstanding capital stock or other
ownership interests of such Company Subsidiary. The Company and each Company
Subsidiary are corporations duly organized and existing in good standing under
the laws of their respective jurisdictions of incorporation. The Company has
heretofore delivered to Parent complete and correct copies of their Certificate
of Incorporation and Articles of Incorporation, respectively, of the Company and
each Company Subsidiary and their respective By-laws as now in effect. Each of
the Company and the Company Subsidiaries has full corporate power and authority
to carry on their respective businesses as they are now being conducted and as
now proposed to be conducted and to own or lease their respective properties and
assets.
(b) Except for the Company Subsidiaries, neither the Company
nor any of the Company Subsidiaries has any direct or indirect interest (by way
of stock ownership or otherwise) in any firm, corporation, limited liability
company, partnership, association or business. Except as disclosed in SCHEDULE
2.1, the Company owns all of the issued and outstanding capital stock of each of
the Company Subsidiaries free and clear of all Liens, and none of the Company
Subsidiaries has any outstanding options, warrants or rights to purchase capital
stock or other equity securities of such Company, other than the capital stock
owned by the Company.
(c) Each of the Company and the Company Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, and has all requisite
corporate power and authority to own or lease its properties and assets and
carry on its business as now conducted, and is duly qualified to conduct
business as a foreign corporation and is in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification necessary, except where the failure to be so qualified would
not have a Material Adverse Effect on the Company.
8
2.2 Authority; No Conflicts; Consents.
(a) The Company has full power and authority to execute,
deliver and perform this Agreement and the Articles of Merger (together, the
"Merger Documentation" or "Merger Documents"), and the transactions contemplated
hereunder. The execution, delivery and performance of this Agreement and the
Merger Documentation have been duly authorized by the Board of Directors of the
Company and all of the corporate acts and other proceedings required for the due
and valid authorization, execution, delivery and performance of the Merger
Documentation and the consummation of the Merger have been validly and
appropriately taken, except for the approval by the requisite vote of the
shareholders of the Company and the filing referred to in Section 1.2. In
connection herewith, inclusive of shares of Company Common Stock owned by trusts
established for the benefit of himself or for the benefit of his descendants,
Mark Emalfarb ("Emalfarb"), the holder of 5,202,959 shares of Company Common
Stock, and has executed and delivered to the Parent a voting agreement in the
form of the agreement attached hereto as EXHIBIT I (the "Emalfarb Voting
Agreement").
(b) The execution, delivery and performance by the Company of
this Agreement and the consummation of the Merger do not, and will not, (i)
violate or conflict with any provision of the Articles of Incorporation or
By-laws of the Company or any Company Subsidiary, (ii) violate any law, rule,
regulation, order, writ, injunction, judgment or decree of any court,
governmental authority or regulatory agency applicable to the Company or any
Company Subsidiary, except for violations which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, or (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any note, bond, indenture, lien, mortgage,
lease, permit, guaranty or other agreement, instrument or obligation to which
the Company or any Company Subsidiary is a party or by which any of their assets
may be bound, except for violations, breaches or defaults which, individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
(c) The execution and delivery of this Agreement by the
Company does not, and the performance by the Company of this Agreement will not,
require any consent, approval, authorization or permission of, or filing with or
notification of any governmental or regulatory authority, domestic or foreign,
or any other Person except for (i) the filing and recordation of appropriate
merger documents as required by the FBCA, (ii) the approval of the Company's
shareholders and (iii) any such consent, approval, authorization, permission,
notice or filing which, if not obtained or made, would not have a Material
Adverse Effect on the Company.
(d) The Board of Directors of the Company has approved this
Agreement and the transactions contemplated hereby, has determined that the
terms of the Merger are in the best interests of the Company's shareholders, and
has resolved to recommend the approval of the Merger and the adoption of this
Agreement and the consummation of the transactions contemplated hereby to the
Company's shareholders.
9
2.3 Capital Stock. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 50,000,000 shares of
Preferred Stock, and the Company has no authority to issue any other capital
stock. There are 12,881,193 shares of Company Common Stock issued and
outstanding, and such shares are duly authorized, validly issued, fully paid and
nonassessable, and none of such shares have been issued in violation of the
preemptive rights of any person. There are no shares of Preferred Stock issued
and outstanding. The offer, issuance and sale of such shares of Company Common
Stock were (a) exempt from the registration and prospectus delivery requirements
of the Securities Act, (b) registered or qualified (or were exempt from
registration or qualification) under the registration or qualification
requirements of all applicable state securities laws and (c) accomplished in
conformity with all other applicable securities laws. None of such shares of
Company Common Stock are subject to a right of withdrawal or a right of
rescission under any federal or state securities or blue sky law. Except as
disclosed in SCHEDULE 2.5A hereto, the Company has no outstanding Company
Options, Company Warrants, Company Convertible Securities or any other options,
warrants, rights or commitments to issue Company Common Stock or other Equity
Securities of the Company, and there are no outstanding securities convertible
or exercisable into or exchangeable for Company Common Stock or other Equity
Securities of the Company.
2.4 Indebtedness. The Company has no Indebtedness for Borrowed
Money, except as disclosed on the Balance Sheet and SCHEDULE 2.13(B)(V) hereto.
2.5 Company Shareholders. SCHEDULE 2.5A hereto contains a true and
complete list of the names and addresses of the record owners of all of the
outstanding Company Common Stock and other Equity Securities of the Company,
together with the number and percentage of securities held. To the best
knowledge of the Company, except as described in SCHEDULE 2.5B or otherwise
contemplated by this Agreement, there is no voting trust, agreement or
arrangement among any of the beneficial holders of Company Common Stock
affecting the nomination or election of directors or the exercise of the voting
rights of Company Common Stock.
2.6 Corporate Acts and Proceedings. The execution, delivery and
performance of this Agreement and the Articles of Merger (together, the "Merger
Documentation" or "Merger Documents") have been duly authorized by the Board of
Directors of the Company and all of the corporate acts and other proceedings
required for the due and valid authorization, execution, delivery and
performance of the Merger Documentation and the consummation of the Merger have
been validly and appropriately taken, except for the approval by the requisite
vote of the shareholders of the Company and the filing referred to in Section
1.2. In connection herewith, inclusive of shares of Company Common Stock owned
by trusts established for the benefit of himself or for the benefit of his
descendants, Emalfarb, the holder of 5,202,959 shares of Company Common Stock,
has executed and delivered to the Parent concurrently with the execution of this
Agreement, the Emalfarb Voting Agreement, which contains provisions pursuant to
which Emalfarb has agreed to vote or cause to be voted such shares of Company
Common Stock in favor of the Merger.
10
2.7 Compliance with Laws and Instruments. The business, products and
operations of the Company have been and are being conducted in compliance in all
material respects with all applicable laws, rules and regulations, except for
such violations thereof for which the penalties, in the aggregate, would not
have a Material Adverse Effect on the Company. The execution, delivery and
performance by the Company of the Merger Documentation and the consummation by
the Company of the transactions contemplated by this Agreement: (a) have been
duly authorized by the Board of Directors of the Company, (b) will not require
any authorization, consent or approval of, or filing (other than the filing
referred to in Section 1.2 herein) or registration with, any court or
governmental agency or instrumentality, except such as shall have been obtained
prior to the Closing or as set forth in SCHEDULE 2.7 hereto, (c) subject to
obtaining the requisite approval of the shareholders of the Company or any
Company Subsidiary, will not cause the Company to violate or contravene in any
material respect (i) any provision of law, (ii) any rule or regulation of any
agency or government, (iii) any order, judgment or decree of any court or (iv)
any provision of the Articles of Incorporation or By-laws of the Company or any
Company Subsidiary, (d) will not violate or be in conflict with, result in a
breach of or constitute (with or without notice or lapse of time, or both) a
default under, any material indenture, loan or credit agreement, deed of trust,
mortgage, security agreement or other contract, agreement or instrument to which
the Company or any Company Subsidiary is a party or by which the Company, any
Company Subsidiary or any of their properties is bound or affected and (e) will
not result in the creation or imposition of any Lien upon any property or asset
of the Company; except, with respect to the matters set forth in clauses (c)
through(e) above, those matters as would not have a Material Adverse Effect on
the Company. Neither the Company nor any of the Company Subsidiaries is in
violation of, or (with or without notice or lapse of time, or both) in default
under, any term or provision of its Articles of Incorporation or By-laws or of
any indenture, loan or credit agreement, deed of trust, mortgage, security
agreement or other material agreement or instrument to which it is a party or by
which it or any of its properties is bound or affected, except as would not have
a Material Adverse Effect on the Company.
2.8 Binding Obligations. This Agreement constitutes the legal, valid
and binding obligations of the Company and is enforceable against the Company in
accordance with its terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity. Upon the execution and delivery
of the Articles of Merger by the Company and Acquisition, the Articles of Merger
will be a legal, valid and binding obligation of the Company and will be
enforceable against the Company in accordance with its terms, except as such
enforcement is subject to the Company obtaining the required approval of the
shareholders of the Company and is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
2.9 Broker's and Finder's Fees. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Company, Parent, Acquisition or any Shareholder for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, except as
disclosed in SCHEDULE 2.9 hereto.
11
2.10 Financial Statements. On or prior to the Merger Effective Time,
the Company shall use commercially reasonable best efforts to provide any such
audited or unaudited financial statements as may be required under the
applicable regulations of the Securities and Exchange Commission (the "SEC" or
the "Commission") for inclusion of such statements in Parent's Commission and
other regulatory filings. Attached hereto as SCHEDULE 2.10 hereto are (a) the
Company's audited consolidated balance sheet (the "Company Balance Sheet") as of
December 31, 2003 (the "Company Balance Sheet Date"), and the consolidated
statements of operations, shareholders' equity (deficiency) and cash flows for
the three years ended December 31, 2003, (b) the Company's audited combined
balance sheets as of December 31, 2002 and December 31, 2001 and the audited
statements of operations, shareholders' equity (deficit) and cash flows for the
three years ended December 31, 2002, together with the related independent
auditors' report of Ernst & Young, L.L.P., and (c) the Company's unaudited
consolidated balance sheet as of June 30, 2004 and the unaudited consolidated
statements of operations and cash flows for the six month period ended June 30,
2004 (the "Company Financial Statements"). The Company Financial Statements (i)
are in accordance with the books and records of the Company, (ii) present fairly
in all material respects the financial condition of the Company at the dates
therein specified and the results of its operations and changes in financial
position for the periods therein specified and (iii) have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
basis consistent with prior accounting periods, except as noted in the Notes to
such Company Financial Statements.
2.11 Absence of Undisclosed Liabilities. Except as set forth in
SCHEDULE 2.11 hereto or reported on the Company Balance Sheet, since December
31, 2003, there has been no event or condition that has had or would have a
Material Adverse Effect on the Company; and there has been no impairment,
damage, destruction, loss or claim, whether or not covered by insurance, or
condemnation or other taking which would have a Material Adverse Effect on the
Company. The Company has no material obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due),
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in SCHEDULE 2.11 and/or SCHEDULE 2.12 hereto, (b) to the extent
set forth on or reserved against in the Company Balance Sheet or the notes to
the Company Financial Statements, (c) current liabilities incurred and
obligations under agreements entered into in the usual and ordinary course of
business since the Company Balance Sheet Date, none of which (individually or in
the aggregate) has had a Material Adverse Affect on the Company, and (d) by the
specific terms of any written agreement, document or arrangement identified in
any of the Schedules hereto or contemplated by this Agreement. Except as set
forth in SCHEDULE 2.11, there are no accrued and unpaid dividends or
distributions with respect to the capital stock of the Company or any Company
Subsidiary.
12
2.12 Changes. Since the Company Balance Sheet Date, except as
disclosed in SCHEDULE 2.12 hereto, the Company has not (a) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, except current liabilities incurred in the usual and
ordinary course of business, none of which (individually or in the aggregate)
has had a Material Adverse Effect on the Company, (b) discharged or satisfied
any Liens other than those securing, or paid any obligation or liability other
than, current liabilities shown on the Balance Sheet and current liabilities
incurred since the Company Balance Sheet Date, in each case in the usual and
ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of
its assets, tangible or intangible other than in the usual and ordinary course
of business, (d) sold, transferred or leased any of its assets, except in the
usual and ordinary course of business, (e) cancelled or compromised any debt or
claim, or waived or released any right, of material value, (f) suffered any
physical damage, destruction or loss (whether or not covered by insurance)
having a Material Adverse Effect on the Company, (g) entered into any
transaction other than in the usual and ordinary course of business, (h)
encountered any labor difficulties, (i) made or granted any wage or salary
increase or made any increase in the amounts payable under any profit sharing,
bonus, deferred compensation, severance pay, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement, other than in the
ordinary course of business consistent with past practice, or entered into any
employment agreement, (j) issued or sold any shares of capital stock, bonds,
notes, debentures or other securities or granted any options (including employee
stock options), warrants or other rights with respect thereto, (k) declared or
paid any dividends on or made any other distributions with respect to, or
purchased or redeemed, any of its outstanding capital stock, (l) suffered or
experienced any change in, or condition having a Material Adverse Affect on the
Company other than changes, events or conditions in the usual and ordinary
course of its business, none of which (either by itself or in conjunction with
all such other changes, events and conditions) has been materially adverse, (m)
made any change in the accounting principles, methods or practices followed by
it or depreciation or amortization policies or rates theretofore adopted,
(n)made or permitted any amendment or termination of any material contract,
agreement or license to which it is a party, (o) suffered any material loss not
reflected in the Balance Sheet or its statement of income for the year ended on
the Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment
of, bonuses or special compensation of any kind or any severance or termination
pay to any present or former officer, director, employee, shareholder or
consultant, (q) made or agreed to make any charitable contributions or incurred
any non-business expenses in excess of $5,000 in the aggregate, or (r) entered
into any agreement, or otherwise obligated itself, to do any of the foregoing.
2.13 Schedule of Assets and Contracts. Attached hereto as SCHEDULES
2.13(A) through 2.13(B)(XVI) hereto are various schedules listing assets and
contracts of the Company, as described herein.
(a) SCHEDULE 2.13(A) contains a true and complete list of all
real property leased by the Company, including a brief description of each item
thereof and of the nature of the Company's interest therein, and of all tangible
personal property owned or leased by the Company having a cost or fair market
value of greater than $10,000, including a brief description of each item and of
the nature of the interest of the Company therein. All the property listed in
SCHEDULE 2.13(A) as being leased by the Company is held by the Company under
valid and enforceable leases having the rental terms, termination dates and
renewal and purchase options described in SCHEDULE 2.13(A); such leases are
enforceable in accordance with their terms, and there is not, under any such
lease, any existing default or event of default or event which with notice or
lapse of time, or both, would constitute a default by the Company, and the
Company has not received any notice or claim of any such default. The Company
does not own any real property.
13
(b) Except as expressly set forth in this Agreement, the
Company Balance Sheet or the notes thereto, or as disclosed in any of the
Schedules referred to in this Section 2.13, the Company is not a party to any
written or oral agreement not made in the ordinary course of business that is
material to the Company. SCHEDULES 2.13(B)(I) through 2.13(B)(XVI),
respectively, list each agreement to which the Company is a party, whether
written or oral: (i) with any labor union; (ii) for the purchase of fixed assets
or for the purchase of materials, supplies or equipment in excess of normal
operating requirements; (iii) for the employment of any officer, individual
employee or other Person on a full-time basis or any agreement with any Person
for consulting services; (iv) other than the Company Option Plan, the Company
Employee Benefit Plans referred to in Section 2.17 hereof, pertaining to any
bonus, pension, profit sharing, retirement, stock purchase, stock option,
deferred compensation, medical, hospitalization or life insurance or similar
plan, contract or understanding with respect to any or all of the employees of
the Company or any other Person; (v) for any indenture, loan or credit
agreement, note agreement, deed of trust, mortgage, security agreement,
promissory note or other agreement or instrument relating to or evidencing
Indebtedness for Borrowed Money or subjecting any asset or property of the
Company to any Lien or evidencing any Indebtedness; (vi) guaranty of any
Indebtedness; (vii) other than as set forth in SCHEDULE 2.13(A), for any lease
or agreement under which the Company is lessee of or holds or operates any
property, real or personal, owned by any other Person under which payments to
such Person exceed $20,000 per year or with an unexpired term (including any
period covered by an option to renew exercisable by any other party) of more
than 60 days; (viii) for any lease or agreement under which the Company is
lessor or permits any Person to hold or operate any property, real or personal,
owned or controlled by the Company; (ix) other than as set forth in SCHEDULE
2.5B, granting any preemptive right, right of first refusal or similar right to
any Person; (x) pertaining to any arrangement with any Affiliate or any
"associate" (as such term is defined in Rule 405 under the Securities Act) of
the Company or any present or former officer, director or shareholder of the
Company; (xi) other than as set forth in SCHEDULE 2.16, obligating the Company
to pay any royalty or similar charge for the use or exploitation of any tangible
or intangible property; (xii) pertaining to any covenant not to compete or other
restriction on its ability to conduct a business or engage in any other
activity; (xiii) pertaining to any distributor, dealer, manufacturer's
representative, sales agency, franchise or advertising contract or commitment;
(xiv) pertaining to obligation of confidentiality on the part of the Company or
any other third party to the Company; or (xv) pertaining to any other commitment
or arrangement with any Person continuing for a period of more than three months
from the Closing Date which involves an expenditure or receipt by the Company in
excess of $20,000. Except as disclosed in SCHEDULE 2.13(B)(XVI), none of the
agreements, contracts, leases, instruments or other documents or arrangements
listed in SCHEDULES 2.13(B)(I) through 2.13(B)(XV) requires the consent of any
of the parties thereto other than the Company to permit the contract, agreement,
lease, instrument or other document or arrangement to remain effective following
consummation of the Merger and the transactions contemplated hereby.
14
(c) SCHEDULE 2.13(C) contains a true and complete list and
description of all insurance policies and insurance coverage with respect to the
Company, its business, premises, properties, assets, employees and agents
including, without limitation, fire and casualty insurance, property and
liability insurance, product liability insurance, life insurance, medical and
hospital insurance and workers' compensation insurance; such list includes with
respect to each policy (i) a general description of the insured loss coverage,
(ii) the expiration date of coverage, (iii) the annual premium, and (iv) the
dollar limitations of coverage and a general description of each deductible
feature.
(d) SCHEDULE 2.13(D) contains a true and complete list and
description of each bank account, savings account, other deposit relationship
and safety deposit box of the Company, including the name of the bank or other
depository, the account number and the names of the individuals having signature
or other withdrawal authority with respect thereto.
(e) The Company has furnished to Parent and Acquisition true
and complete copies of all agreements and other documents and a description of
all applicable oral agreements disclosed or referred to in SCHEDULES 2.13(B)(I)
through 2.13(B)(XVI), as well as any additional agreements or documents,
requested by Parent or Acquisition The Company has in all material respects
performed all obligations required to be performed by it to date and is not in
default in any respect under any of the contracts, agreements, leases,
documents, commitments or other arrangements to which it is a party or by which
it or any of its property is otherwise bound or affected. All parties having
material contractual arrangements with the Company are in substantial compliance
therewith and none are in material default thereunder. The Company does not have
outstanding any power of attorney.
2.14 Employees. The Company has complied in all material respects
with all laws relating to the employment of labor, and the Company has
encountered no material labor union difficulties. There are no facts or
circumstances which would lead to a valid charge of discrimination of any kind.
Other than pursuant to ordinary arrangements of employment compensation, the
Company is not under any obligation or liability to any officer, director or
employee of the Company, except as set forth in SCHEDULE 2.14.
2.15 Tax Returns and Audits. All required federal, state and local
Tax Returns of the Company have been accurately prepared and duly and timely
filed, and all federal, state and local Taxes required to be paid with respect
to the periods covered by such returns have been paid. The Company is not and
has not been delinquent in the payment of any Tax. The Company has not had a Tax
deficiency proposed or assessed against it and has not executed a waiver of any
statute of limitations on the assessment or collection of any Tax. None of the
Company's federal income tax returns nor any state or local income or franchise
tax returns has been audited by governmental authorities. The reserves for Taxes
reflected on the Balance Sheet are and will be sufficient for the payment of all
unpaid Taxes payable by the Company with respect to the period ended on the
Balance Sheet Date. Since the Balance Sheet Date, the Company has made adequate
provisions on its books of account for all Taxes with respect to its business,
properties and operations for such period. The Company has withheld or collected
from each payment made to each of its employees the amount of all taxes
(including, but not limited to, federal, state and local income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom, and has paid the same to the
proper Tax receiving officers or authorized depositaries. There are no federal,
state, local or foreign audits, actions, suits, proceedings, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns of the
Company now pending, and the Company has not received any notice of any proposed
audits, investigations, claims or administrative proceedings relating to Taxes
or any Tax Returns. The Company is neither obligated to make a payment nor is a
party to an agreement that under certain circumstances could obligate it to make
a payment, that would not be deductible under Section 280G of the Code. The
Company has not agreed or is not required to make any adjustments under section
481(a) of the Code (or any similar provision of state, local and foreign law) by
reason of a change in accounting method or otherwise for any Tax period for
which the applicable statute of limitations has not yet expired. The Company (i)
is neither a party to, nor is bound by nor has any obligation under, any Tax
sharing agreement, Tax indemnification agreement or similar contract or
arrangement, whether written or unwritten (collectively, "Tax Sharing
Agreements"), and (ii) has no potential liability or obligation to any person as
a result of, or pursuant to, any such Tax Sharing Agreements.
15
2.16 Intellectual Property.
(a) SCHEDULE 2.16 hereto contains a true and complete list of
all patents, patent applications, trade names, trademarks, trademark
registrations and applications, copyrights, copyright registrations and
applications, and grants of licenses, both domestic and foreign, presently
owned, possessed, used or held by the Company (collectively, "Registered
Intellectual Property"); and, except as set forth in SCHEDULE 2.16, the Company
owns the entire right, title and interest in and to the Registered Intellectual
Property, free and clear of all Liens and restrictions. SCHEDULE 2.16 also
contains a true and complete list of all licenses granted to ("Licenses-In") or
by the Company ("Licenses-Out," and together with the Licenses-In, collectively,
"I/P Licenses") with respect to the Registered Intellectual Property. Except as
disclosed in SCHEDULE 2.16, all Registered Intellectual Property and I/P
Licenses (i) are not subject to any pending or threatened challenge, and (ii)
can and will be transferred by the Company to the Surviving Corporation as a
result of the Merger and without the consent of any Person other than the
Company. Neither the execution nor delivery of the Merger Documentation, nor the
consummation of the transactions contemplated thereby will give any licensor or
licensee of the Company any right to change the terms or provisions of,
terminate or cancel, any License to which the Company is a party.
(b) Except as set forth in the Company Financial Statements or
in SCHEDULE 2.16, the Company (i) owns or has the right to use, free and clear
of all Liens, claims and restrictions, all Registered I/P and rights with
respect to the foregoing used in or necessary for the conduct of its business as
now conducted or proposed to be conducted without infringing upon or otherwise
acting adversely to the right or claimed right of any Person under or with
respect to any of the foregoing and (ii) except with respect to the Licenses-In,
is not obligated or under any liability to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any patent, trademark, service mark, trade name, copyright or other intangible
asset, with respect to the use thereof or in connection with the conduct of its
business or otherwise
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(c) To the best knowledge of the Company, the Company owns and
has the unrestricted right to use all trade secrets, if any, including know-how,
negative know-how, formulas, patterns, programs, devices, methods, techniques,
inventions, designs, processes, computer programs and technical data and all
information that derives independent economic value, actual or potential, from
not being generally known or known by competitors (collectively, "Other
Intellectual Property") required for or incident to the development, operation
and sale of all products and services sold by the Company, free and clear of any
right, Lien or claim of others; provided, however, the possibility exists that
other Persons, completely independent of the Company or its employees or agents,
could have developed intellectual property similar or identical to the Other
Intellectual Property. All Other Intellectual Property can and will be
transferred by the Company to the Surviving Corporation as a result of the
Merger and without the consent of any Person other than the Company.
2.17 Employee Benefit Plans; ERISA.
(a) Except as disclosed in SCHEDULE 2.17 hereto, there are no
"employee benefit plans" (within the meaning of Section 3(3) of the ERISA) nor
any other employee benefit or fringe benefit arrangements, practices, contracts,
policies or programs of every type other than programs merely involving the
regular payment of wages, commissions, or bonuses established, maintained or
contributed to by the Company, whether written or unwritten and whether or not
funded. The plans listed in SCHEDULE 2.17 hereto are hereinafter referred to as
the "Company Employee Benefit Plans."
(b) All current and prior material documents, including all
amendments thereto, with respect to each Company Employee Benefit Plan have been
delivered to Parent and Acquisition or their advisors.
(c) All Company Employee Benefit Plans are in material
compliance with the applicable requirements of ERISA, the Code and any other
applicable state, federal or foreign law.
(d) There are no pending claims or lawsuits which have been
asserted or instituted against any Company Employee Benefit Plan, the assets of
any of the trusts or funds under the Company Employee Benefit Plans, the plan
sponsor or the plan administrator of any of the Company Employee Benefit Plans
or against any fiduciary of a Company Employee Benefit Plan with respect to the
operation of such plan, nor does the Company have any knowledge of any incident,
transaction, occurrence or circumstance which might reasonably be expected to
form the basis of any such claim or lawsuit.
(e) There is no pending or, to the knowledge of the Company,
contemplated investigation or pending or possible enforcement action by the
Pension Benefit Guaranty Corporation, the Department of Labor, the Internal
Revenue Service or any other government agency with respect to any Company
Employee Benefit Plan and the Company has no knowledge of any incident,
transaction, occurrence or circumstance which might reasonably be expected to
trigger such an investigation or enforcement action.
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(f) To the knowledge of the Company, no actual or contingent
liability exists with respect to the funding of any Company Employee Benefit
Plan or for any other expense or obligation of any Company Employee Benefit
Plan, except as disclosed on the financial statements of the Company or the
Schedules to this Agreement, and no contingent liability exists under ERISA with
respect to any "multi-employer plan," as defined in Section 3(37) or Section
4001(a)(3) of ERISA.
(g) No events have occurred or are expected to occur with
respect to any Company Employee Benefit Plan that would cause a material change
in the costs of providing benefits under such Company Employee Benefit Plan or
would cause a material change in the cost of providing for other liabilities of
such Company Employee Benefit Plan.
2.18 Title to Property and Encumbrances. The Company has good, valid
and indefeasible marketable title to all properties and assets used in the
conduct of its business free of all Liens (except as set forth in the Company
Financial Statements or in SCHEDULE 2.16) and other encumbrances, except
Permitted Liens and such ordinary and customary imperfections of title,
restrictions and encumbrances as do not, individually or in the aggregate,
materially detract from the value of the property or assets or materially impair
the use made thereof by the Company in its business. Without limiting the
generality of the foregoing, the Company has good and indefeasible title to all
of its properties and assets reflected in the Company Balance Sheet, except for
property disposed of in the usual and ordinary course of business since the
Company Balance Sheet Date and for property held under valid and subsisting
leases which are in full force and effect and which are not in default.
2.19 Condition of Properties. All facilities, machinery, equipment,
fixtures and other properties owned, leased or used by the Company are in good
operating condition and repair, subject to ordinary wear and tear, and are
adequate and sufficient for the Company's business.
2.20 Insurance Coverage. There is in full force and effect one or
more of the policies of insurance issued by insurers of recognized
responsibility, insuring the Company and its properties, products and business
against such losses and risks, and in such amounts, as are customary for
corporations of established reputation engaged in the same or similar business
and similarly situated. The Company has not been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it will be
unable to renew its existing insurance coverage as and when the same shall
expire upon terms at least as favorable to those currently in effect, other than
possible increases in premiums that do not result from any act or omission of
the Company. No suit, proceeding or action or threat of suit, proceeding or
action has been asserted or made against the Company within the last five years
due to alleged bodily injury, disease, medical condition, death or property
damage arising out of the function or malfunction of a product, procedure or
service designed, manufactured, sold or distributed by the Company.
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2.21 Litigation. Except as disclosed in SCHEDULE 2.21 hereto, there
is no legal action, suit, arbitration or other legal, administrative or other
governmental proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company or its properties, assets or
business, and after reasonable investigation, the Company is not aware of any
incident, transaction, occurrence or circumstance that might reasonably be
expected to result in or form the basis for any such action, suit, arbitration
or other proceeding. The Company is not in default with respect to any order,
writ, judgment, injunction, decree, determination or award of any court or any
governmental agency or instrumentality or arbitration authority.
2.22 Bankruptcy, Litigation and Investigation. The Company has not
been the subject of any voluntary or involuntary bankruptcy proceeding. There is
no legal action, suit, arbitration or other legal, administrative or other
governmental proceeding pending or, to the best knowledge of the Company ,
threatened against or affecting the Company or its properties, assets or
business, and after reasonable investigation, the Company is not aware of any
incident, transaction, occurrence or circumstance that might reasonably be
expected to result in or form the basis for any such action, suit, arbitration
or other proceeding. The Company is not in default with respect to any order,
writ, judgment, injunction, decree, determination or award of any court or any
governmental agency or instrumentality or arbitration authority. Neither the
Company nor any past or present officers, directors or affiliates of the Company
have been the subject of, nor does any officer or director of the Company have
any reason to believe that the Company or any of its past or present officers,
directors or affiliates will be the subject of, any civil, criminal or
administrative investigation or proceeding brought by any federal or state
agency having regulatory authority over such entity.
2.23 Interested Party Transactions. Except as disclosed in SCHEDULE
2.23 hereto, no officer, director or shareholder of the Company or any Affiliate
or "associate" (as such term is defined in Rule 405 under the Securities Act) of
any such Person or the Company has or has had, either directly or indirectly,
(a) an interest in any Person that (i) furnishes or sells services or products
that are furnished or sold or are proposed to be furnished or sold by the
Company or (ii) purchases from or sells or furnishes to the Company any goods or
services, or (b) a beneficial interest in any contract or agreement to which the
Company is a party or by which it may be bound or affected.
2.24 Hazardous Waste. There is no substance or material defined or
designated as hazardous or toxic waste, material, substance or other similar
term, by any health or environmental statute, regulation or ordinance currently
in effect, on, about, related from or in any of the real property in which the
Company now has or previously had any leasehold or ownership interest.
2.25 Receivables. The accounts and notes receivable shown on the
Company Balance Sheet (net of the allowance for doubtful accounts in the amount
appearing thereon) have been collected or are collectible in the usual and
ordinary course of the Company's business in the amounts thereof shown on the
Company Balance Sheet. The accounts and notes receivable of the Company acquired
after the Company Balance Sheet Date and prior to the Closing Date will be
reflected on the books of account of the Company at 100% of the amount thereof
and have been collected, or are or will be collectible in the usual and ordinary
course of the Company's business, in the full amounts thereof (less normal
allowances for doubtful accounts). All of the accounts receivable reflected on
the Company Balance Sheet and all accounts receivable which have arisen since
the Company Balance Sheet Date are valid and enforceable claims, and the goods
and services sold and delivered which gave rise to such accounts receivable were
sold and delivered in conformity with all applicable express and implied
warranties, purchase orders, agreements and specifications, and are not subject
to any valid defense or offset.
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2.26 Inventories. The inventories of the Company which are reflected
in the Balance Sheet and all inventory items which have been acquired since the
Balance Sheet Date consist of raw materials, supplies, work-in-process and
finished goods of such quality and in such quantities as are being used and will
be usable or are being sold and will be saleable in the ordinary course of its
business with full mark-up at prevailing market prices, except to the extent of
reserves for obsolete and slow-moving inventories reflected in the Balance
Sheet. Such inventories are valued at the lower of cost or market and were
determined in accordance with generally accepted accounting principles
consistently applied. The Company has not experienced, nor has any reason to
believe that it will experience in the foreseeable future, any material
difficulty in obtaining, in the desired quantity and quality and upon reasonable
terms and conditions, the raw materials, supplies or component products required
for the manufacture, assembly or production of its products.
2.27 Customers, Suppliers and Independent Contractors. Since the
Company Balance Sheet Date, the Company has not been advised that any customer,
supplier or independent contractor of the Company intends to terminate or
materially curtail its business relationship with the Company.
2.28 Product Warranty. SCHEDULE 2.28 hereto sets forth a complete
and accurate description of all product warranties given by the Company in
connection with the business and operations of the Company other than in the
usual and ordinary course thereof and all such warranties in written form are
attached thereto.
2.29 Purchase Commitments and Outstanding Bids. No purchase
commitment of the Company is in excess of normal, ordinary and usual
requirements of its business, or was made at any price in excess of then current
market price, or contains terms and conditions more onerous than those usual and
customary in the industry. There is no outstanding bid, sales proposal, contract
or unfilled order of the Company which (a) will, or could if accepted, require
the Company to supply goods or services at a cost to the Company significantly
in excess of the normal cost of goods or services established for the product or
service in question, or (b) quotes prices which do not include a mark-up over
reasonably estimated costs reasonably consistent with past mark-ups on similar
business.
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2.30 Questionable Payments. Neither the Company nor any director,
officer or, to the best knowledge of the Company, agent, employee or other
Person associated with or acting on behalf of the Company, has used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect
unlawful payments to government officials or employees from corporate funds;
established or maintained any unlawful or unrecorded fund of corporate monies or
other assets; made any false or fictitious entries on the books of record of any
such corporations; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
2.31 Obligations to or by Shareholders. Except as disclosed in
SCHEDULE 2.31, the Company has no liability or obligation or commitment to any
Shareholder or any Affiliate or "associate" (as such term is defined in Rule 405
under the Securities Act) of any Shareholder, nor does any Shareholder or any
such Affiliate or associate have any liability, obligation or commitment to the
Company.
2.32 Duty to Make Inquiry. To the extent that any of the
representations or warranties in this Section 2 are qualified by "knowledge" or
"belief," the Company represents and warrants that it has made due and
reasonable inquiry and investigation concerning the matters to which such
representations and warranties relate, including, but not limited to, diligent
inquiry by its directors, officers and key personnel.
2.33 Disclosure. No representation, statement, or information
contained in this Agreement (including the Schedules) or any contract or
document executed in connection herewith or delivered pursuant hereto or made
available or furnished to Parent or its representatives by the Company contains
any untrue statement of a material fact or omits any material fact necessary to
make the information contained therein not misleading. The Company has provided
Parent with correct and complete copies of all documents listed or described in
the Schedules referred to in this Section 2.
3. Representations and Warranties of Parent and Acquisition. Parent and
Acquisition, jointly and severally, represent and warrant to the Company as
follows:
3.1 Organization; Subsidiaries; Standing; Qualification, etc.
(a) Parent and each of Acquisition and CCP (collectively, the
"Parent Subsidiaries") are each corporations duly organized and existing in good
standing under the laws of their respective state of incorporation. Parent,
Acquisition and CCP have heretofore delivered to the Company complete and
correct copies of their Certificate of Incorporation and Articles of
Incorporation, respectively, and their respective By-laws as now in effect.
Parent, Acquisition and CCP have full corporate power and authority to carry on
their respective businesses as they are now being conducted and as now proposed
to be conducted and to own or lease their respective properties and assets.
(b) Except for the Parent Subsidiaries, neither Parent nor any
of the Parent Subsidiaries has any direct or indirect interest (by way of stock
ownership or otherwise) in any firm, corporation, limited liability company,
partnership, association or business. Parent owns all of the issued and
outstanding capital stock of each of the Parent Subsidiaries free and clear of
all Liens, and none of the Parent Subsidiaries has any outstanding options,
warrants or rights to purchase capital stock or other equity securities of such
Parent Subsidiary, other than the capital stock owned by the Parent.
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(c) Parent and each Parent Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has all requisite corporate power and
authority to own or lease its properties and assets and carry on its business as
now conducted, and is duly qualified to conduct business as a foreign
corporation and is in good standing in each jurisdiction wherein the nature of
its activities or its properties owned or leased makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect on Parent.
3.2 Authority; No Conflicts; Consents.
(a) Parent has full corporate power and authority to
consummate the Private Placement Offering and to enter into the Placement Agency
Agreement with the Company's investment bankers and the Company attached hereto
as EXHIBIT J (the "Offering Placement Agency Agreement"), and the Subscription
Agreement with each investor in the Private Placement Offering ("New Parent
Investor") in the form attached hereto as EXHIBIT K (the "Offering Subscription
Agreement"). The Parent Warrants shall be substantially in the form of EXHIBIT L
attached hereto. The Offering Subscription Agreement and the form of Parent
Warrants, together with the Offering Memorandum referred to in Section 6.8, are
referred to, collectively, as the "Offering Documentation" or "Offering
Documents."
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(b) Each of Parent and/or Acquisition and/or CCP (as the case
may be) has full corporate power and authority to enter into the Merger
Documentation and the other agreements to be made pursuant to the Merger
Documentation and to carry out the transactions contemplated hereby and thereby
(including in the case of Parent, the Split-Off), and each of Parent and/or CCP
has full corporate power and authority to enter into the Split-Off Agreement and
the other agreements to be made pursuant thereto (collectively, the "Split-Off
Documentation" or "Split-Off Documents"), and to carry out the transactions
contemplated thereby. Each of Parent, Acquisition and CCP has full corporate
power and authority to execute, deliver and perform this Agreement, the other
Merger Documentation, the Split-Off Agreement, the other Split-Off Documentation
and the undertakings of Parent set forth in the Offering Documents,
respectively, and the transactions contemplated hereunder and thereunder. The
Board of Directors of Parent (the "Parent Board") has declared the Offering, the
Merger and the Split-Off advisable, approved the Offering Documents, this
Agreement, the other Merger Documents, the Split-Off Agreement, the other
Split-Off Documents, the amendment of Parent's by-laws in accordance with the
provisions of Section 6.16 hereof, and resolved to recommend the approval of the
Split-Off and the amendment and restatement of the Articles of Incorporation of
Parent in accordance with the provisions of Section 6.16 hereof, and the
consummation of the transactions contemplated hereby and thereby to the
stockholders of Parent. The Board of Directors of Acquisition (the "Acquisition
Board") has declared the Merger advisable and approved this Agreement and
resolved to recommend the approval of the Merger and adoption of this Agreement
and the consummation of the transactions contemplated hereby to the sole
stockholder of Acquisition. The Board of Directors of CCP (the "CCP Board") has
declared the Split-Off advisable and approved the Split-Off Agreement and the
other Split-Off Documentation and resolved to recommend the approval of the
Split-Off and adoption of this Agreement and the consummation of the
transactions contemplated hereby and thereby to the sole stockholder of CCP. The
execution, delivery and performance of Offering Documents by Parent have been
duly authorized and approved by the Parent Board. The execution, delivery and
performance of this Agreement by each of Parent and Acquisition, have been duly
authorized and approved (i) in the case of Acquisition, by the Acquisition Board
and Parent, its sole stockholder, and (ii) in the case of Parent, by all
necessary corporate action and, except for the filing of appropriate merger
documents as required by the FBCA, no other corporate proceedings other than
actions previously taken on the part of either Parent or Acquisition are
necessary to authorize this Agreement and the transactions contemplated hereby.
The execution, delivery and performance of the Split-Off Agreement and other
Split-Off Documents by each of Parent and CCP, have been duly authorized and
approved (i) in the case of CCP, by the CCP Board and Parent, its sole
stockholder, and (ii) in the case of Parent, by all necessary corporate action
and, except for the adoption of the Split-Off Agreement by the stockholders of
Parent, no other corporate proceedings other than actions previously taken on
the part of either Parent or Acquisition are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement, the other
Merger Documentation, the Offering Documentation, the Split-Off Agreement and
the other Split-Off Documentation have been duly authorized, executed and
delivered by each of Parent, Acquisition and CCP, as applicable, and are the
legal, valid and binding obligation of each of Parent, Acquisition and CCP, as
applicable, enforceable in accordance with its terms, except as enforceability
may be subject to stockholder approval of Parent and may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and by the effect of
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(c) The execution, delivery and performance by each of Parent,
Acquisition and CCP, respectively, as applicable, of this Agreement, the
undertakings of Parent under the Offering Documents and the Split-Off Agreement,
respectively, and the consummation of the Merger and the Split-Off,
respectively, do not, and will not, (i) violate or conflict with any provision
of the certificate of incorporation or by-laws of either Parent, Acquisition or
CCP, (ii) violate any law, rule, regulation, order, writ, injunction, judgment
or decree of any court, governmental authority, or regulatory agency, except for
violations which, individually or in the aggregate, will not have a Material
Adverse Effect on Parent, Acquisition or CCP, individually or taken as a whole,
or (iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any note, bond, indenture,
lien, mortgage, lease, permit, guaranty or other agreement, instrument or
obligation, oral or written, to which Parent, Acquisition or CCP is a party or
by which any of the properties of Parent, Acquisition or CCP may be bound,
except for violations, breaches or defaults which, individually or in the
aggregate, will not have a Material Adverse Effect on Parent, Acquisition or
CCP, individually or taken as a whole.
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(d) The execution and delivery of the Offering Documentation
by Parent, the execution and delivery of this Agreement by each of Parent and
Acquisition, and the execution and delivery of the Split-Off Agreement by each
of Parent and CCP does not, and the performance of Parent of its undertakings
under the Offering Documents, the performance by each of Parent and Acquisition
of this Agreement, and the performance by each of Parent and CCP of the
Split-Off Agreement will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, or any other Person except for (i) the filing
and recordation of the Merger Documents as required by the FBCA, (ii) the
approval of the stockholders of Parent to the Split-Off and the amendment and
restatement of the Articles of Incorporation of Parent, (iii) any such consent,
approval, authorization, permission, notice or filing which is required under
the Securities Act, the Exchange Act and applicable state securities laws, and
(iv) any such consent, approval, authorization, permission, notice or filing
which if not obtained or made would not have a Material Adverse Effect on
Parent, Acquisition and CCP, or on the transactions contemplated by the
Offering, this Agreement or the Split-Off Agreement, respectively. In connection
herewith, David R. Allison, the holder of 3,000,000 shares of Parent Common
Stock, has executed and delivered to the Company a voting agreement in the form
of agreement attached hereto as EXHIBIT M (the "Allison Voting Agreement").
3.3 Capitalization of Parent. The authorized capital stock of Parent
consists of (a) 5,000,000 shares of preferred stock ("Parent Preferred Stock"),
par value $.0001 per share, none of which have ever been issued, and (b)
100,000,000 shares of Parent Common Stock, of which 4,995,000 shares are issued
and outstanding on the date hereof, prior to taking into consideration the
issuance of Parent Common Stock in the Private Placement Offering. Except as
disclosed in SCHEDULE 3.3, Parent has no outstanding options, rights or
commitments to issue shares of Parent Preferred Stock, Parent Common Stock, or
any other Equity Security of Parent or any Parent Subsidiary, and there are no
outstanding securities convertible or exercisable into or exchangeable for
shares of Parent Preferred Stock, Parent Common Stock or other any Equity
Security of Parent or any Parent Subsidiary. To the best knowledge of Parent,
there is no voting trust, agreement or arrangement among any of the beneficial
holders of Parent Common Stock affecting the nomination or election of directors
or the exercise of the voting rights of Parent Common Stock. All outstanding
shares of the Parent Common Stock are validly issued and outstanding, fully paid
and nonassessable, and none of such shares have been issued in violation of the
preemptive rights of any person. Further, all offers, issuances and sales of
shares of Parent Common Stock were (a) exempt from the registration and
prospectus delivery requirements of the Securities Act, (b) registered or
qualified (or were exempt from registration or qualification) under the
registration or qualification requirements of all applicable state securities
laws and (c) accomplished in conformity with all other applicable securities
laws. To the knowledge of Parent, none of such shares of Parent Common Stock are
subject to a right of withdrawal or a right of rescission under any federal or
state securities or blue sky law.
24
3.4 Parent Common Stockholders. SCHEDULE 3.4 hereto contains a true
and complete list of the names and addresses of the record owners of all of the
outstanding Parent Common Stock and other Equity Securities of Parent, together
with the number and percentage of securities held. To the best knowledge of
Parent, except as contemplated by this Agreement, there is no voting trust,
agreement or arrangement among any of the beneficial holders of Parent Equity
Securities affecting the nomination or election of directors or the exercise of
the voting rights of Parent Common Stock.
3.5 Broker's and Finder's Fees. No person, firm, corporation or
other entity is entitled by reason of any act or omission of Parent or
Acquisition to any broker's or finder's fees, commission or other similar
compensation with respect to the execution and delivery of this Agreement or the
Articles of Merger, or with respect to the consummation of the transactions
contemplated hereby or thereby, except as contemplated by the Placement Agency
Agreement.
3.6 Acquisition. Acquisition is a wholly owned Subsidiary of Parent
that was formed specifically for the purpose of the Merger and that has not
conducted any business or acquired any property, and will not conduct any
business or acquire any property, prior to the Closing Date, except in
preparation for and otherwise in connection with the transactions contemplated
by this Agreement, the Articles of Merger and the other agreements to be made
pursuant to or in connection with this Agreement and the Articles of Merger.
3.7 Validity of Shares. The 12,881,193 shares of Parent Common Stock
to be issued at the Closing pursuant to Section 1.5(b) hereof, when issued and
delivered in accordance with the terms hereof and of the Articles of Merger,
shall be duly and validly issued, fully paid and nonassessable. Based in part on
the representations and warranties of the Company Shareholders as contemplated
by Section 6.19 hereof and assuming the accuracy thereof, the issuance of the
Parent Common Stock upon the Merger pursuant to Section 1.5(b) will be exempt
from the registration and prospectus delivery requirements of the Securities Act
and from the qualification or registration requirements of any applicable state
blue sky or securities laws.
3.8 Securities Laws Reporting and Compliance.
(a) Parent has complied with all applicable material federal
and state securities laws and regulations, including the filing with the
Commission of a registration statement on Form SB-2 under the Securities Act and
amendments thereto, which registration statement was declared effective on
December 24, 2003 (the "Parent Registration Effective Date"). Such Form SB-2
registration statement has been duly qualified by filings under applicable state
securities laws in the states (the "Registration States") set forth on SCHEDULE
3.8, and is exempt from qualification due to the availability of exemptions
under the securities laws of certain other states as listed and described in
SCHEDULE 3.8. Parent has delivered to the Company all comment letters received
by Parent from the staff of the Commission and the securities regulator of any
of the Registration States and all responses to such comment letters by or on
behalf of Parent. Since the Parent Registration Effective Date, Parent has on a
timely basis filed with the Commission all proxy statements, information
statements, reports and other forms required to be filed pursuant to the
Exchange Act. Parent has not filed with the Commission a certificate on Form 15
pursuant to Rule 12h-3 or Rule 15d-6 of the Exchange Act. To the knowledge of
Parent, no order suspending the effectiveness of Parent's registration statement
on Form SB-2 has been issued by the SEC, and, to Parent's knowledge, no
proceedings for that purpose have been initiated or threatened by the SEC. No
order suspending the effectiveness of Parent's qualification and/or registration
statement in any of the Registration States has been issued by the applicable
securities regulator of any of the Registration States, and, to Parent's
knowledge, no proceedings for that purposes have been initiated or threatened by
the securities regulator of any of the Registration States. Parent has not
conducted an offering pursuant to Section 504 of the Securities Act or filed any
registration statement under the Securities Act on Form S-8.
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(b) Except to the extent available in full without redaction
on the Commission's web site through the Electronic Data Gathering Analysis and
Retrieval System ("EDGAR") two days prior to the date of the Agreement, Parent
has delivered to the Company true and complete copies of all registration
statements, proxy statements, information statements, reports and other forms
(collectively, the "Parent SEC Documents") filed by the Parent with the
Commission. The Parent SEC Documents complied with all of the requirements of
the SEC and applicable securities laws. The Parent SEC Documents (i) were
prepared in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations thereunder and
(ii) did not at the time they were filed with the Commission contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading. No Parent Subsidiary is
or has been required to file any form, report, registration statement or other
document with the SEC. Parent maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act; to the knowledge of
Parent, such controls and procedures are effective to ensure that all material
information concerning Parent and the Parent Subsidiaries is made known on a
timely basis to the individuals responsible for the preparation of Parent's
filings with the Commission and other public disclosure documents. As used in
this Section 3.8, the term "file" shall be broadly construed to include any
manner in which a document or information is furnished, supplied otherwise made
available to the SEC.
(c) Parent has not filed, and nothing has occurred with
respect to which Parent would be required to file, any report on Form 8-K since
the Registration Statement Effective Date. Prior to and until the Closing,
Parent will provide to the Company copies of any and all amendments or
supplements to the Parent SEC Documents filed with the Commission and all
registration statements, proxy statements information statements, reports and
other forms filed by Parent subsequent to the filing of the Parent SEC Documents
with the Commission or delivered to the stockholders of Parent.
(d) Parent is not an investment company within the meaning of
Section 3 of the Investment Company Act.
(e) The shares of Parent Common Stock are quoted on the
National Association of Securities Dealers (NASD) Bulletin Board under the
symbol "CCPI," and Parent is in compliance in all material respects with all
rules and regulations of the NASD Bulletin Board applicable to it and the Parent
Common Stock.
26
(f) Between the date hereof and the Closing Date, Parent shall
continue to satisfy the filing requirements of the Exchange Act and all other
requirements of applicable securities laws.
(g) Neither Parent, its predecessors, if any, nor any of its
Affiliates has been subject to a disqualifying provision of Regulation A or
Regulation D, pursuant to the Securities Act.
(h) Neither Parent or the past and present officers, directors
and Affiliates of Parent have been the subject of, nor does any officer or
director of Parent have any reason to believe that Parent or any of its past or
present officers, directors, or Affiliates will be the subject of, any civil or
criminal proceeding or investigation by any federal or state agency alleging a
violation of securities laws.
(i) The Parent has otherwise complied with the Securities Act,
Exchange Act and all other applicable federal and state securities laws in all
material respects.
3.9 Parent Financial Statements. The balance sheets, and statements
of income, changes in financial position and shareholders' equity contained in
the Parent SEC Documents (including the related notes) (collectively, the
"Parent Financial Statements") (i) have been prepared in accordance with GAAP
applied on a basis consistent with prior periods (and, in the case of unaudited
financial information, on a basis consistent with year-end audits), (ii) are in
accordance with the books and records of the Parent, (iii) fairly present in all
material respects the consolidated financial condition of the Parent and the
Subsidiaries at the dates therein specified and the consolidated results of
operations, cash flows, and changes in financial position for the periods
therein specified, and (iv) complied as to form, as of their respective dates of
filings with the Commission, with applicable accounting requirements and the
rules and regulations of the Commission thereto (including, without limitation,
Regulation S-X). There are no securitization transactions or "off-balance sheet
arrangements" (as defined in Item 303(c) of Regulation S-B of the Commission)
effectuated by Parent and/or the Subsidiaries. The Parent Financial Statements
included in the Annual Report on Form 10-KSB are as audited by, and include the
related opinions of, Sherb & Co., LLP, Parent's independent certified public
accountants. The Parent Financial Statements and other financial information
included in the Quarterly Report on Form 10-QSB for the quarters ended March 31,
2004 and June 30, 2004, are unaudited, and reflect all adjustments (including
normally recurring accounts) that Parent considers necessary for a fair
presentation of such information.
3.10 Financial Controls. Each of the Parent and each Parent
Subsidiary maintains accurate books and records reflecting its assets and
liabilities and maintains proper and adequate internal accounting controls that
provides assurance that (i) transactions are executed with management's
authorization; (ii) transactions are recorded as necessary to permit preparation
of the consolidated financial statements of the Parent and to maintain
accountability for the Parent's consolidated assets; (iii) access to the
Parent's assets is permitted only in accordance with management's authorization;
(iv) the reporting of the Parent's assets is compared with existing assets at
regular intervals; and (v) accounts, notes and other receivables and inventory
are recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
27
3.11 Governmental Consents. All material consents, approvals,
orders, or authorizations of, or registrations, qualifications, designations,
declarations, or filings with any federal or state governmental authority on the
part of Parent, Acquisition or CCP required in connection with the consummation
of the Merger, the Split-Off and the Private Placement Offering have been
obtained.
3.12 Compliance with Laws and Other Instruments. The execution,
delivery and performance by Parent and/or Acquisition of this Agreement, the
Articles of Merger, the Split-Off Agreement and the other agreements to be made
by Parent, Acquisition or CCP (as the case may be) pursuant to or in connection
with this Agreement, the Articles of Merger or the Spit-Off Agreement, and the
consummation by Parent, Acquisition and/or CCP (as the case may be) of the
transactions contemplated by the Merger Documentation and/or the Split-Off
Documentation will not cause Parent and/or any Parent Subsidiary to violate or
contravene (i) any provision of law, (ii) any rule or regulation of any agency
or government, (iii) any order, judgment or decree of any court, or (iv) any
provision of their respective certificates of incorporation or articles of
incorporation, as the case may be, or by-laws as amended and in effect on and as
of the Closing Date and will not violate or be in conflict with, result in a
breach of or constitute (with or without notice or lapse of time, or both) a
default under any material indenture, loan or credit agreement, deed of trust,
mortgage, security agreement or other agreement or contract to which Parent or
any Parent Subsidiary is a party or by which Parent and/or any Parent Subsidiary
or any of their respective properties is bound.
3.13 No General Solicitation. In issuing Parent Common Stock in
connection with the Merger hereunder or in the Private Placement Offering,
neither Parent nor, to Parent's knowledge, anyone acting on its behalf has
offered the Parent Common Stock by any form of general solicitation or
advertising.
3.14 Absence of Undisclosed Liabilities. Except as reported on the
Parent Balance Sheet, since December 31, 2003, there has been no event or
condition that has had or would have a Material Adverse Effect on Parent; and
there has been no impairment, damage, destruction, loss or claim, whether or not
covered by insurance, or condemnation or other taking which would have a
Material Adverse Effect on Parent. Parent has no material obligation or
liability (whether accrued, absolute, contingent, liquidated or otherwise,
whether due or to become due), arising out of any transaction entered into at or
prior to the Closing, except (a) as disclosed in SCHEDULE 3.14 hereto, (b) to
the extent set forth on or reserved against in the balance sheet set forth in
Parent's Form 10-QSB for the quarter ended March 31, 2004 (the "Parent Balance
Sheet"), (c) current liabilities incurred and obligations under agreements
entered into in the usual and ordinary course of business consistent with past
practice since the date of the Parent Balance Sheet (the "Parent Balance Sheet
Date"), none of which (individually or in the aggregate) has had a Material
Adverse Effect on Parent, and (d) by the specific terms of any written
agreement, document or arrangement identified in the Schedules. There are no
accrued and unpaid dividends or distributions with respect to the any capital
stock of Parent or any Parent Subsidiary. On or before the Closing, the entire
tax liability of Parent, if any, arising out of, in connection with or related
to the Split-Off shall have been paid in full by Parent.
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3.15 Changes. Since the Parent Balance Sheet Date, except as
disclosed in SCHEDULE 3.15 hereof, Parent has not (a) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, including but not limited to notes payable and accounts
payable, and is not a party to any executory agreements, except current
liabilities incurred in the usual and ordinary course of business, none of which
(individually or in the aggregate) has had a Material Adverse Effect on Parent,
(b) discharged or satisfied any Liens other than those securing, or paid any
obligation or liability other than, current liabilities shown on the Parent
Balance Sheet and current liabilities incurred since the Parent Balance Sheet
Date, in each case in the usual and ordinary course of business, (c) mortgaged,
pledged or subjected to Lien any of its assets, tangible or intangible other
than in the usual and ordinary course of business, (d) sold, transferred or
leased any of its assets, except in the usual and ordinary course of business,
(e) cancelled or compromised any debt or claim, or waived or released any right,
of material value, (f) suffered any physical damage, destruction or loss
(whether or not covered by insurance) having a Material Adverse Effect on
Parent, (g) entered into any transaction other than in the usual and ordinary
course of business, (h) encountered any labor difficulties, (i) made or granted
any wage or salary increase or made any increase in the amounts payable under
any profit sharing, bonus, deferred compensation, severance pay, insurance,
pension, retirement or other employee benefit plan, agreement or arrangement,
other than in the ordinary course of business consistent with past practice, or
entered into any employment agreement, (j) issued or sold any shares of capital
stock, bonds, notes, debentures or other securities or granted any options
(including employee stock options), warrants or other rights with respect
thereto, (k) declared or paid any dividends on or made any other distributions
with respect to, or purchased or redeemed, any of its outstanding capital stock,
(l) suffered or experienced any change in, or condition having a Material
Adverse Affect on Parent other than changes, events or conditions in the usual
and ordinary course of its business, none of which (either by itself or in
conjunction with all such other changes, events and conditions) has had a
Material Adverse Effect on Parent, (m) made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, (n) made or permitted any amendment or
termination of any material contract, agreement or license to which it is a
party, (o) suffered any material loss not reflected in the Parent Balance Sheet
or its statement of income for the period ended on the Parent Balance Sheet
Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer, director, employee, shareholder or consultant, (q)
made or agreed to make any charitable contributions or incurred any non-business
expenses, or (r) entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
29
3.16 Schedule of Assets and Contracts. Except as expressly set forth
in this Agreement, the Parent Balance Sheet or the notes thereto, or SCHEDULE
3.16, the Parent is not a party to any written or oral agreement not made in the
ordinary course of business that is material to the Parent. Parent does not own
any real property. Except as listed on SCHEDULE 3.16, Parent is not a party to
any written or oral agreement (a) with any labor union, (b) for the purchase of
fixed assets or for the purchase of materials, supplies or equipment in excess
of normal operating requirements, (c) for the employment of any officer,
individual employee or other Person on a full-time basis or any agreement with
any Person for consulting services, (d) pertaining to bonus, pension, profit
sharing, retirement, stock purchase, stock option, deferred compensation,
medical, hospitalization or life insurance or similar plan, contract or
understanding with respect to any or all of the employees of Parent or any other
Person, (e) pertaining to any indenture, loan or credit agreement, note
agreement, deed of trust, mortgage, security agreement, promissory note or other
agreement or instrument relating to or evidencing Indebtedness for Borrowed
Money or subjecting any asset or property of Parent to any Lien or evidencing
any Indebtedness, (f) in respect of any guaranty of any Indebtedness, (g) in
respect of any lease or agreement under which Parent is lessee of or holds or
operates any property, real or personal, owned by any other Person, (h) lease or
agreement under which Parent is lessor or permits any Person to hold or operate
any property, real or personal, owned or controlled by Parent, (i) granting any
preemptive right, right of first refusal or similar right to any Person, (j)
agreement or arrangement with any Affiliate or any "associate" (as such term is
defined in Rule 405 under the Securities Act) of Parent or any present or former
officer, director or shareholder of Parent, (k) obligating Parent to pay any
royalty or similar charge for the use or exploitation of any tangible or
intangible property, (1) pertaining to any covenant not to compete or other
restriction on its ability to conduct a business or engage in any other
activity, (m) pertaining to any distributor, dealer, manufacturer's
representative, sales agency, franchise or advertising contract or commitment,
(n) agreement to register securities under the Securities Act, (o) pertaining to
an obligation of confidentiality of the Company or any third party to Parent, or
(p) agreement or other commitment or arrangement with any Person continuing for
a period of more than three months from the Closing Date that involves an
expenditure or receipt by Parent in excess of $1,000. Parent maintains no
insurance policies and insurance coverage of any kind with respect to Parent,
its business, premises, properties, assets, employees and agents. SCHEDULE 3.16
contains a true and complete list and description of each bank account, savings
account, other deposit relationship and safety deposit box of Parent, including
the name of the bank or other depository, the account number and the names of
the individuals having signature or other withdrawal authority with respect
thereto. Except as disclosed on SCHEDULE 3.16, no consent of any bank or other
depository is required to maintain any bank account, other deposit relationship
or safety deposit box of Parent in effect following the consummation of the
Merger and the transactions contemplated hereby. Parent has furnished to the
Company true and complete copies of all agreements and other documents disclosed
or referred to in SCHEDULE 3.16, as well as any additional agreements or
documents, requested by the Company.
3.17 Employees. Other than pursuant to ordinary arrangements of
employment compensation, Parent is not under any obligation or liability to any
officer, director, employee or Affiliate of Parent.
30
3.18 Tax Returns and Audits. All required federal, state and local
Tax Returns of Parent have been accurately prepared and duly and timely filed,
and all federal, state and local Taxes required to be paid with respect to the
periods covered by such returns have been paid. Parent is not and has not been
delinquent in the payment of any Tax. Parent has not had a Tax deficiency
proposed or assessed against it and has not executed a waiver of any statute of
limitations on the assessment or collection of any Tax. None of Parent's federal
income tax returns nor any state or local income or franchise tax returns has
been audited by governmental authorities. The reserves for Taxes reflected on
the Parent Balance Sheet are and will be sufficient for the payment of all
unpaid Taxes payable by Parent with respect to the period ended on the Parent
Balance Sheet Date. Since the Parent Balance Sheet Date, Parent has made
adequate provisions on its books of account for all Taxes with respect to its
business, properties and operations for such period. Parent has withheld or
collected from each payment made to each of its employees the amount of all
taxes (including, but not limited to, federal, state and local income taxes,
Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom, and has paid the same to the
proper Tax receiving offices or authorized depositaries. There are no federal,
state, local or foreign audits, actions, suits, proceedings, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns of
Parent now pending, and Parent has not received any notice of any proposed
audits, investigations, claims or administrative proceedings relating to Taxes
or any Tax Returns. Parent is not obligated to make a payment, or is a party to
an agreement that under certain circumstances could obligate it to make a
payment, that would not be deductible under Section 280G of the Code. Parent has
neither agreed nor is required to make any adjustments under Section 481(a) of
the Code (or any similar provision of state, local and foreign law) by reason of
a change in accounting method or otherwise for any Tax period for which the
applicable statute of limitations has not yet expired. Parent (i) is neither a
party to, nor is bound by nor has any obligation under, any Tax Sharing
Agreement, and (ii) has no potential liability or obligation to any person as a
result of, or pursuant to, any such Tax Sharing Agreements.
3.19 Employee Benefit Plans; ERISA. There are no "employee benefit
plans" (within the meaning of Section 3(3) of the ERISA) nor any other employee
benefit or fringe benefit arrangements, practices, contracts, policies or
programs of every type other than programs merely involving the regular payment
of wages, commissions, or bonuses established, maintained or contributed to by
Parent or any Parent Subsidiary, whether written or unwritten and whether or not
funded. SCHEDULE 3.19 hereto lists each employee benefit plan maintained by
Parent or any Parent Subsidiary (each a "Parent Employee Benefit Plan").
(a) All current and prior material documents, including all
amendments thereto, with respect to each Parent Employee Benefit Plan have been
delivered to Parent and Acquisition or their advisors.
(b) All Parent Employee Benefit Plans are in material
compliance with the applicable requirements of ERISA, the Code and any other
applicable state, federal or foreign law.
(c) There are no pending claims or lawsuits which have been
asserted or instituted against any Parent Employee Benefit Plan, the assets of
any of the trusts or funds under the Parent Employee Benefit Plans, the plan
sponsor or the plan administrator of any of the Parent Employee Benefit Plans or
against any fiduciary of a Parent Employee Benefit Plan with respect to the
operation of such plan, nor does the Parent have any knowledge of any incident,
transaction, occurrence or circumstance which might reasonably be expected to
form the basis of any such claim or lawsuit.
31
(d) There is no pending or, to the knowledge of Parent,
contemplated investigation or pending or possible enforcement action by the
Pension Benefit Guaranty Corporation, the Department of Labor, the Internal
Revenue Service or any other government agency with respect to any Parent
Employee Benefit Plan and Parent has no knowledge of any incident, transaction,
occurrence or circumstance which might reasonably be expected to trigger such an
investigation or enforcement action.
(e) To the knowledge of Parent, no actual or contingent
liability exists with respect to the funding of any Parent Employee Benefit Plan
or for any other expense or obligation of any Parent Employee Benefit Plan,
except as disclosed on the financial statements of Parent or the Schedules to
this Agreement, and no contingent liability exists under ERISA with respect to
any "multi-employer plan," as defined in Section 3(37) or Section 4001(a)(3) of
ERISA.
(f) No events have occurred or are expected to occur with
respect to any Parent Employee Benefit Plan that would cause a material change
in the costs of providing benefits under such Parent Employee Benefit Plan or
would cause a material change in the cost of providing for other liabilities of
such Parent Employee Benefit Plan.
3.20 Bankruptcy, Litigation and Investigation. Parent has not been
the subject of any voluntary or involuntary bankruptcy proceeding, nor has it
been a party to any material litigation. There is no legal action, suit,
arbitration or other legal, administrative or other governmental proceeding
pending or, to the best knowledge of Parent, threatened against or affecting
Parent or its properties, assets or business, and after reasonable
investigation, Parent is not aware of any incident, transaction, occurrence or
circumstance that might reasonably be expected to result in or form the basis
for any such action, suit, arbitration or other proceeding. Parent is not in
default with respect to any order, writ, judgment, injunction, decree,
determination or award of any court or any governmental agency or
instrumentality or arbitration authority. Neither Parent nor any past or present
officers, directors or affiliates of Parent have been the subject of, nor does
any officer or director of Parent have any reasonable belief that Parent or any
of its past or present officers, directors or affiliates will be the subject of,
any civil, criminal or administrative investigation or proceeding brought by any
federal or state agency having regulatory authority over such entity.
3.21 Interested Party Transactions. Except for the Split-Off
Agreement, to the best knowledge of Parent, other than as disclosed in SCHEDULE
3.21 hereto, no officer, director or stockholder of Parent or any Affiliate or
"associate" (as such term is defined in Rule 405 under the Securities Act) of
any such Person or Parent has or has had, either directly or indirectly, (a) an
interest in any Person that (i) furnishes or sells services or products that are
furnished or sold or are proposed to be furnished or sold by Parent or (ii)
purchases from or sells or furnishes to Parent any goods or services, or (b) a
beneficial interest in any contract or agreement to which Parent is a party or
by which it may be bound or affected. Parent has not, since the Registration
Statement Effective Date, extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) of the Parent. SCHEDULE 3.21 identifies any loan or extension of credit
maintained by Parent to which the second sentence of Section 12(k)(1) of the
Exchange Act applies.
32
3.22 Questionable Payments. Neither Parent nor any director, officer
or, to the best knowledge of Parent, agent, employee or other Person associated
with or acting on behalf of Parent, has used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payments to government
officials or employees from corporate funds; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entries on the books of record of any such corporations; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
3.23 Duty to Make Inquiry. To the extent that any of the
representations or warranties in this Section 3 are qualified by "knowledge" or
"belief," Parent represents and warrants that it has made due and reasonable
inquiry and investigation concerning the matters to which such representations
and warranties relate, including, but not limited to, diligent inquiry by its
directors, officers and key personnel.
3.24 Accountants. Each of Rogoff & Co., P.C. and Sherb & Co., LLP is
and has been throughout the periods covered by such financial statements (a) a
registered public accounting firm (as defined in Section 2(a)(12) of the
Sarbanes-Oxley Act of 2002, (b) "independent" with respect to Parent within the
meaning of Regulation S-X and (c) in compliance with subsections (g) through (l)
of Section 10A of the Exchange Act and the related rules of the Commission and
the Public Company Accounting Oversight Board. SCHEDULE 3.24 lists all non-audit
services performed by Rogoff & Co., P.C. or Sherb & Co., LLP for Parent and/or
any of the Parent Subsidiaries since January 1, 2001. None of the reports of
Rogoff & Co., P.C. or Sherb & Co., LLP on the financial statements of Parent for
either of the past two fiscal years contained an adverse opinion or a disclaimer
of opinion, or was qualified as to uncertainty, audit scope, or accounting
principles. During Parent's two most recent fiscal years and the subsequent
interim periods, there were no disagreements with Rogoff & Co., P.C. or Sherb &
Co., LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures. None of the reportable
events listed in Item 304(a)(1)(iv) of Regulation S-B occurred with respect to
Parent and Rogoff & Co., P.C. or Sherb & Co., LLP.
3.25 Minute Books. The minute books, if any, of Parent and each
Parent Subsidiary contain, in all material respects, a complete and accurate
summary of all meetings of directors and stockholders or actions by written
resolutions since the time of organization of each such corporation through the
date of this Agreement, and reflect all transactions referred to in such minutes
and resolutions accurately, except for omissions which are not material. Parent
has provided true and complete copies of all such minute books, if any, to the
Company's representatives.
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3.26 Complete Copies of Materials. Parent has delivered or made
available true and complete copies of each document that has been requested by
the Company or its counsel in connection with their legal and accounting review
of Parent.
3.27 Reorganization. Parent has not taken any action or failed to
take any action which action or failure would reasonably be expected to
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
3.28 Disclosure. No representation, statement, or information
contained in this Agreement (including the Schedules) or any contract or
document executed in connection herewith or delivered pursuant hereto or made
available or furnished to the Company or its representatives by Parent contains
any untrue statement of a material fact or omits any material fact necessary to
make the information contained therein not misleading. Parent has provided the
Company with correct and complete copies of all documents listed or described in
the Schedules referred to in this Section 3.
3.29 Compliance with Laws and Instruments. The business and
operations of the Parent and each Parent Subsidiary have been and are being
conducted in compliance in all material respects with all applicable laws, rules
and regulations, except for such violations thereof for which the penalties, in
the aggregate, would not have a Material Adverse Effect on the Parent. The
execution, delivery and performance by the Parent and Acquisition of the Merger
Documentation and the consummation by the Parent and Acquisition of the
transactions contemplated by this Agreement, and the execution, delivery and
performance by the Parent and CCP of the Split-Off Documentation and the
consummation by Parent and CCP of the transactions contemplated by this
Split-Off Agreement: (a) have been duly authorized by the Boards of Directors of
the Parent, Acquisition and CCP, respectively, (b) will not, in the case of the
Merger, require from the shareholders of Acquisition or the stockholders of
Parent, and in the case of the Split-Off, require from shareholders of Parent or
CCP, any consent or approval that has not already been obtained or will be
obtained prior to the Merger Effective Time, (c) will not require any
authorization, consent or approval of, or filing (other than the filing referred
to in Section 1.2 hereof) or registration with, any court or governmental agency
or instrumentality, (d) will not cause the Parent, Acquisition or CCP, as the
case may be, to violate or contravene (i) any provision of law, (ii) any rule or
regulation of any agency or government, (iii) any order, judgment or decree of
any court or (iv) any provision of their respective certificates of
incorporation or articles of incorporation, respectively, or by-laws, (e) will
not violate or be in conflict with, result in a breach of or constitute (with or
without notice or lapse of time, or both) a default under, any indenture, loan
or credit agreement, deed of trust, mortgage, security agreement or other
contract, agreement or instrument to which the Parent, Acquisition or CCP is a
party or by which the Parent, Acquisition or CCP or any of their respective
properties is bound or affected and (f) will not result in the creation or
imposition of any Lien upon any property or asset of the Parent, Acquisition or
CCP. Neither Parent nor any Parent Subsidiary is in violation of, or (with or
without notice or lapse of time, or both) in default under, any term or
provision of its certificate of incorporation or by-laws or of any indenture,
loan or credit agreement, deed of trust, mortgage, security agreement or, except
as would not have a Material Adverse Affect on Parent, other material agreement
or instrument to which the Parent or any Parent Subsidiary is a party or by
which the Parent or any Parent Subsidiary or any of their properties is bound or
affected.
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3.30 Execution and Delivery of Split-Off Documents and Offering
Documents. Parent hereby represents and warrants to the Company that (i) the
Split-Off Agreement was, immediately prior to the execution and delivery of this
Agreement, executed and delivered by Parent, CCP and Allison, and (ii) the
Placement Agency Agreement was, immediately prior to the execution and delivery
of this Agreement, executed and delivered by Parent and the Company's investment
bankers.
4. Conduct of Company Pending the Merger.
4.1 Company Actions Pending the Merger. Prior to the Merger
Effective Time, unless Parent or Acquisition shall otherwise agree in writing or
as otherwise contemplated by this Agreement, the Company and each Company
Subsidiary shall:
(a) maintain its existence and remain in good standing;
(b) conduct its business in the ordinary and usual manner
consistent with past practices, except as expressly permitted by this Agreement;
(c) maintain its business and accounting records consistent
with past practices; and
(d) use its reasonable best efforts to preserve intact its
business organization, to keep available the service of its present officers and
key employees, and to preserve the good will of those having business
relationships with it.
4.2 Prohibited Actions by Company Pending the Merger. Unless
otherwise provided for herein or approved by Parent or Acquisition in writing,
prior to the Merger Effective Time, the Company and each Company Subsidiary
shall not:
(a) (A) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of its
capital stock; (B) amend its Certificate of Incorporation or By-laws; or (C)
split, combine or reclassify the outstanding Company Common Stock or declare,
set aside or pay any dividend payable in cash, stock or property or make any
distribution with respect to any such stock;
(b) the Company shall not (A) issue or agree to issue any
additional shares of, or options, warrants or rights of any kind to acquire any
shares of, Company Common Stock, except to issue shares of Company Common Stock
upon the exercise of stock options outstanding on the date hereof; (B) acquire
or dispose of any fixed assets or acquire or dispose of any other substantial
assets other than in the ordinary course of business; (C) incur additional
Indebtedness or any other liabilities or enter into any other transaction other
than in the ordinary course of business; (D) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing; or (E) except as
contemplated by this Agreement, enter into any contract, agreement, commitment
or arrangement to dissolve, merge, consolidate or enter into any other material
business combination;
35
(c) enter into any new employment agreements with any of its
officers or employees or grant any increases in the compensation or benefits of
its officers and employees other than increases in the ordinary course of
business and consistent with past practice or amend any employee benefit plan or
arrangement.
(d) acquire (including by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership, other business
organization or any division thereof;
(e) mortgage, pledge or subject to Lien, any of its assets or
properties or agree to do so, except for Permitted Liens;
(f) take any action, other than in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivable);
(g) make any material Tax election or settle or compromise any
material federal, state, local or foreign Tax liability;
(h) settle or comprise any pending or threatened suit, action
or claim the that is material or which relates to any of the transactions
contemplated by this Agreement;
(i) except in connection with the sale of any Company products
in the ordinary course of business and consistent with past practice, sell,
assign, transfer, license, sublicense, pledge or otherwise encumber any of the
Intellectual Property Rights; or
(j) commit or agree to do any of the foregoing.
5. Conduct of Business by Parent, Acquisition and CCP Pending the Merger.
5.1 Parent, Acquisition and CCP Actions Pending the Merger. Prior to
the Merger Effective Time, unless the Company shall otherwise agree in writing
or as otherwise contemplated by this Agreement, Parent, Acquisition and CCP
jointly and severally, agree:
(a) to maintain their respective existence and remain in good
standing;
(b) to conduct the business of Parent, Acquisition and CCP
only in the ordinary manner consistent with past practices; provided, however,
that Parent shall take the steps necessary to cause to be accomplished the
Split-Off of CCP without liability to Parent as of the Closing Date;
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(c) that neither Parent, Acquisition or CCP shall (i) directly
or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase
or otherwise acquire any shares of its capital stock; (ii) amend its certificate
of incorporation or articles of incorporation, respectively, or by-laws (except
as contemplated by this Agreement); or (iii) split, combine or reclassify its
capital stock or declare, set aside or pay any dividend payable in cash, stock
or property or make any distribution with respect to such stock;
(d) that neither Parent, Acquisition or CCP shall (i) issue or
agree to issue any additional shares of, or options, warrants or rights of any
kind to acquire shares of, its capital stock; (ii) acquire or dispose of any
assets other than in the ordinary course of business; (iii) incur additional
Indebtedness or any other liabilities or enter into any other transaction except
in the ordinary course of business; (iv) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing; or (v) except as
contemplated by this Agreement, enter into any contract, agreement, commitment
or arrangement to dissolve, merge; consolidate or enter into any other material
business combination; or
(e) commit or agree to do any of the foregoing.
6. Additional Agreements.
6.1 Access and Confidential Information. The Company, Parent,
Acquisition and CCP shall each afford to the other and to the other's
accountants, counsel and other representatives full access during normal
business hours throughout the period prior to the Merger Effective Time of all
of its properties, books, contracts, commitments and records (including but not
limited to tax returns) and during such period, each shall furnish promptly to
the other all information concerning its business, properties and personnel as
such other party may reasonably request, provided that no investigation pursuant
to this Section 6.1 shall affect any representations or warranties made herein.
Each party shall hold, and shall cause its employees and agents to hold, in
confidence all such information (other than such information that (i) is already
in such party's possession or (ii) becomes generally available to the public
other than as a result of a disclosure by such party or its directors, officers,
managers, employees, agents or advisors, or (iii) becomes available to such
party on a non-confidential basis from a source other than a party hereto or its
advisors, provided that such source is not known by such party to be bound by a
confidentiality agreement with or other obligation of secrecy to a party hereto
or another party until such time as such information is otherwise publicly
available; provided, however, that (A) any such information may be disclosed to
such party's directors, officers, employees and representatives of such party's
advisors who need to know such information for the purpose of evaluating the
transactions contemplated hereby (it being understood that such directors,
officers, employees and representatives shall be informed by such party of the
confidential nature of such information), (B) any disclosure of such information
may be made as to which the party hereto furnishing such information has
consented in writing, and (C) any such information may be disclosed as required
by law or pursuant to judicial, administrative or governmental order, process or
request; provided, however, that the requested party will promptly so notify the
other party so that the other party may seek a protective order or appropriate
remedy and/or waive compliance with this Agreement and if such protective order
or other remedy is not obtained or the other party waives compliance with this
provision, the requested party will furnish only that portion of such
information that is legally required and will exercise its best efforts to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the information furnished. If this Agreement is
terminated, each party will deliver to the other all documents and other
materials (including copies) obtained by such party or on its behalf from the
other party as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof.
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6.2 Further Actions to Close Merger. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, the Private Placement Offering and
the Split-Off, including using its commercially reasonable efforts to satisfy
the conditions precedent to the obligations of any of the parties hereto to
obtain all necessary waivers, and to lift any injunction or other legal bar to
the Merger and the Split-Off (and, in such case, to proceed with the Merger and
Split-Off as expeditiously as possible). In order to obtain any necessary
governmental or regulatory action or non-action, waiver, consent, extension or
approval, each of Parent, Acquisition and the Company agrees (and Parent agrees
to cause CCP) to take all reasonable actions and to enter into all reasonable
agreements as may be necessary to obtain timely governmental or regulatory
approvals and to take such further action in connection therewith as may be
necessary. In case at any time after the Merger Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Parent, Acquisition and the Company
shall take all such necessary action.
6.3 Publicity. No party shall issue any press release or public
announcement pertaining to the Merger that has not been agreed upon in advance
by Parent and the Company, except as Parent reasonably determines to be
necessary in order to comply with the rules of the Commission or of the
principal trading exchange or market for Parent Common Stock.
6.4 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (a) the
occurrence, or non-occurrence, of any event that would be reasonably likely to
cause (i) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(b) any failure of the Company, Parent or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder. Parent shall give prompt notice to the Company of
(c) the occurrence, or non-occurrence, of any event that would be reasonably
likely to cause (i) any representation or warranty contained in the Split-Off
Agreement to be untrue or inaccurate in any material respect or (ii) any
covenant, condition or agreement contained in the Split-Off Agreement not to be
complied with or satisfied and (d) any failure of Parent, CCP or Allison, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under the Split-Off Agreement. No notice
given by either party pursuant to this Section 6.4 to the other shall have any
effect on the remedies available to such other party hereunder. Notwithstanding
the foregoing, the delivery of any notice pursuant to this Section 6.4 shall not
limit or otherwise affect the remedies available to the party receiving such
notice.
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6.5 Tax Returns; Cooperation. The Company on the one hand, and
Parent, on the other, will cooperate with each other and provide such
information as the other Party may require in order to file any return to
determine Tax liability or a right to a Tax refund or to conduct a Tax audit or
other Tax proceeding. Such cooperation shall include making employees available
on a mutually convenient basis to explain any documents or information provided
hereunder or otherwise as required in the conduct of any audit or other
proceeding.
6.6 Reorganization. Each of Parent and the Company shall, both
before and after the Merger Effective Time, use its reasonable best efforts to
cause the business combination of the Merger to be qualified as a reorganization
under Section 368(a) of the Code.
6.7 Form 8-K; Other Filings. As promptly as practicable after the
date of this Agreement (but in no event later than any date required by SEC Form
8K or applicable law), Parent will, with the Company's cooperation and prior
approval, prepare and file a current report on SEC Form 8-K (the "Agreement Form
8-K") and any filings required to be filed by it under the Exchange Act, the
Securities Act or any other Federal, foreign or blue sky or related laws
relating to the execution of this Agreement. As promptly as practical after the
Merger Effective Time (but in no event later than the date required by SEC Form
8K or applicable law), Parent will, with the Company's cooperation and prior
approval, prepare and file a current report on SEC Form 8-K (the "Merger Form
8-K"), and any other filings required to be filed by it under the Exchange Act,
the Securities Act or any other federal, foreign or blue sky or related laws
relating to the consummation of the Merger and the transaction contemplated by
this Agreement. Without limitation, in connection with the Merger, Parent will
comply with the Accounting and Financial Reporting Interpretations and Guidance
issued by the Accounting Staff Members in the SEC's Division of Corporate
Finance on March 31, 2001 as the same relate to "Reverse Acquisitions -
Reporting Issues." The Merger Form 8-K and the Agreement Form 8-K are sometimes
collectively referred to as the "Transaction Form 8-Ks." The Company will
promptly review the Transaction Form 8-Ks and such other filings and confirm the
accuracy of all matters contained therein that are based on written disclosures
made by the Company. Parent will not file the Transaction Form 8-K with the
Commission until the Company has received and approved the content of such
filing. After the Merger Effective Time, Parent will timely file the Merger 8-K
and other reports with the SEC, the stock exchange or trading system on which
shares of Parent Common Stock are listed or quoted and such other governmental
agencies as may require the filing of such other filings.
6.8 Offering Memorandum. As soon as practicable after the execution
of this Agreement, Parent shall prepare, with the Company's cooperation and
prior approval of the content thereof, a confidential offering memorandum (the
"Offering Memorandum") for use in the conduct of the Private Placement Offering.
Parent and the Company shall each use commercially reasonable efforts to cause
the Offering Memorandum to comply with the requirements of applicable federal
and state laws. Parent will not distribute the Offering Memorandum to any person
that, to its knowledge, is not an "accredited investor" as defined in Rule 501
promulgated under the Securities Act. Each of Parent and the Company will
provide promptly to the other such information concerning its business affairs
and financial statements and as, in the reasonable judgment of the providing
party or its counsel, may be required or appropriate for inclusion in the
Offering Memorandum, or in any amendments or supplements thereto, and to cause
its counsel and auditors to cooperate with the other's counsel and auditors in
the preparation of the Offering Memorandum. The Company will promptly advise
Parent, and Parent will promptly advise the Company, in writing if at any time
prior to the Merger Effective Time either the Company or Parent shall obtain
knowledge of any facts that might make it necessary or appropriate to amend or
supplement the Offering Memorandum in order to make the statements contained or
incorporated by reference therein not misleading or to comply with applicable
law. In that case, Parent will prepare, with the Company's cooperation and prior
approval of the content thereof, an amendment or supplement that reflects the
new facts and cause it to be delivered to the New Parent Investors prior to the
consummation of the Private Placement Offering.
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6.9 Company Information Statement. As promptly as practicable after
the execution of this Agreement and the Company's receipt of the approval of
this Agreement from its stockholders by written consent of a majority of the
holders of its shares entitled to vote thereon, the Company shall, in
consultation with Parent, prepare and mail to the Company Shareholders who have
not executed the written consent of shareholders pursuant to which the Merger
was approved an information statement complying with the applicable provisions
of the FBCA.
6.10 Parent Information Statement. As promptly as practicable after
the execution of this Agreement and Parent's receipt of the approval of the
Split-Off Agreement and the amendment and restatement of Parent's Certificate of
Incorporation in accordance with the provisions of Section 6.16 hereof, from its
stockholders by written consent of a majority of the holders of Parent Common
Stock entitled to vote thereon, Parent shall, in consultation with the Company,
prepare and mail to the holders of Parent Common Stock who have not executed the
written consent of shareholders pursuant to which the Split-Off and amendment of
Parent's Certificate of Incorporation were approved, an information statement
complying with the applicable provisions of the Delaware General Corporation
Law.
6.11 Regulatory Approval by Parent. Prior to the Merger Effective
Time, Parent shall obtain all regulatory approvals, if any, needed to ensure
that Parent Securities to be issued in the Merger will be exempt from
registration or qualification under the Securities Act and the securities law of
every jurisdiction in which any registered holder of Company shares has an
address of record as of the Closing; provided, that Parent shall not be required
to consent generally to the service of process in any jurisdiction in which it
is not so subject.
6.12 Notices from Governmental Agencies. Parent will notify the
Company promptly upon the receipt of any communication from the SEC or its staff
or any other government officials regarding the transactions contemplated by
this Agreement and will provide the Company with copies of all correspondence
between Parent or any of Parent's representatives, on the one hand, and the SEC
or its staff or any other government officials, on the other hand, with respect
to the transactions contemplated hereby. In addition, subject to applicable laws
relating to the exchange of information, each Party will promptly furnish to the
other Parties copies of written communications (and memoranda setting forth the
substance of all oral communications) received by such party, or any of its
Subsidiaries, Affiliates or associates (as such terms are defined in Rule 12b-2
under the Exchange Act as in effect on the date hereof), from, or delivered by
any of the foregoing to, any governmental or regulatory authority, domestic or
foreign, relating to or in respect of the transactions contemplated under this
Agreement.
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6.13 Registration of Shares and Other Securities.
(a) Subject to Section 6.13(c) hereof, Parent shall file, not
later than 60 days after the Merger Effective Time, a registration statement
(the "Resale Registration Statement") with the SEC covering the resale of (i)
the shares of Parent Common Stock that are issued in the Private Placement
Offering or that may be purchased pursuant to the Parent Warrants, (ii) the
Merger Consideration Shares; and (iii) the shares of Parent Common Stock that
may be acquired pursuant to conversion or exercise of the Company Options (other
than the Company Options issued under the Company Option Plan), the Company
Warrants and the Company Convertible Securities that are assumed by Parent
pursuant to Sections 1.5(c), (d) and (e) hereof.
(b) Parent shall maintain the effectiveness of the Resale
Registration Statement for 24 months. Notwithstanding the foregoing, if at any
time or from time to time after the date of effectiveness of the Resale
Registration Statement, Parent notifies the holders of the "Registrable
Securities" (as defined in the Offering Subscription Agreements) in writing of
the existence of an event or circumstance that is not disclosed in the Resale
Registration Statement and that may have a material effect on Parent or its
business (a "Potential Material Event"), the holders of the Registrable
Securities shall not offer or sell any Registrable Securities, or engage in any
other transaction involving or relating to the Registrable Securities, from the
time of the giving of notice with respect to a Potential Material Event until
Parent notifies the holders of the Registrable Securities that such Potential
Material Event either has been added to the Resale Registration Statement by
amendment or supplement or no longer constitutes a Potential Material Event;
provided, that Parent may not so suspend the right of such holders of
Registrable Securities pursuant to this Section 6.13(b) for more than 120 days
in the aggregate.
(c) Inclusion of any shares in the Resale Registration
Statement shall be subject to the holder of such shares providing the Parent
with all information reasonably requested by Parent in connection therewith.
6.14 Appointment of Directors. Immediately following the Merger
Effective Time, the Board of Directors of Parent shall increase the size of the
Board of Directors of Parent to a number equal to the total of (x) the number of
existing directors of Parent plus (y) the number of persons that Dyadic
nominates for election to Parent's Board of Directors by written notice to
Parent at least three (3) Business Days prior to Closing, and shall cause the
persons so nominated by Dyadic to be elected to the Board of Directors of Parent
in accordance with the Bylaws of Parent. Promptly following the election of the
new slate of Board of Directors for Parent, all of the current officers and
directors of Parent will resign, and Parent shall, in addition to the election
of a reconstituted Board of Directors, appoint such officers as shall be
designated by the Company.
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6.15 Lock-Up Letters. As of the Merger Effective Time, lock-up
letters, on substantially the terms set forth in the respective forms of lock-up
letters attached as EXHIBIT O hereto, shall have been executed by Mark Tompkins
and IVC Group (collectively, "Tompkins"), the Francisco Trust, Emalfarb and
other executive officers of the Company.
6.16 Amendment and Restatement of Parent Corporate Charter and
By-Laws. As of the Merger Effective Time, Parent shall have caused its
stockholders to approve the amendment and restatement of Parent's Certificate of
Incorporation to be substantially identical in form and substance to the form
attached hereto as EXHIBIT P hereto (the "Amended and Restated Certificate of
Incorporation"), and Parent Board shall have amended and restated the By-Laws of
Parent to be substantially identical in form and substance to the form attached
hereto as EXHIBIT Q hereto (the "Amended and Restated By-Laws").
6.17 Novation Agreements. Novation Request. Promptly after the
execution of this Agreement, the Company will send (a) to each holder of Company
Options two counterparts of the Company Option Novation Agreement each executed
by the Company and Parent, (b) to each holder of Company Warrants two
counterparts of the Company Warrant Novation Agreement and (c) to each holder of
Company Convertible Securities two counterparts of the Company Convertible
Security Novation Agreement, each executed by the Company and Parent, in all
cases to the address of the respective holder at his or her address on the books
and records of the Company. The Company will use commercially reasonable efforts
to cause each holder of Company Options, Company Warrants and Company
Convertible Securities to tender, execute and deliver their respective Novation
Agreements to Parent on or prior to the Merger Effective Time. After the Merger
Effective Time, the Company shall cooperate with Parent to communicate with
those holders of Company Options, Company Warrants and Company Convertible
Securities who have not delivered their Novation Agreements and to use its
reasonable best efforts to cause such holders to deliver any remaining Novation
Agreements to Parent.
6.18 Tompkins Indemnification and Escrow Account. Prior to the
Merger Effective Time, an indemnification and escrow agreement, on substantially
the terms set forth in the agreement attached as EXHIBIT R hereto (the "Tompkins
Indemnification Agreement"), shall be executed by Mark Tompkins and his
affiliate Vitel Ventures and delivered to Parent, the Company and the escrow
agent named therein, together with the delivery and transfer to the escrow agent
of the shares of Company Common Stock or Parent Common Stock referred to
therein.
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6.19 Additional Representations, Warranties and Covenants of the
Shareholders. Promptly after the Merger Effective Time, Parent shall cause to be
mailed to each Existing Company Shareholder whose shares of Company Common Stock
were converted pursuant to Section 1.5 hereof into the right to receive Parent
Common Stock a letter of transmittal ("Letter of Transmittal") in substantially
the form attached hereto as EXHIBIT S which shall contain additional
representations, warranties and covenants of such shareholder, including without
limitation, that (i) such shareholder has full right, power and authority to
deliver such Company Common Stock and Letter of Transmittal, (ii) the delivery
of such Company Common Stock will not violate or be in conflict with, result in
a breach of or constitute a default under, any indenture, loan or credit
agreement, deed of trust, mortgage, security agreement or other agreement or
instrument to which such shareholder is bound or affected, (iii) such
shareholder has good, valid and marketable title to all shares of Company Common
Stock indicated in such Letter of Transmittal and that such shareholder is not
affected by any voting trust, agreement or arrangement affecting the voting
rights of such Company Common Stock, (iv) such shareholder is an "accredited
investor," as such term is defined in Regulation D under the Securities Act, and
is acquiring Parent Common Stock for investment purposes and not with a view to
selling or otherwise distributing such Parent Common Stock in violation of the
Securities Act or the securities laws of any state, (v) such shareholder has had
an opportunity to ask and receive answers to any questions such shareholder may
have had concerning the terms and conditions of the Merger and the Parent Common
Stock and has obtained any additional information that such shareholder has
requested and (vi) such shareholder acknowledges that the stock certificates
evidencing the shares of Parent Common Stock to be issued to such shareholder
shall bear a restrictive legend customarily used in connection with restricted
securities within the meaning of Rule 144 under the Securities Act. Delivery
shall be effected, and risk of loss and title to the Parent Common Stock shall
pass, only upon delivery to the Parent (or an agent of the Parent) of (x)
certificates acceptable to Parent and its transfer agent evidencing ownership
thereof as contemplated by Section 1.6 hereof (or affidavit of lost certificate
acceptable to Parent and its transfer agent), and (y) the Letter of Transmittal
containing the representations, warranties and covenants contemplated by this
Section 6.19.
6.20 Novation of Engagement Agreement. As of the Merger Effective
Time, a novation agreement in form and substance acceptable to the Company shall
have been executed and delivered by Parent and each of the investment bankers
party to that certain Engagement Letter with the Company dated June 15, 2004 in
accordance with the terms of Section 1(a) of the Placement Agency Agreement (the
"Investment Banking Engagement Novation Agreement").
6.21 Termination of Stock Plan. Parent shall take all necessary
action by its Board of Directors and stockholders to terminate its existing
stock option plan effective as of the Merger Effective Time. Parent shall not
authorize or issue any stock options under such stock option plan.
6.22 Parent Common Stock and Net Worth Adjustments.
(a) Prior to the Merger Effective Time, Parent shall take the
necessary steps, either through a stock split, reverse stock split, stock
repurchase or redemption, or stock dividend or issuance (the "Stock Adjustment
Steps"), to ensure that there shall be only 1,653,138 shares of Parent Common
Stock that are issued and outstanding as of the Merger Effective Time not
including (i) the shares of Parent Common Stock to be issued in the Private
Placement Offering and (ii) the shares of Parent Common Stock owned by Allison
to be redeemed pursuant to the consummation of the Split-Off. Parent shall
ensure that none of the Stock Adjustment Steps cause any adverse tax
consequences to Parent. Before effecting any Stock Adjustment Step, Parent shall
obtain the approval thereof by the Company, which approval shall not be
unreasonably withheld or delayed.
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(b) Prior to the Merger Effective Time, Parent shall take the
necessary steps, either through debt forgiveness from creditors, additional
capital contributions or stock sales (the "Net Worth Adjustment Steps"), to
ensure that the net worth of Parent immediately following the consummation of
the Split-Off, and the payment of all costs, expenses and fees incurred by
Parent and Parent Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement, the Private Placement Offering and
the Split-Off, but without taking into account the assets or liabilities of the
Company and the net proceeds from the Private Placement Offering, is not less
than zero. Parent shall ensure that none of the Net Worth Adjustment Steps cause
any adverse tax consequences to Parent. Before effecting any Net Worth
Adjustment Step, Parent shall obtain the approval thereof by the Company, which
approval shall not be unreasonably withheld or delayed.
6.23 Company Delivery of Documents. At the time of signing this
Agreement, the Company has not yet made available to Parent copies of some of
the documents listed in the Schedules. Such missing documents are listed in
SCHEDULE 6.23. As soon as practicable after the signing of this Agreement, the
Company shall make available to Parent copies of such missing documents.
6.24 Assumption of Company Commitment to Issue Parent Warrants. The
Company has previously committed to purchasers in its private placement of
Company Common Stock that was completed in July 2004 (the "Prior Private
Purchasers") to issue Parent Warrants to the Prior Private Purchasers on the
same basis as in the Private Placement Offering, if the Private Placement
Offering is closed. Following the Closing, Parent shall cause to be issued
Parent Warrants to purchase an aggregate of 711,049 shares of Parent Common
Stock to the Prior Private Purchasers on the basis of a Parent Warrant to
purchase one share of Parent Common Stock for every two shares of Company Common
Stock purchased by each Prior Private Purchaser in the private placement
completed in July 2004.
7. Conditions of Parties' Obligations.
7.1 Conditions Precedent to Each Party's Obligation to Effect the
Merger. The respective obligations of each Party to effect the Merger shall be
subject to the fulfillment or satisfaction, prior to or on the Closing Date, of
the following conditions:
(a) The Merger shall have been duly approved by the requisite
vote of the outstanding shares of Company Common Stock entitled to vote thereon
in accordance with the FBCA.
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(b) The Split-Off and the Amendment and Restatement of Parent
Corporate Charter shall have been duly approved by the requisite vote of the
outstanding shares of Parent Common Stock entitled to vote thereon in accordance
with the DGCL.
(c) Except for the filing of the Articles of Merger, all
authorizations, consents, orders, declarations or approvals of, or filings with,
or terminations or expirations of waiting periods imposed by, any governmental
or regulatory authority, domestic or foreign, which the failure to obtain, make
or occur would have the effect of making the Merger or any of the transactions
contemplated hereby illegal or would have a Material Adverse Effect on Parent or
the Company (as Surviving Corporation), assuming the Merger had taken place,
shall have been obtained, made or occurred.
(d) Parent shall have consummated the Private Placement
Offering, and shall have raised in the Private Placement Offering gross proceeds
of at least $25,000,000, excluding an anticipated investment of $1,225,000 by
Emalfarb through an exchange and cancellation of existing debt owed to Emalfarb
by the Company, unless the Company agrees in its sole discretion that a lesser
amount of gross proceeds can be raised in the Private Placement Offering but in
no event less than $20,000,000, excluding such anticipated investment by
Emalfarb, all without waiver of or modification from any of the material terms
or conditions of the Offering Subscription Agreements, unless such changes have
been previously agreed to in writing by the Company. The Company shall have the
right to accept or reject any of the Offering Subscription Agreements, in its
discretion.
(e) Each of the transactions contemplated by the Split-Off
Agreement shall have been consummated in accordance with the terms thereof.
7.2 Conditions Precedent to Obligations of Parent. Parent's
obligation to effect the Merger and consummate the other transactions
contemplated to occur in connection with the Closing and thereafter is subject
to the satisfaction of each condition precedent listed below:
(a) Each representation and warranty set forth in Section 2
shall have been accurate and complete in all material respects on and as of the
Closing Date, as if made on the Closing Date, after giving full effect to any
supplements to the schedules as amended from time to time so long as such
modification does not constitute a Material Adverse Effect on the Company.
Parent and Acquisition shall have received a certificate dated the Closing Date
and signed by the chief executive officer of the Company substantially in the
form attached hereto as EXHIBIT T certifying that the conditions specified in
Section 7.2(a) and 7.2(b) have been satisfied.
(b) The Company shall have performed and complied in all
material respects with its covenants to be performed or complied with at or
prior to Closing
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(c) Since the date hereof, there has been no event, series of
events or the lack of occurrence thereof that, singularly or in the aggregate,
could reasonable be expected to have a Material Adverse Effect on the Company.
(d) No action is pending or threatened by or before any
governmental body, arbitrator, or mediator that seeks to restrain, prohibit,
invalidate, or collect any substantial damages arising out of the transactions
contemplated by this Agreement.
(e) Counsel for the Company shall have delivered to Parent and
Acquisition their legal opinions, substantially in the respective forms attached
hereto as EXHIBIT U and EXHIBIT V.
(f) Parent and Acquisition shall have received the following:
(i) Copies of resolutions of the Board of Directors and
the shareholders of the Company, certified by the Secretary of the Company,
authorizing and approving the execution, delivery and performance of the Merger
Documentation and all other documents and instruments to be delivered pursuant
hereto and thereto.
(ii) A certificate of incumbency executed by the
Secretary of the Company certifying the names, titles and signatures of the
officers authorized to execute any documents referred to in this Agreement and
further certifying the copies of the Articles of Incorporation and By-laws of
the Company delivered to Parent and Acquisition at the time of the execution of
this Agreement and that such documents have not been amended or modified.
(iii) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as Parent and
Acquisition may reasonably request.
(g) All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and, where such instruments
are not exhibits to this Agreement, all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any such transactions,
shall be satisfactory in form and substance to Parent and Acquisition The
Company shall furnish to Parent and Acquisition such supporting documentation
and evidence of the satisfaction of any or all of the conditions precedent
specified in this Section 7.2 as Parent or its counsel may reasonably request.
7.3 Conditions Precedent to Obligation of the Company. The Company's
obligations to effect the Merger and consummate the other transactions
contemplated to occur in connection with the Closing and thereafter is subject
to the satisfaction of each condition previously listed below:
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(a) Each representation and warranty set forth in Section 3
shall have been accurate and complete in all material respects on and as of the
Closing Date, as if made on the Closing Date, after giving full effect to any
supplements to the schedules as amended from time to time so long as such
modification does not constitute a Material Adverse Effect on Parent. The
Company shall have received certificates dated the Closing Date and signed by
the chief executive officer of Parent, substantially in the form attached hereto
as EXHIBIT W, certifying that the conditions set forth in Section 7.3(a) and
7.3(b) have been satisfied, and that the net worth of Parent immediately
following the consummation of the Split-Off, and the payment of all costs,
expenses and fees incurred by Parent and Parent Subsidiaries in connection with
the consummation of the transactions contemplated by this Agreement, the Private
Placement Offering and the Split-Off, but without taking into account the assets
or liabilities of the Company and the net proceeds from the Private Placement
Offering, is not less than zero. The Company shall have received a certificate
dated the Closing Date and signed by the chief executive officer of each of
Parent and CCP substantially in the form attached hereto as EXHIBIT X certifying
that each representation and warranty made by each of Parent and CCP in the
Split-Off Agreement, and by Parent in the Placement Agency Agreement, shall have
been accurate and complete in all material respects as of the Closing Date, as
if made on the Closing Date, after giving full effect to any supplements to the
schedules to the Split-Off Agreement, and/or the Placement Agency Agreement, as
the case may be, as amended from time to time so long as such modification does
not constitute a Material Adverse Effect on Parent, and that each of Parent and
CCP have performed and complied in all material respects with their respective
covenants and obligations required by the Split-Off Agreement and/or the
Placement Agency Agreement, as the case may be, to be complied with or performed
at or prior to the closing of the Split-Off and/or the Private Placement
Offering.
(b) Parent shall have performed and complied in all material
respect with its covenants and obligations required by this Agreement to be
performed or complied with at or prior to the Closing.
(c) Since the date hereof, there has been no event, series of
events or the lack of occurrence thereof that, singularly or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on Parent.
(d) Each of the directors of Parent shall have delivered to
Parent and the Company an executed resignation letter substantially in the form
of EXHIBIT Y with an effective date and time agreed upon by the Company. Each of
the officers of Parent shall have delivered to Parent and the Company an
executed resignation letter substantially in the form of EXHIBIT Z with an
effective date and time agreed upon by the Company.
(e) By its execution of the Novation Agreements referred to in
Section 1.5, Parent's assumption of (i) the Company's Restricted Stock
Agreements, (ii) the Company Option Plan and the Company Options issued and
outstanding, (iii) the Company Warrants and (iv) the Company Convertible
Securities, shall have been authorized by the unanimously adopted separate
resolution of Parent's board of directors, which resolution shall be
satisfactory in form and substance to the Company's counsel, provided that a
copy of such resolution, as adopted, shall be delivered to the Company,
certified by the Secretary of Parent
47
(f) Counsel for Parent and Acquisition shall have delivered to
the Company and the Company's shareholders its legal opinion, substantially in
the form attached hereto as EXHIBIT AA.
(g) Parent shall have delivered to the Company an appraisal of
the current fair market value of the outstanding shares of CCP owned by Parent
prepared by an appraiser that was approved in advance by the Company.
(h) No action is pending or threatened by or before any
governmental body, arbitrator, or mediator that seeks to restrain, prohibit,
invalidate, or collect any substantial damages arising out of the transactions
contemplated by this Agreement, including the Merger and the Split-Off.
(i) The Company shall have received the following:
(i) Copies of resolutions of Parent's, Acquisition's and
CCP's respective board of directors and shareholders, certified by their
respective Secretaries, authorizing and approving, to the extent applicable, the
execution, delivery and performance of this Agreement, the Articles of Merger,
the amendment and restatement of the Certificate of Incorporation and By-Laws of
Parent, in the case of Parent and Acquisition, respectively, and the Split-Off
and the Split-Off Agreement, in the case of Parent and CCP, and all other
documents and instruments to be delivered by them pursuant hereto and thereto,
respectively.
(ii) A certificate of incumbency executed by the
respective Secretaries of Parent, Acquisition and CCP certifying the names,
titles and signatures of the officers authorized to execute the documents
referred to in paragraph (i) above and further certifying that the Amended and
Restated Certificate of Incorporation and the Amended and Restated By-Laws of
Parent adopted in accordance with the provisions of Section 6.16 hereof, and the
articles of incorporation and by-laws of Acquisition heretofore furnished by
Parent to the Company, have not been amended or modified.
(iii) Copies of resolutions of CCP's board of directors
and the sole shareholder of CCP, certified by its Secretary, authorizing and
approving, to the extent applicable, the execution, delivery and performance of
the Split-Off Agreement, the Split-Off Documentation, and all other documents
and instruments to be delivered by CCP pursuant hereto and thereto.
(iv) A certificate of incumbency executed by the
Secretary of CCP certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in paragraph (iii) above and
further certifying that the certificate of incorporation and by-laws of CCP
appended thereto have not been amended or modified.
(v) A certificate of Parent's transfer agent and
registrar, certifying as of the Business Day prior to the Closing Date, a true
and complete list of the names and addresses of the record owners of all of the
outstanding shares of Parent Company Common Stock, together with the number of
shares of Parent Common Stock held by each record owner.
48
(vi) A certificate of Parent's transfer agent and
registrar certifying as of the Closing Date that there are 1,653,138 shares of
Parent Common Stock issued and outstanding not including (i) the shares of
Parent Common Stock to be issued in the Private Placement Offering and (ii) the
shares of Parent Common Stock owned by Allison to be redeemed pursuant to the
consummation of the Split-Off.
(vii) Sherb & Co., LLP shall have agreed in writing, in
form and substance reasonably satisfactory to the Company, to resign as
independent public accountant of Parent, and Sherb & Co., LLP and Rogoff & Co.,
P.C. shall each have agreed in writing, in form and substance reasonably
satisfactory to the Company, to cooperate with Parent in providing to Parent
from time to time as requested after the Merger Effective Time consents,
financial statements, documents and other information with respect to the Parent
financial statements that have been audited by such respective audit firms.
(viii) Written evidence satisfactory to the Company of
completion of the Stock Adjustment Steps and the Net Worth Adjustment Steps and
that all of the Stock Adjustment Steps and Net Worth Adjustment Steps have been
duly authorized by all necessary corporate actions on the part of Parent.
(ix) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the Company
may reasonably request, including but not limited to such certified copies of
the corporate governance instruments of Parent and each Parent Subsidiary, and
good standing certificates from each jurisdiction in which Parent and each
Parent Subsidiary is qualified to do business.
(j) All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and, where such instruments
are not exhibits to this Agreement, all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any such transactions
shall be satisfactory in form and substance to the Company. Parent and
Acquisition shall furnish to the Company such supporting documentation and
evidence of satisfaction of any or all of the conditions specified in this
Section 7.3 as the Company may reasonably request.
(k) Tompkins shall have delivered to the Company at the
Closing $100,000 in immediately available funds in accordance with the terms of
the Tompkins Side Letter Agreement.
The Company may waive compliance with any of the conditions
precedent specified in this Section 7.3.
49
7.4 Frustration of Closing Conditions. None of the Company, Parent
or Acquisition may rely on the failure of any condition set forth in Sections
7.1, 7.2, or 7.3, as the case may be, to be satisfied if such failure was caused
by such party's failure to use reasonable efforts to consummate the Merger and
the other transactions contemplated by this Agreement, as required by and
subject to Section 6.2.
8. Non-Survival of Representations and Warranties. The representations and
warranties of the parties made in Sections 2 and 3 of this Agreement (including
the Schedules to the Agreement, which are hereby incorporated by reference) or
in any instrument delivered pursuant to this Agreement shall not survive beyond
the Merger Effective Time, except that for purposes of the Tompkins
Indemnification Agreement and the Split-Off Agreement, such representations and
warranties shall survive the Merger Effective Time for a period of one (1) year.
This Section 8 shall not limit any claim for fraud or for breach of any covenant
or agreement of the parties.
9. Amendment of Agreement. This Agreement and the Articles of Merger may
be amended or modified at any time in all respects by an instrument in writing
executed (i) in the case of this Agreement by the parties hereto and (ii) in the
case of the Articles of Merger by the parties thereto.
10. Definitions. Unless the context otherwise requires, the terms defined
in this Section 10 shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms herein defined.
"Acquisition" means CCP Acquisition Corp., a Delaware corporation.
"Acquisition Board" means the Board of Directors of Acquisition.
"Affiliate" shall mean any Person that directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person.
"Agreement" shall mean this Agreement.
"Agreement Form 8-K" shall have the meaning assigned to it in
Section 6.7 of this Agreement.
"Allison" shall mean David R. Allison.
"Allison Voting Agreement" shall have the meaning assigned it in
Section 3.2(d) hereof.
"Amended and Restated By-Laws" shall have the meaning assigned that
term in Section 6.16 hereof.
"Amended and Restated Certificate of Incorporation" shall have the
meaning assigned that term in Section 6.16 hereof.
50
"Articles of Merger" shall have the meaning assigned to it in the
second recital of this Agreement.
"Business Day" means any day, other than a Saturday or Sunday, on
which the national banks in New York, New York as a general matter are open for
business for substantially all of their banking functions.
"CCP" means Custom Craft Packaging, Inc., a North Carolina
corporation, and a wholly owned Subsidiary of Parent.
"CCP Board" means the Board of Directors of CCP.
"Closing" and "Closing Date" shall have the meanings assigned to
such terms in Section 11 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Company" shall mean Dyadic International, Inc., a Florida
corporation. Unless the context otherwise requires, all references to the
"Company" shall be treated as being a reference to the Company and the Company
Subsidiaries take together as one enterprise. For purposes of illustration only,
a reference to the agreements of the Company shall include the agreements of
each Company Subsidiary.
"Company Balance Sheet" and "Company Balance Sheet Date" shall have
the meanings assigned to such terms in Section 2.10 hereof.
"Company Board" means the Board of Directors of the Company.
"Company Common Stock" shall mean the common stock of the Company,
no par value per share.
"Company Convertible Security" shall have the meaning assigned to it
in Section 1.5(e) of this Agreement.
"Company Convertible Security Novation Agreement" shall have the
meaning assigned to it in Section 1.5(e) of this Agreement.
"Company Employee Benefit Plans" shall have the meaning assigned to
it in Section 2.17 of this Agreement.
"Company Financial Statements" shall have the meaning set forth in
Section 2.10 of this Agreement.
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"Company Option" shall have the meaning assigned that term in
Section 1.5(c) of this Agreement.
"Company Option Novation Agreement" shall have the meaning assigned
to it in Section 1.5(c) of this Agreement.
"Company Option Plan" shall have the meaning assigned to it in
Section 1.5(c) of this Agreement.
"Company Restricted Stock" shall have the meaning assigned to it in
Section 1.5(b) of this Agreement.
"Company Restricted Stock Agreement" shall have the meaning assigned
to it in Section 1.5(b) of this Agreement.
"Company Restricted Stock Novation Agreement" shall have the meaning
assigned to it in Section 1.5(b) of this Agreement.
"Company Subsidiary" shall have the meaning assigned to it in
Section 2.1 of this Agreement.
"Company Warrant" shall have the meaning assigned to it in Section
1.5(d) of this Agreement.
"Company Warrant Novation Agreement" shall have the meaning assigned
to it in Section 1.5(d) of this Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning assigned that term in
Section 1.8 of this Agreement.
"EDGAR" shall have the meaning assigned to it in Section 3.8(b) of
this Agreement.
"Emalfarb" means Mark A. Emalfarb.
"Emalfarb Voting Agreement" shall have the meaning assigned to it in
Section 2.2(a) hereof.
"Equity Security" shall mean any stock or similar security of an
issuer or any security (whether stock or Indebtedness for Borrowed Money)
convertible, with or without consideration, into any stock or similar security,
or any similar security (whether stock or Indebtedness for Borrowed Money)
carrying any warrant or right to subscribe to or purchase any stock or similar
security of that issuer, or any such warrant or right.
52
"ERISA" shall mean the Employee Retirement Income Securities Act of
1974, as amended.
"Event of Default" shall mean (a) the failure of the Company to pay
any Indebtedness for Borrowed Money, or any interest or premium thereon, within
five (5) days after the same shall become due, whether such Indebtedness shall
become due by scheduled maturity, by required prepayment, by acceleration, by
demand or otherwise, (b) an event of default under any agreement or instrument
evidencing or securing or relating to any such Indebtedness, or (c) the failure
of the Company to perform or observe any material term, covenant, agreement or
condition on its part to be performed or observed under any agreement or
instrument evidencing or securing or relating to any such Indebtedness when such
term, covenant or agreement is required to be performed or observed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning assigned that term in
Section 1.5(b) of this Agreement.
"Existing Company Shareholders" shall have the meaning assigned in
Paragraph B(ii) of the Recitals to this Agreement.
"Expiration Date" shall have the meaning assigned that term in
Section 11.
"FBCA" shall have the meaning assigned that term in Recital E.
"GAAP" shall mean generally accepted accounting principles in the
United States, as in effect from time to time.
"Indebtedness" shall mean any obligation of the Company which under
generally accepted accounting principles is required to be shown on the balance
sheet of the Company as a liability. Any obligation secured by a Lien on, or
payable out of the proceeds of production from, property of the Company shall be
deemed to be Indebtedness even though such obligation is not assumed by the
Company.
"Indebtedness for Borrowed Money" shall mean (a) all Indebtedness in
respect of money borrowed including, without limitation, Indebtedness which
represents the unpaid amount of the purchase price of any property and is
incurred in lieu of borrowing money or using available funds to pay such amounts
and not constituting an account payable or expense accrual incurred or assumed
in the ordinary course of business of the Company, (b) all Indebtedness
evidenced by a promissory note, bond or similar written obligation to pay money,
or (c) all such Indebtedness guaranteed by the Company or for which the Company
is otherwise contingently liable.
53
"Intellectual Property" means the following intellectual property:
(a) (i) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereon, and all patents,
patent applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, divisions, extensions and re-examinations
thereof, (ii) all trademarks, including all goodwill associated therewith, and
all applications, registrations and renewals in connection therewith, (iii) all
copyrights and copyrightable woks and all applications, registrations and
renewals in connection wherewith, (iv) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
methods, schematics, technology, technical data, designs, drawings, flowcharts,
block diagrams, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), and (v) all
software and firmware, in whatever form (including data, databases and related
documentation);
(b) all documents, records and files relating to design, end
user documentation, quality control, sales, marketing or customer support for,
and other tangible embodiments of, all intellectual property described herein;
(c) all proprietary rights and other tangible or intangible
proprietary information and materials; and
(d) all licenses, agreements, and other permissions or rights
in any third party product or any third party intellectual property described in
(a) through (c) above.
that are owned or held by or on behalf of the Company that are being used in the
business as it is currently conducted.
"Investment Banking Engagement Novation Agreement" shall have the
meaning assigned that term in Section 6.20 of this Agreement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"I/P Licenses" shall have the meaning assigned that term in Section
2.16(a) of this Agreement.
"Letter of Transmittal" shall have the meaning assigned to it in
Section 6.19 of this Agreement.
"License-In" has the meaning assigned that term in Section 2.16(a)
of this Agreement.
"License-Out" has the meaning assigned that term in Section 2.16(a)
of this Agreement.
54
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by statute or other law.
"Material Adverse Effect" means (unless otherwise specified), as to
a party, any condition or event that may (i) have a material adverse effect on
the assets, business, financial condition, operations of such party or parties
taken as a whole, (ii) materially impair the ability of such party to perform
its obligations under this Agreement or (iii) prevent or delay beyond the
Expiration Date the consummation of the transactions contemplated under this
Agreement.
"Merger" shall have the meaning assigned to it in Section 1.1 of
this Agreement.
"Merger Consideration Shares" means those shares of Parent Common
Stock that are issued to the Existing Company Shareholders upon the Merger
pursuant to Section 1.5 of this Agreement.
"Merger Documentation" or "Merger Documents" shall have the meaning
assigned to it in Section 2.6 of this Agreement.
"Merger Effective Time" shall have the meaning assigned to it in
Section 1.2 of this Agreement.
"Merger Form 8-K" shall have the meaning assigned to it in Section
6.7 of this Agreement.
"Net Worth Adjustment Steps" shall have the meaning assigned that
term in Section 6.22 of this Agreement.
"New Parent Investors" shall have the meaning assigned that term in
Section 3.2(a) of this Agreement.
"Offering Documentation" and "Offering Documents" shall have the
meaning set forth in Section 3.2 of this Agreement.
"Offering Memorandum" shall have the meaning assigned to it in
Section 6.8 of this Agreement.
"Offering Placement Agency Agreement" shall have the meaning
assigned that term in Section 3.2(a) of this Agreement.
"Offering Subscription Agreement" shall have the meaning assigned
that term in Section 3.2(a) of this Agreement.
55
"Option Plan" means the Dyadic International, Inc. 2001 Equity
Compensation Plan.
"Other Intellectual Property" has the meaning assigned that term in
Section 2.16(c) of this Agreement.
"Parent" shall mean CCP Worldwide Inc., a Delaware corporation.
Unless the context otherwise requires, all references to the "Parent" shall be
treated as being a reference to the Parent and the Parent Subsidiaries taken
together as one enterprise. For purposes of illustration only, a reference to
the agreements of Parent shall include the agreements of each Parent Subsidiary.
"Parent Balance Sheet" and "Parent Balance Sheet Date" shall have
the meanings assigned to such terms in Section 3.14 this Agreement.
"Parent Board" means the Board of Directors of Parent.
"Parent Common Stock" shall have the meaning assigned to it in
Paragraph B(i) of the Recitals to this Agreement.
"Parent Employee Benefit Plan" shall have the meaning assigned to it
in Section 3.19 of this Agreement.
"Parent Financial Statements" shall have the meaning assigned that
term in Section 3.9 of this Agreement.
"Parent Preferred Stock" shall have the meaning assigned that term
in Section 3.3 of this Agreement.
"Parent Registration Effective Date shall have the meaning assigned
to it in Section 3.8 this Agreement.
"Parent SEC Documents" shall have the meaning assigned to it in
Section 3.8(b) this Agreement.
"Parent Subsidiaries" shall have the meaning assigned to it in
Section 3.1 of this Agreement.
"Parent Warrants" shall have the meaning assigned to it in Paragraph
B(i) of the Recitals to this Agreement.
"Permitted Liens" shall mean (a) Liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings; (b) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation, carriers', warehousemen's, mechanics',
laborers' and materialmen's and similar Liens, if the obligations secured by
such Liens are not then delinquent or are being contested in good faith by
appropriate proceedings; and (c) Liens incidental to the conduct of the business
of the Company that were not incurred in connection with the borrowing of money
or the obtaining of advances or credits and which do not in the aggregate
materially detract from the value of its property or materially impair the use
made thereof by the Company in its business.
56
"Person" shall mean all natural persons, corporations, business
trusts, associations, limited liability companies, partnerships, joint ventures
and other entities and governments and agencies and political subdivisions.
"Placement Agency Agreement" shall mean that certain Placement
Agency Agreement dated of even date with this Agreement by and among Parent, the
Company, [language omitted].
"Potential Material Event" shall have the meaning assigned that term
in Section 6.13(b) of this Agreement.
"Preferred Stock" shall mean the preferred stock of the
Company, having no par value per share.
"Prior Private Purchasers" shall have the meaning assigned that term
in Section 6.24 of this Agreement.
"Private Placement Offering" shall have the meaning assigned that
term in Paragraph B(i) of the Recitals to this Agreement.
"Registered Intellectual Property" has the meaning assigned that
term in Section 2.16(a) of this Agreement.
"Registration States" shall have the meaning assigned that term in
Section 3.8 of this Agreement.
"Resale Registration Statement" shall have the meaning assigned that
term in Section 6.13 of this Agreement.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Split-Off" shall have the meaning assigned it in Paragraph B(iii)
of the Recitals to this Agreement..
"Split-Off Agreement" shall have the meaning assigned it in
Paragraph B(iii) of the Recitals to this Agreement.
57
"Split-Off Documentation" and "Split-Off Documents" shall have the
meaning set forth in Section 3.2 of this Agreement.
"Stock Adjustment Steps" shall have the meaning assigned that term
in Section 6.22 of this Agreement.
"Subsidiary" shall mean, as to any Person, any corporation, company,
partnership, organization or other entity in respect of which that Person, at
the date of determination, owns, directly or indirectly, the securities or other
ownership interests which possess a majority of the voting power required for
the election of a majority of the members of the board of directors or other
governing body thereof.
"Surviving Corporation" shall have the meaning assigned to it in
Section 1.1 hereof.
"Tax" or "Taxes" shall mean (a) any and all taxes, assessments,
customs, duties, levies, fees, tariffs, imposts, deficiencies and other
governmental charges of any kind whatsoever (including, but not limited to,
taxes on or with respect to net or gross income, franchise, profits, gross
receipts, capital, sales, use, ad valorem, value added, transfer, real property
transfer, transfer gains, transfer taxes, inventory, capital stock, license,
payroll, employment, social security, unemployment, severance, occupation, real
or personal property, estimated taxes, rent, excise, occupancy, recordation,
bulk transfer, intangibles, alternative minimum, doing business, withholding and
stamp), together with any interest thereon, penalties, fines, damages costs,
fees, additions to tax or additional amounts with respect thereto, imposed by
the United States (federal, state or local) or other applicable jurisdiction;
(b) any liability for the payment of any amounts described in clause (a) as a
result of being a member of an affiliated, consolidated, combined, unitary or
similar group or as a result of transferor or successor liability, including,
without limitation, by reason of Regulation section 1.1502-6; and (c) any
liability for the payments of any amounts as a result of being a party to any
Tax Sharing Agreement or as a result of any express or implied obligation to
indemnify any other Person with respect to the payment of any amounts of the
type described in clause (a) or (b).
"Tax Return" shall include all returns and reports (including
elections, declarations, disclosures, schedules, estimates and information
returns (including Form 1099 and partnership returns filed on Form 1065)
required to be supplied to a Tax authority relating to Taxes.
"Tax Sharing Agreement" has the meaning assigned that term in
Section 2.15 of this Agreement.
"Tompkins" shall have the meaning assigned that term in Section 6.15
of this Agreement.
"Tompkins Indemnification Agreement" shall have the meaning assigned
that term in Section 6.18 of this Agreement.
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"Tompkins Side Letter Agreement" shall mean that certain letter
agreement dated the date of this Agreement by and between the Company and
Tompkins pertaining to the payment to Parent the sum of $100,000 as inducement
consideration to the Company to execute and deliver this Agreement.
"Transaction Form 8-Ks" shall have the meaning assigned to it in
Section 6.7 this Agreement.
11. Closing. The closing of the Merger (the "Closing") shall occur
contemporaneously with the closing of the Private Placement Offering at the
offices of Jenkens Gilchrist Parker Chapin in New York City on a date mutually
agreeable to the parties hereto (the "Closing Date") on or before November 5,
2004 (the "Expiration Date"). At the Closing, Parent shall present for delivery
to the Company on behalf of each Existing Company Shareholder the certificates
representing the Parent Common Stock to be issued pursuant to the provisions of
Section 1.5(b) hereof. Such presentment for delivery shall be against delivery
to Parent and Acquisition of the certificates, opinions, agreements and other
instruments referred to in Section 7 hereof. All of the other documents,
instruments, certificates and agreements referenced in Section 7 will also be
executed and delivered as described therein. At the Merger Effective Time, all
actions to be taken at the Closing shall be deemed to be taken simultaneously.
12. Termination Prior to Closing.
12.1 Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing:
(a) By the mutual written consent of the Company, Acquisition
and Parent;
(b) By the Company, if (i) Parent or Acquisition (x) fails to
perform in any material respect any of its agreements contained herein required
to be performed by it on or prior to the Closing Date, or (y) materially
breaches any of its representations, warranties or covenants contained herein,
which failure or breach is not cured within ten (10) days after the Company has
notified Parent and Acquisition of its intent to terminate this Agreement
pursuant to this paragraph (b), or (ii) if (i) Parent or CCP (x) fails to
perform in any material respect any of its agreements contained in the Split-Off
Agreement required to be performed by it on or prior to the Closing Date, or (y)
materially breaches any of its representations, warranties or covenants
contained in the Split-Off Agreement, which failure or breach is not cured
within ten (10) days after the Company has notified Parent and Acquisition of
its intent to terminate this Agreement pursuant to this paragraph (b);
(c) By Parent and Acquisition, if the Company (i) fails to
perform in any material respect any of its agreements contained herein required
to be performed by it on or prior to the Closing Date, (ii) materially breach
any of its representations, warranties or covenants contained herein, which
failure or breach is not cured within ten (10) days after Parent or Acquisition
has notified the Company of its intent to terminate this Agreement pursuant to
this paragraph (c);
59
(d) By either the Company, on the one hand, or Parent and
Acquisition, on the other hand, if there shall be any order, writ, injunction or
decree of any court or governmental or regulatory agency binding on Parent,
Acquisition or the Company, that prohibits or materially restrains any of them
from consummating the transactions contemplated hereby, provided that the
parties hereto shall have used their reasonable efforts to have any such order,
writ, injunction or decree lifted and the same shall not have been lifted within
ninety (90) days after entry, by any such court or governmental or regulatory
agency; or
(e) By either the Company, on the one hand, or Parent and
Acquisition, on the other hand, if the Closing has not occurred on or prior to
November 5, 2004, for any reason other than delay or nonperformance of the party
seeking such termination.
12.2 Termination of Obligations. Termination of this Agreement
pursuant to this Section 12 shall terminate all obligations of the parties
hereunder, except for the obligations under Sections 6.1, 6.3 and 6.12, and
Section 13; provided, however, that termination pursuant to paragraphs (b) or
(c) of Section 12.1 shall not relieve the defaulting or breaching party or
parties from any liability to the other parties hereto.
13. Miscellaneous.
13.1 Notices. Any notice, request or other communication hereunder
shall be given in writing and shall be delivered personally or mailed, certified
or registered mail, return receipt requested, or delivered by overnight courier
service, to the following addresses, or such other addresses as shall be given
by notice delivered hereunder, and shall be deemed to have been given upon
delivery, if delivered personally, four (4) days after mailing, if mailed, or
one (1) Business Day after timely delivery to the overnight courier service, if
delivered by overnight courier service:
If to Parent or Acquisition:
CCP Worldwide, Inc.
6040A Six Forks Road
Suite 179
Raleigh, North Carolina 27609
With a copy to (which shall not constitute notice):
Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor
New York, New York 10022
Attention: Adam S. Gottbetter, Esq.
60
If to the Company:
Dyadic International, Inc.
140 Intracoastal Pointe Dr.
Suite 404
Jupiter, Florida 33477-5094
Attention: Mr. Mark Emalfarb, CEO
With a copy to (which shall not constitute notice):
Jenkens & Gilchrist, PC
225 West Washington, Suite 2600
Chicago, Illinois 60606
Attention: Robert I. Schwimmer, Esq.
Notices shall be deemed received at the earlier of actual receipt or
three (3) Business Days following mailing. Counsel for a party (or any
authorized representative) shall have authority to accept delivery of any notice
on behalf of such party.
13.2 Entire Agreement. This Agreement, including the schedules and
exhibits attached hereto and other documents referred to herein, contains the
entire understanding of the parties hereto with respect to the subject matter
hereof. This Agreement supersedes all prior oral or written agreements and
undertakings between the parties with respect to such subject matter, including,
but not limited to that certain letter agreement between IVC Group and the
Company dated June 22, 2004, except that Sections D, M, N, P, Q, R, T, U, V and
W of such letter agreement shall survive the execution of this Agreement and
continue in full force and effect.
13.3 Expenses. Subject to Section 12.2 hereof, each party shall bear
and pay all of the legal, accounting and other expenses incurred by it in
connection with the transactions contemplated by this Agreement.
13.4 Time. Time is of the essence in the performance of the parties'
respective obligations herein contained.
13.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.6 Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and heirs; provided, however, that the neither the Company
nor Parent and Acquisition shall directly or indirectly transfer or assign any
of its rights hereunder in whole or in part without the written consent of the
Company (in the case of Parent and Acquisition) or Parent (in the case of the
Company), which written shall not be unreasonably withheld or delayed, and any
such transfer or assignment without said written consent shall be void.
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13.7 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and benefit of the parties hereto, their
successors, assigns and heirs, and no other Person shall have any right or
action under this Agreement, except that the covenants set forth in Section 6.13
hereof are for the express benefit of the holders of the Company Common Stock
and the holders of Company Options, Company Warrants, and Company Convertible
Securities.
13.8 Counterparts. This Agreement may be executed in one or more
counterparts, with the same effect as if all parties had signed the same
document. Each such counterpart shall be an original, but all such counterparts
together shall constitute a single agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page was an original thereof.
13.9 Recitals, Schedules and Exhibits. The Recitals, Schedules and
Exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth herein.
13.10 Section Headings and Gender. The Section headings used herein
are inserted for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. All personal pronouns used in this
Agreement shall include the other genders, whether used in the masculine,
feminine or neuter gender, and the singular shall include the plural, and vice
versa, whenever and as often as may be appropriate.
13.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts or choice of laws thereof.
13.12 Specific Performance; Remedies. Each of Parent and the Company
acknowledges and agrees that the other party would be damaged irreparably if any
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. Accordingly, each of Parent and the Company
agrees that the other party will be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its terms and provisions in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, subject to Section 13.11, in
addition to any other remedy to which they may be entitled, at law or in equity.
Except as expressly provided herein, the rights, obligations and remedies
created by this Agreement are cumulative and in addition to any other rights,
obligations or remedies otherwise available at law or in equity, and nothing
herein will be considered an election of remedies.
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13.13 Submission to Jurisdiction; Process Agent; No Jury Trial.
(a) Each of Parent and the Company hereby submits to the
jurisdiction of any state or federal court sitting in the Palm Beach County,
Florida, in any action arising out of or relating to this Agreement and agrees
that all claims in respect of the action may be heard and determined in any such
court. Each of Parent and the Company also agrees not to bring any action
arising out of or relating to this Agreement in any other court. Each of Parent
and the Company agrees that a final judgment in any action so brought will be
conclusive and may be enforced by action on the judgment or in any other manner
provided at law or in equity. Each of Parent and the Company waives any defense
of inconvenient forum to the maintenance of any action so brought and waives any
bond, surety, or other security that might be required of any other Party with
respect thereto.
(b) EACH OF PARENT AND THE COMPANY HEREBY AGREES TO WAIVE ITS
RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY
DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope
of this waiver is intended to be all encompassing of any and all actions that
may be filed in any court and that relate to the subject matter of the
transactions, including, contract claims, tort claims, breach of duty claims,
and all other common Law and statutory claims. Each of Parent and the Company
hereby acknowledges that this waiver is a material inducement to enter into a
business relationship and that they will continue to rely on the waiver in their
related future dealings. Each of Parent and the Company further represents and
warrants that it has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND
THE WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In
the event of commencement of any action, this Agreement may be filed as a
written consent to trial by a court.
13.14 Amendment. This Agreement may be amended by action taken by or
on behalf of the respective Boards of Directors of Parent, Acquisition and the
Company at any time prior to the Effective Time, provided that notwithstanding
the foregoing, after the Existing Company Shareholders approve and adopt this
Agreement and the Merger, no amendment to this Agreement may be made that would
reduce the amount of or change the Merger Share Consideration or otherwise would
require the Existing Company Shareholders to approve such amendment under the
FBCA, unless the Existing Company Shareholders approve such amendment in
accordance with the FBCA. Amendments to this Agreement must be in writing and
signed the Parties.
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13.15 Electronic Signatures.
(a) Notwithstanding the Electronic Signatures in Global and
National Commerce Act (15 U.S.C. Sec. 7001 et. seq.), the Uniform Electronic
Transactions Act, or any other law relating to or enabling the creation,
execution, delivery, or recordation of any contract or signature by electronic
means, and notwithstanding any course of conduct engaged in by the Company and
Parent, neither the Company, Parent or Acquisition will be deemed to have
executed a transaction document or other document contemplated thereby
(including any amendment or other change thereto) unless and until such party
shall have executed such transaction document or other document on paper by a
handwritten original signature or any other symbol executed or adopted by that
party with the current intention to authenticate such transaction document or
such other document contemplated.
(b) Delivery of a copy of a transaction document or such other
document bearing an original signature by facsimile transmission (whether
directly from one facsimile device to another by means of a dial-up connection
or whether mediated by the worldwide web), by electronic mail in "portable
document format" (".PDF") form, or by any other electronic means intended to
preserve the original graphic and pictorial appearance of a document, will have
the same effect as physical delivery of the paper document bearing the original
signature. "Originally signed" or "original signature" means or refers to a
signature that has not been mechanically or electronically reproduced.
13.16 Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof will arise
favoring or disfavoring any Party because of the authorship of any provision of
this Agreement. Any reference to any federal, state, local, or foreign law will
be deemed also to refer to law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The words
"include," "includes," and "including" will be deemed to be followed by "without
limitation." Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will be
construed to include the plural and vice versa, unless the context otherwise
requires. The words "this Agreement," "herein," "hereof," "hereby," "hereunder,"
and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The parties hereto intend
that each representation, warranty, and covenant contained herein will have
independent significance. If any party hereto has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which that party has
not breached will not detract from or mitigate the fact that such party is in
breach of the first representation, warranty, or covenant.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be binding and effective as of the day and year first above written.
PARENT:
CCP WORLDWIDE, INC.
By: /s/David R. Allison
----------------------------------------
Name: David R. Allison
Title: President and CEO
ACQUISITION CORP.:
CCP ACQUISITION CORP.
By: /s/ David R. Allison
---------------------------------------
Name: David R. Allison
Title: President and CEO
THE COMPANY:
DYADIC INTERNATIONAL, INC.
By: /s/Mark Emalfarb
----------------------------------------
Name: Mark Emalfarb
Title: President
65