AGREEMENT AND PLAN OF
MERGER
BY AND BETWEEN
SKYWIDE CAPITAL MANAGEMENT
LIMITED
AND
SINOENERGY
CORPORATION
DATED AS OF OCTOBER 12,
2009
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ARTICLE
I
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1
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Certain Defined
Terms
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1
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Other Defined
Terms
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6
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6
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Effective Time of the
Merger
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6
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Closing
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7
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Effects of the
Merger
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7
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Directors and
Officers
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7
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ARTICLE III CONVERSION OF
SECURITIES
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7
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Conversion of Capital
Stock
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7
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Exchange of Certificates, Company
Stock Options and Company Stock Purchase Warrants
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8
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ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
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10
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Organization, Standing and Power;
Subsidiaries.
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10
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Capitalization.
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11
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Authority; No Conflict; Required
Filings and Consents.
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13
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SEC Filings; Financial
Statements; Reporting Requirements.
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14
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No Undisclosed Liabilities;
Indebtedness
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16
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Absence of Certain Changes or
Events
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17
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Taxes
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17
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Owned and Occupied Real
Properties
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17
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Intellectual
Property
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17
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Agreements, Contracts and
Commitments; Government Contracts.
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17
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Litigation; Product Liability;
Product Recalls
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18
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Environmental
Matters
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18
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Employee Benefit
Plans
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18
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Compliance With
Laws
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18
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Labor Matters
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18
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Opinions of Financial
Advisors
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18
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Insurance
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18
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Brokers
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18
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Certain Approvals
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19
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Unlawful Payments
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19
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Affiliate
Transactions
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19
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Guaranteed Senior
Notes
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19
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No Other Representations or
Warranties.
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19
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ARTICLE
V REPRESENTATIONS AND WARRANTIES OF THE
BUYER
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20
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Organization, Standing and
Power
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20
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Authority; No Conflict; Required
Filings and Consents.
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20
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Information
Provided
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21
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Financing
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21
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Brokers
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21
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Shares
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21
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ARTICLE
VI CONDUCT OF BUSINESS
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22
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Covenants of the
Company
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22
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ARTICLE VII
ADDITIONAL AGREEMENTS
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24
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No Solicitation.
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24
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Proxy Statement.
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26
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Nasdaq Quotation
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27
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Access to
Information
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27
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Shareholders
Meeting
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27
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Cooperation; Further
Action.
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28
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Public Disclosure
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29
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Company Stock
Plans.
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29
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Shareholder
Litigation
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29
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Notification of Certain
Matters
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30
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Directors’ and
Officers’ Indemnification and Insurance.
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30
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Loans to Company Employees,
Officers and Directors
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31
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Takeover Statutes and
Laws
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31
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Standstill Agreements;
Confidentiality Agreements
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32
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ARTICLE VIII CONDITIONS TO
MERGER
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32
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Conditions to Each Party’s
Obligation To Effect the Merger
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32
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Additional Conditions to
Obligations of the Buyer
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32
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Additional Conditions to
Obligations of the Company
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34
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ARTICLE
IX TERMINATION AND AMENDMENT
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35
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9.1
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Termination
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35
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9.2
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Effect of
Termination
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36
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9.3
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Fees and Expenses
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36
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ARTICLE X
MISCELLANEOUS
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38
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10.1
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Amendment
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38
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10.2
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Extension; Waiver
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38
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10.3
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Non−Survival of
Representations, Warranties and Agreements
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38
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10.4
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Notices
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38
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10.5
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Entire Agreement
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39
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10.6
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No Third Party
Beneficiaries
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39
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10.7
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Assignment
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40
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10.8
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Severability
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40
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10.9
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Counterparts and
Signature
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40
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10.1
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Interpretation
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40
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10.11
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Governing Law
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41
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10.12
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Remedies
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41
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10.13
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Submission to
Jurisdiction
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41
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10.14
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Waiver Of Jury
Trial
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41
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AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF MERGER
(this “ Agreement ”), dated as of October 12,
2009, is by and between Skywide Capital Management Limited, a
company incorporated with limited liability under the laws of the
British Virgin Islands (the “ Buyer ”) and
Sinoenergy Corporation, a corporation organized under the laws of
the state of Nevada (the “ Company
”).
WHEREAS, the Board of Directors and
members of Buyer and the Board of Directors of the Company deem it
advisable and in the best interests of each Party and their
respective members and shareholders that the Buyer acquire the
Company in order to advance the long-term business interests of the
Buyer and the Company;
WHEREAS, the acquisition of the
Company shall be effected through a merger (the “
Merger ”) of the Company with and into the Buyer in
accordance with the terms of this Agreement and the NGCL and the
BVIBCA.
NOW, THEREFORE, in consideration of
the foregoing and the respective representations, warranties,
covenants and agreements set forth below, the Buyer and the Company
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined
Terms . As used in this Agreement, the following
terms have the meanings ascribed thereto in this
Article:
Action means any claim, action, suit, arbitration,
mediation, inquiry, proceeding or investigation by or before any
Governmental Entity, arbitrator or mediator.
Affiliate when used with respect to any party shall mean
any person who is an “affiliate” of that party within
the meaning of Rule 405 promulgated under the Securities Act;
provided , that for purposes of this Agreement, Buyer shall
not be deemed an Affiliate of the Company and the Company shall not
be deemed an Affiliate of Buyer.
Agreement has the meaning attributed thereto in the
Preamble.
Business Day
means any day that is not a
Saturday, a Sunday or other day on which banks are required or
authorized by Law to be closed in The City of New York.
Buyer has the meaning attributed thereto in the
Preamble.
Buyer Material Adverse
Effect means
any material adverse change, event, circumstance or development
with respect to, or any material adverse effect on, (i) the
business, assets, liabilities, capitalization, prospects, condition
(financial or otherwise), or results of operations of the Buyer and
its Subsidiaries, taken as a whole or (ii) the ability of the Buyer
to consummate the transactions contemplated by this
Agreement. For the avoidance of doubt, the parties agree
that the terms “material”, “materially” or
“materiality” as used in this Agreement with an initial
lower case “m” shall have their respective customary
and ordinary meanings, without regard to the meanings ascribed to
Buyer Material Adverse Effect or Company Material
Adverse Effect.
BVIBCA means the British Virgin Islands Business
Companies Act, 2004, as amended.
Company has the meaning attributed thereto in the
Preamble.
Company Balance Sheet means the consolidated, audited
balance sheet of the Company as of September 30, 2008.
Company Board means the Board of Directors of the
Company.
Company Disclosure Schedule
has the meaning attributable thereto
in the first paragraph of Article IV.
Company Material Adverse
Effect means any change
in, or effect on, the business, operations, assets, liabilities or
condition (financial or otherwise) of the Company and its
Subsidiaries which, when considered either individually or in the
aggregate together with all other adverse changes or effects with
respect to which such phrase is used in this Agreement, is, or is
reasonably likely to be, materially adverse to the business,
operations, assets, liabilities or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole,
excluding effects resulting from (i) changes in general economic
conditions or in the securities markets in general that do not
affect the Company and its Subsidiaries in a materially
disproportionate manner relative to other companies in the same
industry, (ii) changes in the industries in which the Company and
its Subsidiaries operate (including legal and regulatory changes)
that do not specifically relate to the Company and its Subsidiaries
and that do not affect the Company and its Subsidiaries in a
materially disproportionate manner relative to other companies in
such industry, (iii) acts taken pursuant to or in accordance with
this Agreement at the request of the Buyer, or (iv) acts of
terrorism or war (whether or not declared); provided ,
however , that the Buyer recognizes that the Company has
incurred net losses for the three and nine months ended June 30,
2009, and that the financial statements at June 30, 2009 and for
the nine months then ended include an explanatory paragraph stating
that the financial statements have been prepared on a going concern
basis and do not include any adjustments that might result from the
uncertainties described in the third paragraph of Note 2 of the
notes to such consolidated financial statements (the “
Uncertainties Paragraph ”) and the continuation of
losses substantially consistent with such losses and the
continuation of the matters described in the Uncertainties
Paragraph shall not be deemed a Company Material Adverse
Effect.
Company Unaudited Balance Sheet
means the consolidated, unaudited
balance sheet of the Company as of June 30, 2009.
Encumbrance
means any security interest, pledge,
mortgage, lien, charge, hypothecation, option to purchase or lease
or otherwise acquire any interest, conditional sales agreement,
claim, restriction, covenant, easement, right of way, title defect,
adverse claim of ownership or use, transfer restriction, voting
agreement, proxy or other limitation on voting rights, or other
encumbrance of any kind, other than any obligation to accept
returns of inventory in the ordinary course of business and other
than those arising by reason of restrictions on transfers under
federal, state and foreign securities Laws.
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Governmental Entity
means any court, arbitrational
tribunal, administrative agency or commission or other governmental
or regulatory authority, agency or instrumentality of any nation,
state or other political subdivision thereof, or any stock market
or stock exchange on which the Shares are listed for
trading.
Governmental Order
means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by
or with any Governmental Entity.
Indebtedness
means, with respect to any Person,
without duplication, (A) all obligations of such Person for
borrowed money, or with respect to deposits or advances of any kind
to such Person, (B) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (C) all
obligations of such Person upon which interest charges are
customarily paid, (D) all obligations of such Person under
conditional sale or other title retention agreements relating to
property purchased by such Person, (E) all obligations of such
Person issued or assumed as the deferred purchase price of property
or services (excluding obligations of such Person or creditors for
raw materials, inventory, services and supplies incurred in the
Ordinary Course of Business), (F) all capitalized lease obligations
of such Person, (G) all obligations of others secured by any lien
on property or assets owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (H) all
obligations of such Person under interest rate or currency hedging
transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such Person and (J) all
guarantees and arrangements having the economic effect of a
guarantee by such Person of any Indebtedness of any other
Person.
Intellectual Property
means the rights associated with or
arising out of any of the following: (i) domestic and
foreign patents and patent applications, together with all
reissuances, divisionals, continuations, continuations-in-part,
revisions, renewals, extensions, and reexaminations thereof, and
any identified invention disclosures (“ Patents
”); (ii) trade secret rights and corresponding rights in
confidential information and other non-public information (whether
or not patentable), including ideas, formulas, compositions,
inventor’s notes, discoveries and improvements, know-how,
manufacturing and production processes and techniques, testing
information, research and development information, inventions,
invention disclosures, unpatented blueprints, drawings,
specifications, designs, plans, proposals and technical data,
business and marketing plans, market surveys, market know-how and
customer lists and information (“ Trade Secrets
”); (iii) all copyrights, copyrightable works, rights in
databases, data collections, “moral” rights, mask
works, copyright registrations and applications therefore and
corresponding rights in works of authorship (“
Copyrights ”); (iv) all trademarks, service marks,
logos, trade dress and trade names and domain names indicating the
source of goods or services, and other indicia of commercial source
or origin (whether registered, common law, statutory or otherwise),
all registrations and applications to register the foregoing
anywhere in the world and all goodwill associated therewith
(“ Trademarks ”); (v) all computer software and
code, including assemblers, applets, compilers, source code, object
code, development tools, design tools, user interfaces and data, in
any form or format, however fixed (“ Software
”); and (vi) all Internet electronic addresses, uniform
resource locators and alphanumeric designations associated
therewith and all registrations for any of the foregoing (“
Domain Names ”).
Knowledge means, with respect to any particular matter
pertaining to the Company or any Subsidiary, the actual knowledge
of the chief executive officer, the executive vice president or the
chief financial officer of the Company regarding such matter;
provided that such officers shall be deemed to have made due
and diligent inquiry of those employees, agents, consultants or
other Persons whom such officers reasonably believe would have
knowledge of the matters represented.
Law means any statute, law, ordinance, regulation,
rule, code, principle of common law and equity or other requirement
of law of a Governmental Entity or any Governmental
Order.
Merger has the meaning attributed thereto in the
Preamble.
NGCL means the Nevada General Corporation Law (NRS
§§ 78.010, et seq. and NRS
§§ 92A.005, et seq. ) , as
amended.
Ordinary Course of Business
, with respect to any action, means
such action is:
(i) consistent
with the recent past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person;
and
(ii) not
required to be authorized by the board of directors of such
Person.
Person means any individual, partnership, firm,
corporation, association, trust, unincorporated organization,
Governmental Authority, joint venture, limited liability company or
other entity.
SEC means the United States Securities and Exchange
Commission.
Securities Act means the Securities Act of 1933, as
amended.
Shares means the $.001 par value common stock of the
Company.
Subsidiary
means, with respect to a party, any
corporation, partnership, joint venture, limited liability company
or other business association or entity, whether incorporated or
unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner or a managing member
(excluding partnerships, the general partnership interests of which
held by such party and/or one or more of its Subsidiaries do not
have a majority of the voting interest in such partnership),
(ii) such party and/or one or more of its Subsidiaries holds
voting power to elect a majority of the board of directors or other
governing body performing similar functions, or (iii) such party
and/or one or more of its Subsidiaries, directly or indirectly,
owns or controls more than 50% of the equity, membership,
partnership or similar interests.
Taxes means all taxes, charges, fees, levies or other
similar assessments or liabilities, including income, gross
receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, services, transfer, withholding,
employment, payroll and franchise taxes imposed by the United
States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States
of America or any such government, and any interest, fines,
penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any
contest or dispute thereof.
Tax Returns
means all reports, returns,
declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
A Triggering Event shall be
deemed to have occurred if: (a) the Company Board shall
have failed to recommend that the Company’s shareholders vote
to approve the Agreement, or shall have withdrawn or modified
(without the consent of the Buyer) in a manner adverse to the Buyer
the Company Board Recommendation (it being understood and agreed
that any “stop-look-and-listen” communication by the
Company Board to the shareholders of the Company pursuant to Rule
14d-9(f) of the Exchange Act shall not be deemed to constitute a
withdrawal, modification or change of its recommendation of this
Agreement); (b) the Company shall have failed to include in the
Proxy Statement the Company Board Recommendation; (c) the Company
Board fails to reaffirm the Company Board Recommendation, or fails
to reaffirm its determination that the Merger is fair to and in the
best interests of the Company’s shareholders, in a press
release if so requested by the Buyer, within 10 days after the
Buyer requests in writing that such recommendation or determination
be reaffirmed; (d) the Company Board shall have approved, endorsed
or recommended any Acquisition Proposal; (e) the Company shall have
entered into any letter of intent or similar document or any
Contract relating to any Acquisition Proposal, other than
confidentiality agreements that the Company is required or
permitted to enter into pursuant Section 7.1 of the Agreement; (f)
a tender or exchange offer relating to securities of the Company
shall have been commenced and the Company shall not have sent to
its security holders, or filed with the SEC, within 10 Business
Days after the commencement of such tender or exchange offer, a
statement disclosing that the Company recommends rejection of such
tender or exchange offer; or (g) the Company or any Representative
of the Company shall have breached in any material respect any
material obligations set forth in Section 7.1 of this
Agreement.
1.2 Other Defined
Terms . The following terms have the meanings
defined for such terms in the Sections set forth below:
Term
Section
ARTICLE II
THE MERGER
2.1 Effective Time
of the Merger . Subject to the provisions of this
Agreement, prior to the Closing, the Buyer shall prepare, and on
the Closing Date or as soon as practicable thereafter the Buyer
shall cause to be filed with the Secretary of State of the State of
Nevada, and with the Registrar of Corporate Affairs of the British
Virgin Islands (the “ Registrar ”), articles of
merger (in each case, the “ Articles of Merger
”) in such form as is required by, and executed by the
Surviving Company in accordance with, the relevant provisions of
the NGCL and the BVIBCA and shall make all other filings or
recordings required under the NGCL and BVIBCA. The
Merger shall become effective upon the filing of the Articles of
Merger with the Secretary of State of the State of Nevada and with
the Registrar, or at such later time as is established by the Buyer
and the Company and set forth in the Articles of Merger (the
“ Effective Time ”).
2.2 Closing
. The closing of the Merger (the “ Closing
”) shall take place at 10:00 a.m., Eastern time, on a
date to be specified by the Buyer and the Company (the “
Closing Date ”), which shall be no later than the
second Business Day after satisfaction or waiver of the conditions
set forth in Article VII (other than delivery of items to be
delivered at the Closing and other than satisfaction of those
conditions that by their nature are to be satisfied at the Closing,
it being understood that the occurrence of the Closing shall remain
subject to the delivery of such items and the satisfaction or
waiver of such conditions at the Closing), at the offices of Arent
Fox LLP, 1675 Broadway, New York, New York 10019, unless
another date, place or time is agreed to in writing by the Buyer
and the Company.
2.3 Effects of the
Merger . At the Effective Time (i) the separate
existence of the Company shall cease and the Company shall be
merged with and into the Buyer (the Buyer following the Merger is
sometimes referred to herein as the “ Surviving
Company ”) and (ii) the memorandum and articles of
association of the Buyer as in effect immediately prior to the
Effective Time shall be the memorandum and articles of association
of the Surviving Company, until further amended in accordance with
the BVIBCA. The Merger shall have the effects set forth
in Section 92A.250 of the NGCL and Sections 173 and 174 of the
BVIBCA.
2.4 Directors and
Officers . The directors of the Buyer immediately
prior to the Effective Time shall be the initial directors of the
Surviving Company and officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Company,
each to hold office in accordance with the articles of association
of the Surviving Company.
ARTICLE III
CONVERSION OF
SECURITIES
3.1 Conversion of
Capital Stock . As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of
any shares of the capital stock of the Company or authorized shares
of the Buyer:
(a) Each of the
Shares issued and outstanding immediately prior to the Effective
Time (other than Shares held in the Company’s treasury or by
any wholly-owned Subsidiary of the Company and Shares owned
beneficially by the Buyer or any wholly-owned Subsidiary of the
Buyer) shall be converted into and represent the right to receive
$1.90 in cash per share of the Shares, without any interest thereon
(the “ Merger Consideration ”).
(b) Cancellation
of Stock Owned by the Parties and Their Subsidiaries
. All of the Shares that are owned by the Company as
treasury stock or by any wholly-owned Subsidiary of the Company and
any Shares owned by the Buyer, any shareholder of the Buyer or any
wholly-owned Subsidiary of the Buyer immediately prior to the
Effective Time shall be cancelled and shall cease to exist and no
shares of the Buyer or other consideration shall be delivered in
exchange therefor.
(c) Treatment of
Company Stock Options and Common Stock Purchase Warrants
. Prior to the Effective Time, the Company Board
(and/or, if appropriate, the Compensation Committee thereof) shall
adopt appropriate resolutions and take all other actions necessary
to provide that each Company Stock Option and each Company Stock
Purchase Warrant, whether or not then vested or exercisable, shall,
at the Effective Time, be cancelled, and each holder thereof, other
than the Buyer, any shareholder of the Buyer or any wholly-owned
Subsidiary of the Buyer, shall be entitled to receive a payment in
cash as provided in Section 7.8(b)
hereof (subject to any applicable withholding taxes). As
provided herein, unless otherwise determined by the Buyer, the
Company Stock Plans (and any feature of any other Benefit Plans or
other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the
Company) shall terminate as of the Effective Time. After
the date hereof, the Company will not issue any Company Stock
Options, Company Stock Purchase Warrants or other options,
warrants, rights or agreements which would entitle any person to
acquire any capital stock of the Company or, except as otherwise
provided in this Section 3.1(c) or in
Section 7.8 , to receive any payment
in respect thereof.
3.2 Exchange of
Certificates, Company Stock Options and Company Stock Purchase
Warrants . The procedures for exchanging outstanding
Shares for Merger Consideration, and outstanding Company Stock
Options and Company Stock Purchase Warrants for Option
Consideration, pursuant to the Merger are as follows:
(a) Exchange
Agent . As of the Effective Time, the Buyer shall
deposit with the Company’s transfer agent or another bank or
trust company designated by the Buyer and reasonably acceptable to
the Company (the “ Exchange Agent ”), for the
benefit of the holders of Shares, Company Stock Options and Company
Stock Purchase Warrants, for exchange in accordance with this
Section 3.2 , through the
Exchange Agent, cash in an amount sufficient to pay the aggregate
Merger Consideration and the aggregate Option Consideration (such
aggregate consideration being hereinafter referred to as the
“ Exchange Fund ”), payable pursuant to
Section 3.1 to holders of
certificates which immediately prior to the Effective Time
represented outstanding Shares (the “ Certificates
”), and pursuant to Sections 3.1(c) and 7.8(b)
to the holders of Company Stock Options and Company Stock Purchase
Warrants.
(b) Exchange
Procedures . As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of
record of a Certificate, Company Stock Option and Company Stock
Purchase Warrant (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title
to the Certificates, Company Stock Options and Company Stock
Purchase Warrants shall pass, only upon delivery of the
Certificates, Company Stock Options and Company Stock Purchase
Warrants to the Exchange Agent and shall be in such form and have
such other provisions as the Buyer may reasonably specify) and
(ii) instructions for effecting the surrender of the
Certificates, Company Stock Options and Company Stock Purchase
Warrants in exchange for each holder’s respective Merger
Consideration or Option Consideration. Upon surrender of
a Certificate, Company Stock Option or Company Stock Purchase
Warrant for cancellation to the Exchange Agent or to such other
agent or agents as may be appointed by the Buyer, together with
such letter of transmittal, duly executed, and such other documents
as may reasonably be required by the Exchange Agent, the holder of
each Certificate, Company Stock Option and Company Stock Purchase
Warrant shall be entitled to receive in exchange therefor cash
representing (i) that number of whole Shares evidenced by such
Certificate multiplied by the Merger Consideration, and the
Certificate so surrendered shall immediately be cancelled; and/or
(ii) the Option Consideration payable with respect to the
surrendered Company Stock Option or Company Stock Purchase
Warrant. In the event of a transfer of ownership of
Shares which is not registered in the transfer records of the
Company, the payment representing the Merger Consideration payable
to the registered holder may be paid to a person other than the
person in whose name the Certificate so surrendered is registered,
if such Certificate is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this
Section 3.2 , each Certificate,
Company Stock Option and Company Stock Purchase Warrant shall be
deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the payment contemplated by
this Section 3.2 or Section
7.8(b) , as the case may
be.
(c) No Further
Ownership Rights in Shares . All payments upon the
surrender for exchange of Certificates in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of
all rights pertaining to such Shares, and from and after the
Effective Time there shall be no further registration of transfers
on the share transfer books or register of members of the Surviving
Company of the Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Company or the Exchange
Agent for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(d) Termination of
Exchange Fund . Subject to any applicable escheat or
similar Law, any portion of the Exchange Fund which remains
undistributed to the holders of Shares 180 days after the Effective
Time shall be delivered to the Buyer, upon demand, and any holder
of Shares who has not previously complied with this Section
3.2 shall thereafter look only to the
Buyer, as a general unsecured creditor, for payment of his, her or
its claim for Merger Consideration.
(e) Investment of
Exchange Fund The Exchange Agent shall invest cash
included in the Exchange Fund, as directed by the Buyer, on a daily
basis, provided that no such investment or loss thereon
shall affect the amounts payable pursuant to the provisions of this
Article III. Any interest and other income resulting
from such investments shall be paid to the Buyer.
(f) No
Liability . To the extent permitted by applicable
Law, none of the Buyer, the Company, the Surviving Company or the
Exchange Agent shall be liable to any holder of Shares delivered to
a public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate shall not
have been surrendered prior to one year after the Effective Time
(or immediately prior to such earlier date on which any cash
payable to the holder of such Certificate pursuant to this Article
III would otherwise escheat to or become the property of any
Governmental Entity), any such cash in respect of such Certificate
shall, to the extent permitted by applicable Law, become the
property of the Surviving Company, free and clear of all claims or
interest of any person previously entitled thereto.
(g) Withholding
Rights . Each of the Buyer and the Surviving Company
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it reasonably determines that it is required
to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the “
Code ”), or any other applicable provision of
Law. To the extent that amounts are so withheld by the
Surviving Company or the Buyer, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Company or
the Buyer, as the case may be.
(h) Lost
Certificates . If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Company, the posting by
such person of a bond in such reasonable amount as the Surviving
Company may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration deliverable in respect
thereof pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company represents and warrants
to the Buyer that the statements contained in this Article IV
are true and correct, subject to the exceptions set forth in the
disclosure schedule delivered by the Company to the Buyer on or
before the execution and delivery of this Agreement (the “
Company Disclosure Schedule ”). The Company
Disclosure Schedule shall be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this
Article IV that contain references to such Company Disclosure
Schedule; provided , however , that any information
contained in response to any numbered or lettered section of this
Article IV shall constitute disclosure pursuant to this Article
IV. For purposes of this Agreement, each statement or
other item of information set forth in the Company Disclosure
Schedule shall be deemed to be a representation and warranty made
by the Company in Article IV.
4.1 Organization,
Standing and Power; Subsidiaries .
(a) Each of the
Company and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, has all requisite corporate
power and authority to own, lease and operate its properties and
assets and to carry on its business as now being conducted, except
for such failures to be so organized, qualified or in good
standing, individually or in the aggregate, that have not had, and
could not reasonably be expected to have a Company Material Adverse
Effect. There is no jurisdiction in the United States in
which the nature of the business conducted by the Company or
property owned by it requires qualification as a foreign
corporation.
(b) Section 4.1(b) of the Company Disclosure Schedule sets
forth a complete and accurate list of (i) all of the
Company’s Subsidiaries and the Company’s direct or
indirect equity interest therein and (ii) the Company’s
interest in any Person which is not a Subsidiary, including any
Person in which the Company has a non-controlling equity
interest.
(c) The Company has
delivered to the Buyer complete and accurate copies of the
certificate of incorporation and by-laws of the Company and of the
charter, by-laws or other organizational documents of each
Subsidiary of the Company, in each case as amended to
date. The Company is not in default under, or in
violation of, its certificate of incorporation or by-laws, and each
of its Subsidiaries is not in violation of its comparable
organizational documents.
(a) The authorized
capital stock of the Company consists of 10,000,000 shares of
preferred stock, par value $0.001 per share, none of which are
outstanding or authorized for issuance, and 50,000,000
Shares. The rights and privileges of each class of the
Company’s capital stock are as set forth in the
Company’s certificate of incorporation. As of the
date of this Agreement, 15,942,336 Shares were issued and
outstanding, and no Shares were held in the treasury of the Company
or by Subsidiaries of the Company.
(b) Section 4.2(b) of the Company Disclosure Schedule
lists the number of Shares reserved for issuance pursuant to
outstanding convertible notes, stock options and stock purchase
warrants, as of the date of this Agreement and any plans or other
arrangements under which additional notes, options and warrants may
be issued or granted (collectively, the “ Company Stock
Plans ”) and sets forth a complete and accurate list of
all holders of outstanding notes convertible into, and options and
warrants to purchase, Shares (such outstanding notes, options and
warrants, respectively, the “ Company Convertible
Notes ,” “ Company Stock Options ” and
the “ Company Stock Purchase Warrants ”),
whether or not granted under the Company Stock Plans, and the
number of Shares issuable pursuant to each Company Convertible
Note, each Company Stock Option and each Company Stock Purchase
Warrant, and the conversion, exercise or purchase price, the date
of grant or issuance, the repurchase price payable per unvested
Share, and the expiration date thereof. The Company has provided to
the Buyer accurate and complete copies of all Company Stock Plans,
and the forms of all convertible note, stock option and common
stock warrant agreements evidencing Company Convertible Notes,
Company Stock Options and Company Stock Purchase Warrants, and
there are no agreements, understandings or commitments to amend,
modify or supplement such documents, which documents include any
applicable provisions relating to adjustments in the number of
Shares whic