AGREEMENT AND PLAN OF MERGER

4.1           Organization and Qualification.  Cogility is a corporation duly organized, validly existing and in good standing under the laws of State of Delaware, and is duly licensed or qualified to transact business as a foreign corporation and is in good standing in each of the jurisdictions listed on the Cogility Disclosure Schedule, such jurisdictions being the only jurisdictions in which the failure to be so licensed or qualified could have a Material Adverse Effect on Cogility.

 

4.2           Capital Stock. All of the issued and outstanding Cogility Capital Stock was issued in compliance in all material respects with all applicable federal and state securities laws and is owned solely by the persons and entities listed in that certain letter dated the Closing Date from Ghourdjian to Jacobs (the “Ghourdjian Letter to Jacobs”).

 

4.3           Subsidiaries and Affiliates.  Cogility does not have any Subsidiaries, and, except as described on the Cogility Disclosure Schedule, Cogility does not have any Affiliates and does not otherwise own, directly or indirectly, any equity or other ownership interests of any Person.  Except pursuant to this Agreement, Cogility has no obligation to purchase any interest in, or make any investment in, or enter into any other extraordinary corporate transaction with, any Person.

4.4           Charter, By-Laws and Corporate Records.  True, correct and complete copies of each of (a) the Articles of Incorporation of Cogility as amended and in effect on the date hereof, (b) the By-Laws of Cogility as amended and in effect on the date hereof, and (c) the minute books of Cogility, have been previously made available to the AQSP Entities.  Such minute books contain complete and accurate records of all meetings and other corporate actions of the Cogility Board, committees of the Cogility Board, incorporators of Cogility, and the Cogility Shareholders, from the date of Cogility’s incorporation to the date hereof.

4.5           Authorization; Enforceability.  Cogility has the corporate power and authority to own, hold, lease and operate its respective properties and assets and to carry on its respective business as currently conducted. Cogility has the corporate power and authority to execute, deliver and perform this Agreement, the Certificate of Merger, and the other Definitive Documents to which it is a party. The execution, delivery and performance of this Agreement, the Certificate of Merger, and the other Definitive Documents to which Cogility or any of the Cogility Shareholders is a party and the consummation of the transactions contemplated herein and therein have been duly authorized and approved by Cogility and by the Cogility Shareholders, and no other action on the part of Cogility, or any of the Cogility Shareholders is necessary in order to give effect thereto. This Agreement, the Certificate of Merger, and each of the other Definitive Documents to be executed and delivered by Cogility, and by each of the Cogility Shareholders, have been duly executed and delivered by, and constitute the legal, valid and binding obligations of, Cogility and each of the Cogility Shareholders, respectively, enforceable against Cogility and each of the Cogility Shareholders in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.

4.7           Governmental Consents and Approvals.  The execution, delivery and performance of this Agreement, the Certificate of Merger, and the other Definitive Documents by Cogility and the Cogility Shareholders do not and will not require any consent, approval, authorization, Permit or other order of, action by, filing with or notification to, any Governmental Authority.

4.8           Capital Structure.  The authorized Cogility Capital Stock consists of Thirty Million (30,000,000) shares of Cogility Stock.  As of the date hereof, 11,530,493 shares of Cogility Stock are issued and outstanding, and no shares of Cogility Stock are held in treasury. As of the date hereof, 5,724,666 Cogility Options are issued and outstanding. Except as described above, there will be no shares of voting or non-voting capital stock, options, warrants, other equity interests or other Cogility Capital Stock authorized, issued, reserved for issuance or otherwise outstanding at the Closing. All of the outstanding shares of Cogility Stock are duly authorized, validly issued, fully paid and non-assessable, and not subject to, or issued in violation of, any kind of preemptive, subscription or any kind of similar rights. There are no bonds, debentures, notes or other Indebtedness of Cogility having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders of Cogility may vote. Except for the 5,724,666 Cogility Options referred to above, there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind (contingent or otherwise) to which Cogility is a party or bound obligating Cogility to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of Cogility or obligating Cogility to issue, grant, extend or enter into any agreement to issue, grant or extend any security, option, warrant, call, right, commitment, agreement, arrangement or undertaking that will survive the Closing.  There are no outstanding contractual obligations of Cogility to repurchase, redeem or otherwise acquire any shares of capital stock (or options to acquire any such shares) or other security or equity interest of Cogility which will survive the Closing.

 

 

 

4.9           Financial Statements.

 

(a) Attached hereto as Exhibit 4.9(a) are copies of the audited balance sheet of Cogility as of December 31, 2010 and December 31, 2009, together with the related statements of operations and the statements of changes in stockholders equity and the statements of cash flow, for the year ended on such dates (collectively, the “Annual Financial Statements”).  The Annual Financial Statements are correct and complete and in accordance with the books and records of Cogility and fairly present, in accordance with GAAP, in all material respects the financial condition of Cogility as of the dates indicated therein and accurately reflect in the aggregate all material aspects of Cogility’s business.

 

(b) Attached hereto as Exhibit 4.9(b) is a copy of the unaudited balance sheet of Cogility for the six month period ended as of June 30, 2011, together with the related statement of operations (unaudited), the statement of changes in stockholders’ equity (unaudited) and the statement of cash flows (unaudited) for the period ended June 30, 2011 (collectively, the “Interim Financial Statements” and, together with the Annual Financial Statements, the “Financial Statements”).  The Interim Financial Statements are correct and complete and in accordance with the books and records of Cogility and fairly present, in accordance with GAAP, in all material respects the financial condition of Cogility as of the dates indicated therein, are complete and correct in all material respects and accurately reflect any and all material aspects of Cogility’s business.

 

(c) The Financial Statements have been prepared in accordance with GAAP and contain the information required to be contained in corporate financial statements under applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

 

4.10           Conduct in the Ordinary Course; Absence of Changes.  Since June 30, 2011, except as permitted by this Agreement and except as disclosed in the Cogility Disclosure Schedule, Cogility’s business has been conducted in the ordinary course of business, consistent with past practice, and there has been no change in Cogility’s business which has had, or could reasonably be anticipated to have a Material Adverse Effect on Cogility.

4.11           Real Property.

(a)Cogility owns no real estate.

 

(b) The Cogility Disclosure Schedule lists (1) the street address of each parcel of Leased Real Property, (2) the identity of the lessor, lessee and current occupant (if different from lessee) of each such parcel of Leased Real Property, and (3) the term and rental payment terms of the leases (and any subleases) pertaining to each such parcel of Leased Real Property.

 

 

 

 

(c) Cogility has made available to the AQSP Entities, to the extent available, for each parcel of Leased Real Property, all title insurance policies, title reports, surveys, certificates of occupancy, environmental reports and audits, appraisals, other title documents and other documents relating to or otherwise affecting the Leased Real Property, or the operation of Cogility’s business thereon or any other uses thereof.

 

(d) Cogility has delivered or made available to the AQSP Entities correct and complete copies of all leases and subleases listed in the Cogility Disclosure Schedule and any and all ancillary documents pertaining thereto (including, but not limited to, all amendments, consents for alterations and documents recording variations and evidence of commencement dates and expiration dates) (the “Leases”).  With respect to each such Lease:

 

(1) such Lease is legal, valid, binding, enforceable and in full force and effect, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought, and represents the entire agreement between the respective landlord and tenant with respect to such property;

 

(2) such Lease, together with the consent and/or estoppel certificate contemplated by Section 10.1(k), will not cease to be legal, valid, binding, enforceable and in full force and effect, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought, on terms identical to those currently in effect as a result of the consummation of the transactions contemplated by this Agreement, nor will the consummation of the transactions contemplated by this Agreement constitute a breach or default under such Lease or otherwise give the landlord or lessee a right to terminate such Lease;

 

(3) neither Cogility nor any other party to such Lease is in breach or default in any material respect, and no event has occurred that, with notice or lapse of time would constitute such a breach or default or permit termination, modification or acceleration under such Lease; and

 

(4) the rental set forth in each Lease is the actual rental being paid, and there are no separate agreements or understandings with respect to the same.

 

4.12           Personal Property.

(a)           The Cogility Disclosure Schedule lists each item or distinct group of machinery, equipment, tools, supplies, furniture, fixtures, vehicles, rolling stock and other tangible personal property used in Cogility’s business and owned or leased by Cogility (the “Tangible Personal Property”).

 

(b) Cogility has delivered or made available to the AQSP Entities correct and complete copies of all leases for Tangible Personal Property (if any) and any and all material ancillary documents pertaining thereto.  With respect to each of such leases:

 

 

 

 

(1) such lease, together with all ancillary documents delivered pursuant to the first sentence of this Section, is legal, valid, binding, enforceable, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought, and in full force and effect and represents the entire agreement between the respective lessor and lessee with respect to such property; and

 

(2) neither Cogility nor any other party to such lease is in breach or default in any material respect, and no event has occurred that, with notice or lapse of time would constitute such a breach or default or permit termination, modification or acceleration under, such lease; and

 

(3) such lease will not cease to be legal, valid, binding, enforceable, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought, and in full force and effect on terms identical to those currently in effect as a result of the consummation of the transactions contemplated by this Agreement, nor will the consummation of the transactions contemplated by this Agreement constitute a breach or default under such lease or otherwise give the lessor a right to terminate such lease.

 

(c) All Tangible Personal Property is adequate and usable for the use and purposes for which it is currently used, is in good operating condition, normal wear and tear excepted, subject to periodic maintenance and repair in accordance with good business practice.

 

4.13           Board and Shareholder Approvals.  The Cogility Board and the Cogility Shareholders have approved this Agreement, the Merger, the Certificate of Merger, and the other transactions contemplated hereby and by the other Definitive Documents.

 

4.14           Insurance.  Cogility has furnished or made available to the AQSP Entities true and complete copies of all insurance policies and fidelity bonds covering the assets, business, equipment, properties and operations of Cogility relating to Cogility’s business, a list of which (by type, carrier, policy number, limits, premium and expiration date) is set forth in the Cogility Disclosure Schedule. All such insurance policies are in full force and effect and will remain in full force and effect with respect to all events occurring prior to the Effective Time.

 

4.15           Permits.  The Cogility Disclosure Schedule lists all Permits used in or otherwise required for the conduct of Cogility’s business. Each of the Permits is valid and in full force and effect.

 

 

 

4.16           Taxes.  Cogility has been a C corporation for all periods since its incorporation, and has been so classified for state purposes for the same periods and the jurisdictions in which Cogility does business listed in the Cogility Disclosure Schedule.  Except as set forth in the Cogility Disclosure Schedule:  (a) All Tax Returns and reports in respect of Taxes required to be filed with respect to Cogility or Cogility’s business have been timely filed; (b) all Taxes required to be shown on such returns and reports or otherwise due have been timely paid; (c) all such returns and reports are true, correct and complete in all material respects; (d) no adjustment relating to such returns has been proposed formally or informally by any Governmental Authority and no basis exists for any such adjustment; (e) there are no pending or threatened actions or proceedings for the assessment or collection of Taxes against Cogility or (insofar as either relates to the activities or income of Cogility or Cogility’s business or could result in Liability of Cogility on the basis of joint and/or several liability) any corporation that was includible in the filing of a return with Cogility on a consolidated or combined basis; (f) no consent under Section 341(f) of the Code has been filed with respect to Cogility; (g) there are no Tax Liens on any assets of Cogility or Cogility’s business; (h) Cogility has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed; (i) Cogility has not consented to extend the time in which any Taxes may be assessed or collected by any taxing authority; (j) Cogility has not requested or been granted an extension of the time for filing any Tax Return to a date later than the Closing Date; (k) there are no Liens for Taxes (other than for current Taxes not yet due and payable) upon Cogility’s assets; (l) Cogility will not  be required (1) as a result of a change in method of accounting for a taxable period ending on or prior to the Closing Date, to include any adjustment under Section 481(c) of the Code (or any corresponding provision of state, local or foreign law) in taxable income for any taxable period (or portion thereof) beginning after the Closing Date or (2) as a result of any “closing agreement,” as described in Section 7121 of the Code (or any corresponding provision of state, local or foreign law), to include any item of income or exclude any item of deduction from any taxable period (or portion thereof) beginning after the Closing Date; (m) Cogility is not a party to or bound by any tax allocation or tax sharing agreement or has any current or potential contractual obligation to indemnify any other Person with respect to Taxes; (n) there is no basis for any assessment, deficiency notice, 30-day letter or similar notice with respect to any Tax to be issued to Cogility with respect to any period on or before the Closing Date; (o) Cogility has not made any payments, and neither will become obligated (under any contract entered into on or before the Closing Date) to make any payments, that will be nondeductible under Section 280G of the Code (or any corresponding provision of state, local or foreign law); (p) Cogility has not  been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code (or any corresponding provision of state, local or foreign law) during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding provision of state, local or foreign law); (q) no claim has ever been made in writing by a taxing authority in a jurisdiction where Cogility does not file Tax Returns that Cogility is or may be subject to Taxes assessed by such jurisdiction; (r) Cogility does not have any physical presence in any foreign country, as defined in the relevant tax treaty between the United States of America and such foreign country; (s) true, correct and complete copies of all income and sales Tax Returns filed by or with respect to Cogility for the past two (2) years have been furnished or made available to the AQSP Entities; and (t) Cogility will not be subject to any Taxes pursuant to Section 1374 or Section 1375 of the Code (or any corresponding provision of state, local or foreign law) with respect to the transactions contemplated by this Agreement.

 

 

 

4.17           Labor Matters.

(a)           The Ghourdjian Letter to Jacobs lists the name, the place of employment, the current annual salary rates, bonuses, deferred or contingent compensation, pension, accrued vacation, “golden parachute” and other like benefits paid or payable (in cash or otherwise) in 2009, 2010 and 2011 to date, the date of employment and a description of position and job function of each current salaried employee, officer, director, manager, member, consultant or agent of Cogility.

 

(b) Except as set forth in the Ghourdjian Letter to Jacobs, no employment, consulting, severance pay, continuation pay, termination or indemnification agreements or other similar agreements of any nature (whether in writing or not) exist between Cogility, on the one hand, and any of their respective current or former stockholders, officers, directors, members, managers, employees or consultants, on the other hand.

 

(c)   (1)  Cogility is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by Cogility;

 

(2) There are no controversies, strikes, slowdowns or work stoppages pending or threatened between Cogility and any of its employees;

 

(3) There are no unfair labor practice complaints pending against Cogility before the National Labor Relations Board or any other Governmental Authority or any current union representation questions involving employees of Cogility;

 

(4) Cogility is currently in material compliance with all applicable Laws relating to the employment of labor, including those related to wages, hours, collective bargaining and the payment and withholding of taxes and other sums as required by the appropriate Governmental Authority and has withheld and paid to the appropriate Governmental Authority or is holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of Cogility and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing;

 

(5) Cogility has paid in full to all its employees or adequately accrued for in accordance with GAAP, consistently applied, all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees;

 

(6) There is no claim with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or threatened before any Governmental Authority with respect to any Persons currently or formerly employed by Cogility;

 

(7) There is no charge or proceedings with respect to a violation of any occupational safety or health standards that has been asserted or is now pending or threatened with respect to Cogility; and

 

(8) There is no charge of discrimination in employment or employment practices, for any reason, including, without limitation, age, gender, race, religion or other legally protected category, which has been asserted and not settled or is now pending or threatened before the United States Equal Employment Opportunity Commission, or any other Governmental Authority in any jurisdiction in which Cogility has employed or currently employs any Person.

 

 

 

4.19           Environmental Matters.  (a) Cogility has all Environmental Permits which are required under Environmental Laws, (b) Cogility is in material compliance with all terms and conditions of such Environmental Permits, (c) Cogility is in material compliance with all Environmental Laws and any other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in such Environmental Laws or contained in any regulation, code, plan, governmental Order, notice or demand letter issued, entered, promulgated or approved thereunder, (d) there has not been any event, condition, circumstance, activity, practice, incident, action or plan which will interfere with or prevent continued compliance with the terms of such Environmental Permits or which would give rise to any liability under any Environmental Law or give rise to any common law or statutory liability, based on or resulting from Cogility’s or its agents’ manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, or release into the environment, of any Hazardous Substance, and (e) Cogility has taken all actions reasonably necessary under applicable requirements of Environmental Law to register any products or materials required to be registered by Cogility (or any of its agents) thereunder.

4.20           Certain Interests.

(a)           No officer, director, employee, consultant, advisory board member or Cogility Shareholder, and no spouse and no relative (or relative of such spouse) who resides with, or is a dependent of, any such person:

 

(1)           has any direct or indirect financial interest in any competitor, supplier or customer of Cogility, provided, however, that the ownership of securities representing no more than three percent (3%) of the outstanding voting power of any competitor, supplier or customer, and which are also listed on any national securities exchange or traded actively in the national over-the-counter market, shall not be deemed to be a “financial interest” so long as the Person owning such securities has no other connection or relationship with such competitor, supplier or customer;

 

(2) owns, directly or indirectly, in whole or in part, or has any other interest in any tangible or intangible property which Cogility uses or has used in the conduct of Cogility’s business or otherwise; or

 

(3) has outstanding any Indebtedness to Cogility.

 

(b) Except as shown on the Cogility Disclosure Schedule, Cogility does not have any Indebtedness, Liabilities, nor any other obligation of any nature whatsoever to, any officer, director, employee, consultant, advisory board member or Cogility Shareholder, or to  any spouse thereof or to any relative (or relative of such spouse) who resides with, or is a dependent of, any such person.

 

4.21           Litigation.  Except as set forth in the Cogility Disclosure Schedule, there are no Actions or Litigation pending or threatened against, relating to or affecting Cogility or Cogility’s business before any Court, Governmental Agency or any arbitrator or mediator. Neither Cogility nor any Cogility Shareholder is subject to any Order that prohibits or restricts the consummation of the transactions contemplated hereby or restricts in any way the ownership or operations of Cogility or Cogility’s business.

 

 

4.22           Intellectual Property and Web Sites.  Except for software, content, or other similar services/property licensed or purchased by Cogility on a non-exclusive basis through contracts with vendors, all of which contracts are in full force and effect and none of which contracts are currently subject to any contractual disputes nor have been threatened with cancellation or non-renewal by such vendors, Cogility has the exclusive rights, titles and interests in and to any and all Intellectual Property and all of the Web Sites used by, being developed by, or otherwise associated with the present or future operations of Cogility’s business, all of which are listed on the Cogility Disclosure Schedule. All Web Sites, Patents, and Patent applications pending associated with Cogility’s business are listed on the Cogility Disclosure Schedule.

4.23           Receivables.  The Receivables reflected in the Financial Statements consist solely of bona fide accounts receivable generated by Cogility’s business in the ordinary course, which can be collected in the ordinary course of Cogility’s business, subject to reserves for bad debt maintained consistently with the bad debt reserve reflected in the Annual Financial Statements.

 

4.24           Valid Lien. AQSP has a validly perfected and enforceable first priority lien and security interest in all of Cogility’s assets, including liens, recorded with the U.S. Patent and Trademark Office, on all Cogility patent applications identified in the Cogility Disclosure Schedule.   

 

4.25           Brokers.  Neither Cogility nor, to Ghourdjian’s Knowledge, any Cogility Shareholder has employed any financial advisor, broker or finder, and neither Cogility, nor, to Ghourdjian’s knowledge, any of the Cogility Shareholders has incurred nor will incur any broker’s, finder’s, investment banking or similar fees, or commissions in connection with the transactions contemplated by this Agreement.

4.28           Material Information.  All material information concerning Cogility has been provided by Cogility to the AQSP Entities.

 

4.29           AQSP Loans and Security Interest.  As of the date of this Agreement, the aggregate principal amount of Cogility’s Secured Promissory Notes Numbers 1-7 payable to AQSP is $820,000. The obligations of Cogility under such Secured Promissory Notes Numbers 1-7 are jointly secured by a Security Agreement dated as of January 31, 2011, which Security Agreement and the UCC-1 filings thereunder have created a perfected first lien security interest in all of Cogility’s assets in favor of AQSP (the "AQSP Security Interest"). Cogility agrees, represents, warrants and covenants that such Secured Promissory Notes Numbers 1-7, such Security Agreement, such UCC-1 filings, and such AQSP Security Interest are and shall remain legally binding upon Cogility both before and after the Closing Date, and that Cogility has and shall have no claims or defenses whatsoever in regard thereto either before or after the Closing Date, it being the express agreement, acknowledgement and intention of the Parties that the Closing of the Merger shall not be deemed to terminate or otherwise adversely impact the legally binding nature and enforceability of such Secured Promissory Notes Numbers 1-7, such Security Agreement, such UCC-1 filings, or such AQSP Security Interest.

 

AQSP AND AQSP MERGECO

 

In order to induce Cogility, and the Shareholders to enter into this Agreement and to consummate the transactions contemplated hereby, the AQSP Entities represent and warrant to Cogility and the Cogility Shareholders as follows:

 

5.1           Organization and Qualification.  Each of AQSP and AQSP Mergeco is a corporation duly organized, validly existing and in good standing under the laws of its respective state of incorporation.  Each of AQSP and AQSP Mergeco is duly qualified or licensed as a foreign corporation to conduct business, and is in good standing, under the laws of each jurisdiction where the character of the properties owned, leased or operated by it, or the nature of its activities, makes such qualification or licensing necessary, except where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, has not had and would not have a Material Adverse Effect on AQSP or AQSP Mergeco.  Each of AQSP and AQSP Mergeco has made available to Cogility true, complete and correct copies of its Articles of Incorporation and Bylaws, each as amended to date. Neither AQSP nor AQSP Mergeco is in default under or in violation of any provision of its Articles of Incorporation or Bylaws.  All of the issued and outstanding shares of capital stock of, or other equity interests in, AQSP Mergeco are: (a) duly authorized, validly issued, fully paid, non-assessable; (b) owned, directly or indirectly by AQSP free and clear of all Liens; and (c) free of any restriction, including, without limitation, any restriction which prevents the payment of dividends to AQSP, or otherwise restricts the right to vote, sell or otherwise dispose of such capital stock or other ownership interest other than restrictions under the Securities Act and state securities laws.

 

 

 

5.2           Capital Structure.  The authorized capital stock of AQSP consists of (a) 100,000,000 shares of AQSP Common Stock $0.001 par value per share and (b) 10,000,000 shares of “blank check” Preferred Stock, none of which has been issued (“AQSP Preferred Stock”).  As of the date of this Agreement: (1) 291,624 shares of AQSP Stock were issued and outstanding; (2) no shares of AQSP Preferred Stock were issued or outstanding; (3) 630,000 AQSP Options were issued and outstanding; and (4) 460,000 AQSP warrants were issued and outstanding (with the holders of such AQSP warrants having certain so-called “double down” rights in regard to their investment in AQSP notes and warrants pursuant to the terms and conditions of AQSP’s private placement, the first $920,000 of which closed in March, 2011.  Except as described above, there were no shares of voting or non-voting capital stock, equity interests or other securities of AQSP authorized, issued, reserved for issuance or otherwise outstanding. All outstanding shares of AQSP Stock are, and all shares of AQSP Stock to be issued in connection with the consummation of the transactions contemplated by this Agreement will be, when issued in accordance with the terms hereof, duly authorized, validly issued, fully paid and non-assessable, and not subject to, or issued in violation of, any kind of preemptive, subscription or any kind of similar rights.  Except as provided hereunder, neither AQSP nor AQSP Mergeco is subject to any obligation or requirement to provide funds for, or to make any investment (in the form of a loan or capital contribution) to or in any Person. All of the issued and outstanding shares of AQSP Stock were issued in compliance in all material respects with all applicable federal and state securities laws. AQSP Mergeco is a wholly-owned subsidiary of AQSP.

5.3           Authorization; Enforceability.  Each of the AQSP Entities has the corporate power and authority to execute, deliver and perform this Agreement, the Certificate of Merger and the other Definitive Documents to which it is a party. The execution, delivery and performance of this Agreement, the Certificate of Merger and the other Definitive Documents to which it is a party and the consummation of the transactions contemplated herein and therein have been duly authorized and approved by each of the AQSP Entities, and no other action on the part of any of them is necessary in order to give effect thereto. This Agreement, the Certificate of Merger and each of the other Definitive Documents to be executed and delivered by each of the AQSP Entities have been duly executed and delivered by, and constitute the legal, valid and binding obligations of, each of them, enforceable against each of them, in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.

5.4           No Violation or Conflict.  None of (a) the execution and delivery by the AQSP Entities of this Agreement, the Certificate of Merger and the other Definitive Documents to be executed and delivered by each of the AQSP Entities, (b) consummation by each of the AQSP Entities of the transactions contemplated by this Agreement, the Certificate of Merger and the other Definitive Documents, or (c) the performance of this Agreement, the Certificate of Merger and the other Definitive Documents required by this Agreement to be executed and delivered by each of the AQSP Entities at the Closing, will (1) conflict with or violate the Articles of Incorporation or By-Laws of any of them, (2) conflict with or violate any Law, Order or Permit applicable to any of them, or (3) conflict with or violate any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease or other instrument or obligation to which any of them is a party or by which any of their respective properties may be bound or affected.

 

 

 

5.5           Governmental Consents and Approvals.  The execution, delivery and performance of this Agreement and the other Documents by each of the AQSP Entities do not and will not require any consent, approval, authorization, Permit or other order of, action by, filing with or notification to, any Governmental Authority.

5.6           Litigation.  There is no suit, Action, Litigation, arbitration, claim, governmental or other proceeding before any Governmental Authority pending or threatened, against AQSP or AQSP Mergeco.

5.7           Interim Operations.  AQSP Mergeco was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, and has engaged in no other business activities and has conducted its operations only as contemplated in this Agreement.

5.8           Brokers.  None of the AQSP Entities has employed any financial advisor, broker or finder, and neither AQSP nor AQSP Mergeco has incurred and will not incur any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement.

5.9           Board Approval. The AQSP Board and the shareholders of AQSP have approved this Agreement, the Merger, the Certificate of Merger, and the other transactions contemplated hereby and by the other Definitive Documents.

 

6.1           Performance.  Subject to the terms and conditions provided in this Agreement, each of the Parties shall use its respective reasonable best efforts in good faith to take or cause to be taken as promptly as practicable all reasonable actions that are within its power to cause to be performed and fulfilled those of the conditions precedent to its obligations to consummate the transactions contemplated by this Agreement that are dependent upon its actions, including obtaining all necessary approvals, to the end that the transactions contemplated hereby will be fully and timely consummated.

6.2           Regulatory and Other Authorizations; Notices and Consents.

(a)Each of the Parties will use its best efforts to obtain all authorizations, consents, orders and approvals of all Governmental Authorities and officials that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement and the other Documents and will cooperate fully with each of the Parties in promptly seeking to obtain all such authorizations, consents, orders and approvals.

 

(b) Each of the Parties shall give promptly such notices to third parties and use its best efforts to obtain such third party consents and estoppel certificates as the Parties may deem necessary or desirable in connection with the consummation of the transactions contemplated by this Agreement, the Certificate of Merger and the other Definitive Documents. The Parties shall cooperate with each other and use all reasonable efforts to assist in giving such notices and obtaining such consents and estoppel certificates.

 

 

6.4           Conduct of Business Pending Closing.

 

(a)           At all times prior to the Closing Date, Cogility covenants and agrees that it shall conduct Cogility’s business only in the ordinary course of its Business consistent with past practices, and Cogility shall use its commercially reasonable efforts consistent with past practices to preserve intact Cogility’s business and to keep available satisfactory relationships with suppliers, customers and others having business relationships with it.

 

(b)           From the date of this Agreement until the Closing Date there shall not be any material increases or decreases in compensation, capital expenditures, asset sales or affiliate transactions involving Cogility or any of the Cogility Shareholders, nor shall there be any unusual cash withdrawals, unusual payments, unusual contracts or contract provisions, or other unusual transactions or business practices involving Cogility or any of the Cogility Shareholders.

 

(c) At all times prior to the Closing Date, except as otherwise set forth in this Agreement, AQSP Mergeco covenants and agrees that it will not, directly or indirectly, conduct any business or incur any Liabilities (contingent or otherwise).

 

(d) Cogility and the Cogility Shareholders agree that during the period from the date of signing of this Agreement until the Closing Date, they shall each refrain from entering into, participating in, or responding to, any other negotiations, discussions, contracts, letters of intent, or other arrangements of any nature with any third parties (other than AQSP) regarding a disposition of Cogility’s business or assets, the sale of the stock or equity interests of Cogility, or any other actions which might have the effect of impeding, delaying or making more costly the Merger, provided, however, that this agreement shall no longer be legally binding upon Cogility, or the Cogility Shareholders if the Closing has not occurred by December 31, 2011.

 

EMPLOYMENT MATTERS AND MANAGEMENT OF THE SURVIVING

 

7.1           Employment Matters.  Except as provided in Exhibit 2.8(a) and in Section 7.2, or except as may be mutually agreed upon by Ghourdjian and Jacobs, on the Closing Date, there will be no changes in the employment status, or in the terms and conditions of employment, of the employees of AQSP and Cogility Surviving Corporation that existed prior to the Merger.

7.2           Employment Agreements. On the Closing Date, AQSP and the Cogility Surviving Corporation shall enter into employment agreements with each of Ghourdjian and Jacobs, covering the period of time from the Closing Date through December 31, 2013 (the "Employment Agreements"). The Employment Agreements shall contain such terms and conditions as shall be mutually acceptable to Ghourdjian, Jacobs, and the Compensation Committee of the AQSP Board, provided, that the Employment Agreements shall be consistent with the following terms and conditions:

 

(a) Base Salaries:

 

(1)           Due to the current financial weaknesses of AQSP and Cogility, each of Ghourdjian and Jacobs initially shall not receive a monthly base salary from AQSP and/or any of its subsidiaries unless and until the Compensation Committee of the AQSP Board determines in its sole discretion that AQSP and/or its subsidiaries can afford to pay each of Ghourdjian and Jacobs a monthly base salary without jeopardizing the financial health of AQSP and its subsidiaries, and neither Ghourdjian nor Jacobs shall have any rights or claims for "back pay" or "accrued base salary" or other base salary-related compensation in regard to the period of time during the term of the Employment Agreements in which they receive no base salary; and

 

(2) If and when the financial weaknesses of AQSP and its subsidiaries are partially or completely overcome -- either as the result of increased revenue of AQSP or its subsidiaries, or the successful closing(s) by AQSP or its subsidiaries of additional acquisitions and/or of capital raise(s) -- then the Compensation Committee of the AQSP Board may determine in its sole discretion and is hereby authorized to cause AQSP and/or one of its subsidiaries to pay each of Ghourdjian and Jacobs a monthly base salary payable in accordance with the typical payroll practices of AQSP and its subsidiaries (which monthly base salary may be increased or decreased, as circumstances may dictate, from time to time in the sole discretion of the Compensation Committee of the AQSP Board), which monthly base salary shall not exceed $21,666.67 in regard to any month during calendar year 2011, 2012 or 2013, and neither Ghourdjian nor Jacobs shall have any rights or claims for "back pay" or "accrued base salary" or other base salary-related compensation in regard to the period of time during the term of the Employment Agreements in which they receive a monthly base salary of less than $21,666.67;

 

provided, however, that under no circumstances whatsoever shall any member of the senior management team of AQSP or any of its subsidiaries receive a monthly base salary higher than the monthly base salaries of each of Ghourdjian and Jacobs without the prior express written approval of both Ghourdjian and Jacobs;

 

 

 

 

(b)           Annual Bonuses:  If and when the financial weaknesses of AQSP and its subsidiaries are partially or completely overcome -- either as the result of increased revenue of AQSP or its subsidiaries, or the successful closing(s) by AQSP or its subsidiaries of additional acquisitions and/or of capital raise(s) -- then the Compensation Committee of the AQSP Board may determine in its sole discretion and is hereby authorized to cause AQSP and/or one of its subsidiaries to pay each of Ghourdjian and Jacobs an annual bonus in regard to each calendar year during the term of the Employment Agreements, such annual bonus to be based upon the overall annual financial performance of AQSP and its subsidiaries during such calendar year and to not exceed $520,000, provided, however, that under no circumstances whatsoever shall any member of the senior management team of AQSP or any of its subsidiaries receive an annual bonus higher than the annual bonuses of each of Ghourdjian and Jacobs without the prior express written approval of both Ghourdjian and Jacobs;

 

(c)           Event-Triggered Bonuses: If following the Closing Date AQSP or one its subsidiaries successfully closes an acquisition of all or a portion of the stock or assets of a business, or successfully closes a capital raise, or successfully closes a sale of all or a portion of its stock or assets, then the Compensation Committee of the AQSP Board may determine in its sole discretion and is hereby authorized to cause AQSP and/or its subsidiaries to pay to Ghourdjian and Jacobs (or, at the joint election of Ghourdjian and Jacobs, to a group of employees of AQSP and its subsidiaries who are jointly designated by Ghourdjian and Jacobs) bonuses in the following aggregate amounts, respectively:

 

(1) an aggregate amount of up to 5.0% of the aggregate purchase price of such acquisition, as may be determined by the Compensation Committee of the AQSP Board in its sole discretion;

 

(2) an aggregate amount of up to 2.5% of the aggregate amount of such capital raise if such capital raise consists of straight debt such as loans, notes or bonds payable by AQSP and/or its subsidiaries, as may be determined by the Compensation Committee of the AQSP Board in its sole discretion;

 

(3) an aggregate amount of up to 7.5% of the aggregate amount of such capital raise if such capital raise consists of common stock, convertible debt, preferred stock, or other equity securities, as may be determined by the Compensation Committee of the AQSP Board in its sole discretion; and

 

(4) an aggregate amount of up to 10.0% of the aggregate profit in regard to such sale, as may be determined by the Compensation Committee of the AQSP Board in its sole discretion; provided that, in regard to the respective bonuses payable under Sections 7.2(c)(1) and 7.2(c)(4) above: The bonus shall be paid within 45 days of the closing, even if the entire aggregate purchase price of such acquisition, or the entire aggregate sale proceeds, as the case may be, are not paid at the closing. In determining the aggregate purchase price of such acquisition or the aggregate profit from such sale, as the case may be, the Compensation Committee of the AQSP Board will calculate the total consideration reasonably expected to be paid to the seller(s) in such acquisition, or to AQSP or its subsidiary in such sale, as the case may be, regardless of the timing of the payment or whether the payment is made in stock, cash or assumed debt. Where purchase price consideration or sale proceeds are paid in stock, now or in the future, the Compensation Committee of the AQSP Board may use the value of the stock recited in the acquisition or sale documents, as the case may be, or, in the absence of recited value, may use the volume weighted average closing price of the stock for the ten trading days prior to the close of such acquisition or sale, as the case may be, to calculate the value of stock paid at the closing and in the future. Where future payments to sellers, or to AQSP or its subsidiary, as the case may be, are contingent upon milestones, the Compensation Committee of the AQSP Board should expect reasonable milestones to be met, and that the company or assets acquired through such acquisition, or the stock or assets sold through such sale, as the case may be, will perform financially at least as well as prior to the acquisition or sale, as the case may be. The aggregate purchase price, or the aggregate profit, as the case may be, shall not be discounted because some or all payments are to be made in the future; and

 

 

 

 

(d)           Reimbursements:  Ghourdjian and Jacobs shall each receive prompt dollar-for-dollar reimbursement of all legitimate expenses incurred or paid by him in the performance of his duties as a director and officer of AQSP and its subsidiaries, and each shall be provided with an AQSP and/or Cogility Surviving Corporation credit card that may be used to pay all such legitimate expenses. Without limiting the generality of the foregoing sentence, such expenses shall include, but shall not be limited to: travel expenses (including but not limited to airfare, bus, train, taxi, rental car, tolls, parking, mileage allowance on personal cars, other auto expenses and repairs, gasoline, etc.); lodging; corporate apartments away from the homes of Ghourdjian and Jacobs; meals; entertainment; postage; supplies and equipment; office phone and fax; mobile phone charges; office and home internet, and mobile internet; costs of attendance at and participation in investor conferences, trade shows, training courses, and other work-related events and functions; and such other benefits as are generally provided to employees of AQSP and/or its subsidiaries.

 

 

8.1           Sale and Assignment of Intellectual Property.  DSGSPT and Ghourdjian hereby sell, convey, give, grant, assign and transfer to Cogility any and all rights, titles and interests of any nature whatsoever that either of them may have in or to the ownership or use of any and all Intellectual Property and Web Sites used in or associated with Cogility or Cogility’s business.

9.1           Piggyback Registration Rights.  The holders of all of the AQSP Options outstanding at the Effective Time, and the holders of all of the warrants to purchase AQSP Stock issued or to be issued pursuant to the private placement of AQSP notes and warrants the first $920,000 of which private placement closed in March 2011, shall enjoy so-called “piggyback registration rights” in regard to the registration of all AQSP Stock issuable upon the exercise of any of such AQSP Options or warrants, in regard to any registration statement filed by AQSP during the period from the Effective Time through December 31, 2016. AQSP shall bear all of the legal, accounting, filing, and other costs and expenses in regard to such registration statement.

 

10.1           Conditions Precedent to the Obligations of the Parties.  The obligation of each of the Parties to consummate the transactions described in this Agreement shall be subject to the fulfillment on or before the Closing of the following conditions precedent, each of which may be waived by a Party in its sole discretion:

(a)           Representations, Warranties and Covenants of Cogility.  The representations and warranties of Cogility, DSGSPT and Ghourdjian contained in this Agreement shall have been true and correct when made and shall be true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing Date, other than such representations and warranties that are expressly made as of another date, and the covenants and agreements contained in this Agreement to be complied with by Cogility, DSGSPT and Ghourdjian on or before the Closing shall have been complied with, and AQSP and AQSP Mergeco shall have received a certificate from Cogility, DSGSPT and Ghourdjian to such effect signed by DSGSPT and by Ghourdjian, on behalf of Cogility and on behalf of himself as an individual.

(b)           Representations, Warranties and Covenants of AQSP and AQSP Mergeco.  The representations and warranties of each of AQSP and AQSP Mergeco contained in this Agreement shall have been true and correct when made and shall be true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing Date, other than such representations and warranties that are expressly made as of another date, and the covenants and agreements contained in this Agreement to be complied with by AQSP and AQSP Mergeco on or before the Closing shall have been complied with, and Cogility shall have received a certificate to such effect signed by Gerard M. Jacobs on behalf of AQSP and AQSP Mergeco.

(c)           No Adverse Change of Cogility.  No events or conditions shall have occurred which individually or in the aggregate, have had, or may reasonably be anticipated to give rise to any Material Adverse Effect on Cogility.

(d)           No Adverse Change of AQSP or AQSP Mergeco.  No events or conditions shall have occurred which individually or in the aggregate, have had, or may reasonably be anticipated to give rise to any Material Adverse Effect on AQSP or AQSP Mergeco.

(e)           Governmental Approvals.  Any and all approvals from Governmental Authorities required for the lawful consummation of the transactions contemplated by this Agreement, the Certificate of Merger, and the other Definitive Documents shall have been obtained.  The Certificate of Merger shall have been filed with the Secretary of State of the State of Delaware.

 

 

 

(f)           Consents.  Any and all needed consents and approvals from third parties for the consummation of the transactions contemplated by this Agreement, the Certificate of Merger and the other Definitive Documents, and the transfer of all of Cogility’s business, assets and agreements of Cogility to Cogility Surviving Corporation shall have been obtained.

(g)           No Actions, Suits or Proceedings.  No Order of any Court or Governmental Authority shall have been issued restraining, prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement, the Certificate of Merger and the other Definitive Documents.  No Action or Litigation shall be pending or threatened, before any Court or Governmental Authority to restrain, prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement, the Certificate of Merger, the other Definitive Documents, or the consummation of the transactions contemplated hereby.  No insolvency proceeding of any character including without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting Cogility shall be pending, and Cogility shall not have taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings.

(h)           Cogility Capital Stock.  The Cogility Shareholders shall have delivered Cogility Certificates evidencing all of the Cogility Capital Stock to AQSP, provided that AQSP may choose to proceed forward with the Closing notwithstanding the delivery to AQSP of Cogility Certificates evidencing less than all of the Cogility Capital Stock to AQSP but shall not be obligated to deliver any AQSP Stock or AQSP Options to any person or entity which fails to deliver his or its Cogility Certificates to AQSP except as may be required by applicable law.

(i)           AQSP Stock. AQSP shall have delivered to its stock transfer agent an irrevocable instruction letter in a form reasonably acceptable to AQSP and Cogility.

(j)           Closing Documents.  Each Party shall have delivered to the other Parties fully signed originals of this Agreement, the Certificate of Merger, and the other Definitive Documents, and such other documents and instruments as a Party or its counsel may reasonably request in regard to the Closing.

(k)           Consent and/or Estoppel Certificates. Cogility shall deliver to AQSP a consent and/or estoppel certificate executed by each landlord of any Leased Real Property, in form and substance satisfactory to AQSP.

(l)           Mutual Due Diligence. Cogility and AQSP each shall have completed its “due diligence” investigation of the other (including without limitation an examination of the corporate books and records, financials, historical operations, management, business practices, computer systems, prospects, legal, tax, ERISA and other matters), and the results of such investigation shall be satisfactory to each of them, in its sole discretion.

(m)           Financial Statements.  AQSP shall have received from Cogility such the Financial Statements and such other audited financial statements, reviewed financial statements and corresponding auditor’s opinions as shall enable AQSP to file a form 8-K within four business days following the Closing Date satisfying all SEC reporting requirements.

 

 

 

(n)           Reverse Stock Split.  The 1-for-20 Reverse Stock Split of AQSP Stock shall have been completed.

(o)           Securities Filings. All necessary securities filings, including but not limited to the Section 14 Filing, shall have been made with the SEC and other governmental agencies, as required by applicable laws, rules and regulations, in regard to the Merger and related matters.

11.2           Indemnification.

(a)           Cogility, DSGSPT and Ghourdjian agree to indemnify and hold harmless AQSP and AQSP Mergeco, the AQSP Shareholders, and each of their respective successors and assigns, together with all of their officers and directors, from and against any and all losses, damages, liabilities, obligations, costs or expenses which are caused by or arise out of (1) any breach or default in the performance by Cogility of any covenant or agreement of Cogility contained in this Agreement; (2) any material breach of warranty or inaccurate or erroneous representation made by Cogility, DSGSPT or Ghourdjian herein, in this Agreement or in any Exhibit or Schedule (including the Cogility Disclosure Schedule) delivered to AQSP or AQSP Mergeco pursuant hereto or in any certificate or other instrument delivered by or on behalf of Cogility, DSGSPT or Ghourdjian  pursuant hereto; (3) any infringement actions relating to the trademarks or service marks used by Cogility or any other loss arising out of a determination that Cogility is not entitled to use such trademarks or service marks; and (4) any and all actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees) arising out of the foregoing (any one such item being herein called a “Loss” and all such items being herein collectively called “Losses”), if and to the extent that such aggregate Losses exceed an aggregate of One Hundred Thousand Dollars ($100,000); provided, however, that neither DSGSPT nor Ghourdjian shall be liable for a proportionate share of any Loss in excess of its or his proportionate share of his stock in Cogility as of the Closing, and that the total cumulative liability of DSGSPT and Ghourdjian for Losses shall be satisfied from shares in Cogility or AQSP with a fair market value of One Million Dollars ($1,000,000.00).

 

(b) AQSP and AQSP Mergeco jointly and severally agree to indemnify and hold harmless Cogility and the Cogility Shareholders and their respective successors and assigns, from and against any and all Losses which are caused by or arise out of (1) any material breach or default in the performance by AQSP or AQSP Mergeco of any covenant or agreement of AQSP or AQSP Mergeco contained in this Agreement; (2) any material breach of warranty or inaccurate or erroneous representation made by AQSP or AQSP Mergeco herein, in this Agreement or in any Exhibit or Schedule delivered to Cogility pursuant hereto or in any certificate or other instrument delivered by or on behalf of AQSP or AQSP Mergeco pursuant hereto; and (3) any and all actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees) arising out of the foregoing, if and to the extent that such aggregate Losses exceed an aggregate of One Hundred Thousand Dollars ($100,000).

 

 

 

 

(c) Any indemnified party seeking indemnification hereunder shall give to the party obligated to provide indemnification to such indemnified party a notice describing in reasonable detail the facts giving rise to any claim for indemnification hereunder and shall include in such notice the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed pursuant hereto or in connection herewith upon which such claim is based.  After the giving of any notice pursuant hereto, the amount of indemnification to which an indemnified party shall be entitled under this Article shall be determined by the written agreement between the indemnified party and the indemnifying party or by a final judgment or decree of any Court of competent jurisdiction.

 

(d) No party hereunder shall be obligated under this Section 11.2 to pay any amounts for indemnification hereunder relating to a claim to the extent of (1) any tax benefit to the indemnified party therefrom, or (2) any insurance proceeds and any indemnity, contribution or similar payment paid to the indemnified party or any affiliated entity from any third party with respect thereto.

 

11.3           Third Party Claim.  If any third person asserts a claim against an indemnified party hereunder that, if successful, might result in a claim for indemnification against any indemnifying party hereunder, the indemnifying party shall be given prompt written notice thereof and shall have the right (a) to participate in the defense thereof and be represented, at his or its own expense, by advisory counsel selected by it, and (b) to approve any settlement if the indemnifying party is, or will be, required to pay any amounts in connection therewith.  Notwithstanding the foregoing, if within ten (10) Business Days after delivery of the indemnified party’s notice described above, the indemnifying party indicates in writing to the indemnified party that, as between such parties, such claims shall be fully indemnified for by the indemnifying party as provided herein, then the indemnifying party shall have the right to control the defense of such claim, provided that the indemnified party shall have the right (1) to participate in the defense thereof and be represented, at his or its own expense, by advisory counsel selected by it, and (2) to approve any settlement if the indemnified party’s interests are, or would be, affected thereby, which approval shall not be unreasonably withheld, conditioned or delayed.

 

12.1           Termination.

(a)           A Party shall have the right to terminate this Agreement in the event that one of the conditions precedent to the obligation of such Party to close the transaction hereunder set forth in Section 10.1 have not been met by a scheduled Closing Date that is mutually agreed upon by AQSP and Cogility, as extended by mutual agreement of the Parties.

 

(b) This Agreement shall terminate if the Closing does not occur by December 31, 2011, unless such date is extended by mutual agreement of the Parties.

 

 

 

 

13.1           Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either (a) delivered by hand, (b) made by facsimile transmission, (c) sent by recognized overnight courier, or (d) sent by certified mail, return receipt requested, postage prepaid.

If to AQSP, AQSP Mergeco, or Jacobs to:

 

Gerard M. Jacobs

31 N. Suffolk Lane

Lake Forest, IL  60045

If to Cogility, DSGSPT, or Ghourdjian to:

Matthew Ghourdjian

Cogility Software Corporation

2967 Michelson Dr STE G528

Irvine CA ###-###-####

All notices, requests, consents and other communications hereunder shall be deemed to have been delivered (1) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (2) if sent by facsimile transmission, at the time receipt has been acknowledged by electronic confirmation or otherwise, (3) if sent by overnight courier, on the next Business Day following the day such notice is delivered to the courier service, or (4) if sent by certified mail, on the fifth (5th) Business Day following the day such mailing is made.

 

13.2           Entire Agreement.  The November 4, 2010 Agreement, this Agreement, the Certificate of Merger and the other Definitive Documents embody the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all other oral or written discussions, drafts, proposals, agreements, contracts and understandings of any nature whatsoever relating to the subject matter hereof.  No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in the November 4, 2010 Agreement, this Agreement, the Certificate of Merger and the other Definitive Documents shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.

 

 

13.3           Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs, personal representatives, legal representatives, and permitted assigns.

13.4           Assignment.  Neither this Agreement, nor any right hereunder, may be assigned by any of the Parties without the prior written consent of the other Parties.

13.6           Waivers.  The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the Party entitled to the benefits of such terms or provisions.  No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar.  Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.  No failure or delay by a Party in exercising any right, power or remedy under this Agreement, and no course of dealing between the Parties hereto, shall operate as a waiver of any such right, power or remedy of the Party.  No single or partial exercise of any right, power or remedy under this Agreement by a Party, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such Party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  The election of any remedy by a Party shall not constitute a waiver of the right of such Party to pursue other available remedies.  No notice to or demand on a Party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Party giving such notice or demand to any other or further action in any circumstances without such notice or demand.

13.9           Publicity.  Neither Cogility nor any of the Cogility Shareholders shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of AQSP, except as may be required by Law.

 

 

13.10           Governing Law.  This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the Law of the State of Delaware without giving effect to the conflict of law principles thereof.

13.11           Counterparts; Signatures.  This Agreement may be executed in any number of counterparts, either manually, or via facsimile transmission or electronic transmission of signatures, each of which shall be deemed an original, no other counterpart needing to be produced and all of which, when taken together, shall constitute but one and the same instrument and agreement.

13.12           Headings.  The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

13.13           Expenses.  Except as otherwise specified in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses, whether or not the Closing shall have occurred.

 

13.14           Attorney’s Fees.  In the event that any Action or Litigation is filed to enforce any of the agreements, terms, conditions, representations, warranties, covenants, indemnification agreements, or other Sections of this Agreement, the prevailing Party in such action shall be entitled to payment from the losing Party all costs and expenses, including reasonable attorney’s fees, court costs and ancillary expenses incurred by such prevailing Party in connection with such Action or Litigation.

 

13.15           Further Assurances.  At any time and from time to time after the Closing Date each Party shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to more effectively carry forth the terms and conditions of this Agreement, the Certificate of Merger and the other Definitive Documents.

[Remainder of Page Left Intentionally Left Blank]

 

IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and year first above written.

 

Exhibit 1.5     Certificate of Merger

 

 

 

Exhibit 2.8(a)    Directors and Officers of Cogility Surviving Corporation

Matthew Ghourdjian, Co-Chairman

Gerard M. Jacobs, Co-Chairman

Joshua A. Bloom, M.D.

Roger S. Greene

James S. Jacobs, M.D.

Michael D. McCaffrey

Vincent J. Mesolella

Richard E. Morrissy

Two additional persons to be identified by Matthew Ghourdjian and approved by Gerard M. Jacobs

President - Gerard M. Jacobs

Chief Executive Officer - Daniel F. Terry, Jr.

Chief Technology Officer - Matthew Ghourdjian

Treasurer - A person to be mutually designated by Matthew Ghourdjian and Gerard M. Jacobs, and approved by the board of directors of Cogility Surviving Corporation

Secretary - Gerard M. Jacobs

 

 

Exhibit 2.8(b)                                           Directors and Officers of AQSP

Matthew Ghourdjian, Co-Chairman

Gerard M. Jacobs, Co-Chairman

Joshua A. Bloom, M.D.

Roger S. Greene

James S. Jacobs, M.D.

Michael D. McCaffrey

Vincent J. Mesolella

Richard E. Morrissy

Two additional persons to be identified by Matthew Ghourdjian and approved by Gerard Jacobs

Chief Executive Officer, Chief Development Officer, and Secretary - Gerard M. Jacobs

President and Chief Operating Officer - Daniel F. Terry, Jr.

Chief Technology Officer - Matthew Ghourdjian

Treasurer - A person to be mutually designated by Matthew Ghourdjian and Gerard M. Jacobs, and approved by the AQSP Board

Exhibit 4.9(a)                                           Annual Financial Statements

To be attached, subject to approval by both Matthew Ghourdjian and Gerard M. Jacobs

 

 

Exhibit 4.9(b)                                           Interim Financial Statements

To be attached, subject to approval by both Matthew Ghourdjian and Gerard M. Jacobs

 

Exhibit 10.1(i)                                Letter to Transfer Agent

To be attached, subject to approval by both Matthew Ghourdjian and Gerard M. Jacobs

 

 

Cogility hereby discloses, represents and warrants to AQSP and AQSP Mergeco the following information in regard to the following Sections of the Agreement, respectively:

Section 4.1:  Cogility is duly licensed and qualified to transact business as a foreign corporation and is in good standing in California.

Section 4.3:  Cogility owns 49% of the common stock of Cortez Systems, a California corporation.

Section 4.11(b):  The Leased Real Property is as follows:

Anaheim, CA:

(1) Street address: 1600 South Douglass, Suite 102, Anaheim, CA  92612

(2) Identity of lessor and lessee: Lessor is CashCall, Inc., Lessee is Cogility

(3) Term and rental payment: No rental payment and no written agreement guaranteeing any term for Cogility

San Jose, CA:

(1) Street address: 111 N. Market Street, Suite 815, San Jose, CA

(2) Identity of lessor and lessee: Lessor is Fleece Real Estate Co., Lessee is Cogility

(3) Term and rental payment: $3,826 per month through November 30, 2011.

Alexandria, VA:

(1) Street address: 111 S. Patrick, Alexandria, VA  22314

(2) Identity of lessor and lessee: Lessor is Guy Dresser, Lessee is Cogility

(3) Term and rental payment: Month to month, $3400 per month.

Section 4.12:  The following is a list of Cogility’s tangible personal property:

Computers and office equipment

Section 4.15:  The following is a list of all Permits used in or otherwise required for the conduct of Cogility’s business:

General Business Permits to conduct business in its municipal locations

Section 4.16:  Cogility owes the following taxes:

California Franchise Tax Board                                                      $55,909                      Unpaid 2009 taxes

Cogility has filed an amended return claiming that the $55,909 in unpaid taxes is not due, but the Franchise Tax Board has not yet accepted that conclusion.

Cogility has not yet filed its 2010 federal or state tax returns, but has filed and received extensions to file the returns no later than September 15, 2011.  Cogility does not believe it owes state or federal income tax for business operations in 2010, with the exception of annual state franchise fees.

 

 

 

Cogility is late on making payroll tax payments for the period from February 15, 2011 to the present.  The estimated delinquency as of July 31, 2011 is $ 115,970.95, but that amount does not include any penalties or late fees.

Cogility has a 401K plan with Securian Retirement.  Cogility does not match any employee contributions.

On April 15, 2011, Daniel Terry made a loan to Cogility in the principal amount of $100,000, with interest accruing at a rate of 10% per annum. On June 29, 2011, Daniel Terry made a loan to Cogility in the principal amount of $125,000, with interest accruing at a rate of 10% per annum.  On July 29, 2011, Daniel Terry made a loan to Cogility in the principal amount of $125,000, with interest accruing at a rate of 10% per annum.

Section 4.21:

The Watertower Group made a claim in January 2011 relating to a transaction with Cogility in 2005.  Cogility does not believe any sums are due to the Watertower Group.

Section 4.22:

Cogility’s domain names and web sites are as follows:  www.cogility.com

Cogility’s Patents and Patent applications pending are as follows:

SYSTEM AND METHOD FOR TEMPORAL CORRELATION OF

OBSERVABLES Docket No.: 008889P002

STATE MACHINE WITH OUT-OF-ORDER PROCESSING FUNCTIONALITY AND

METHOD THEREOF Docket No.: 005255P003

Cogility does business under the following trade names, both of which are registered to Cogility:

Cogility Software, Registration No. 3006210, registration date 11/11/2005, subject to the lien of AQSP; and

Cogility, Registration No. 2977188, registration date 7/26/2005, subject to the lien of AQSP.

Severance agreements with M. Hood and H. Desai call for payments under certain conditions after the Closing Date.  M. Artiano has a claim for a deferred bonus to be paid under certain conditions after the Closing Date.

 

The AQSP Entities hereby disclose, represent and warrant to Cogility and the Shareholders the following information in regard to Article V of the Agreement:

AQSP's Section 14C information statement in regard to the Merger, its Form 10-K for the transitional period ended December 31, 2010, and its Form 10-Q for the quarterly period ended June 30, 2011, all filed with the U.S. Securities and Exchange Commission, are hereby incorporated herein by reference thereto.