AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “AGREEMENT”) is made and entered into as of July 16, 2007, by and among Atlantic Syndication Network, Inc. a Nevada corporation (the “PARENT”), ASNI II, INC., a Delaware corporation (the “MERGER SUB”) and ZEALOUS HOLDINGS, INC., a Delaware corporation (the “COMPANY”). Capitalized terms used in this Agreement without definition shall have the meanings set forth or referenced in ARTICLE VIII.

WHEREAS, the Shareholders are collectively the beneficial and record owners of all of the issued and outstanding capital stock of the Company, comprised of Five Million (5,000,000) shares of Class A common stock with a par value of $0.0001 per share; Eight Hundred Seventy-Two Thousand Five-Hundred (872,500) shares of Class B common stock with a par value of $0.0001; and Two Hundred Sixty Thousand Two Hundred Sixteen (260,216) shares of Preferred Stock with a par value of $0.0001 per share (collectively, the “COMPANY SHARES”); and

 

WHEREAS, the Board of Directors of Parent and Merger Sub have (i) determined that the Merger is advisable and fair to, and in the best interest of, Parent and its stockholders, and (ii) approved this Agreement, the Amendment and the other transactions contemplated by this Agreement, including the Merger; and

 

WHEREAS, the Board of Directors of the Company have (i) determined that the Merger is advisable and fair to, and in the best interest of, the Company and its stockholders, and (ii) approved this Agreement and the other transactions contemplated by this Agreement, including the Merger.; and

 

WHEREAS, Concurrently with the execution of this Agreement, and as a condition and inducement to the Company's willingness to enter into this Agreement, certain current executive officers and all members of the Board of Directors of Parent are entering into voting agreements and irrevocable proxies in substantially the form attached hereto as Exhibit A (the "Parent Voting Agreements").

 

WHEREAS, The Board of Directors of the Parent has resolved to recommend that the stockholders of the Company adopt this Agreement in accordance with Nevada corporate law;

 

WHEREAS Parent, as the sole stockholder of Merger Sub, has adopted this Agreement;

 

WHEREAS The Board of Directors of Parent has resolved to recommend to its shareholders the approval of (i) the increase in the number of authorized shares of the Parent and (ii) the designation of convertible preferred stock to be issued in connection with the Merger.

 

 

WHEREAS, for Federal income tax purposes it is intended that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “CODE”); and

 

WHEREAS, the Parent, Merger Sub, and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.1    THE MERGER. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the “DGCL”), the Company shall be merged with and into Merger Sub at the Effective Time. At the Effective Time and as a result of the Merger, the separate corporate existence of the Company shall cease and Merger Sub shall continue as the surviving entity (the “SURVIVING ENTITY”). The Merger, the Parent Stockholder Approval, the issuance by the Parent of shares of convertible preferred stock of the Parent, par value $.01 per share, (the “PARENT PREFERRED STOCK,”or the “PARENT COMPANY SHARES”) in connection with the Merger (the “SHARE ISSUANCE”) and the other transactions contemplated by this Agreement are referred to in this Agreement as the “TRANSACTIONS.”

 

1.2    CLOSING. The closing (the “CLOSING”) of the Merger shall take place at the offices of Jones Garneau, 670 White Plains Road, Scarsdale, NY 10583 at 10:00 a.m., Eastern Daylight Time, on the third (3rd) Business Day following the satisfaction (or, to the extent permitted by Law, waiver by the party or parties entitled to the benefits thereof) of the conditions set forth in Sections 5.1 and 5.2 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), or at such other place, time and date as shall be agreed in writing by the Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the “CLOSING DATE.”

 

1.3    EFFECTIVE TIME. Prior to the Closing, the Parent shall prepare, and on the Closing Date, the Surviving Entity shall file with the Secretary of State of the State of Delaware, a certificate of merger or other appropriate documents (in any such case, the “CERTIFICATE OF MERGER”) executed in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State on the Closing Date, or at such later time as the Parent and the Company shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being the “EFFECTIVE TIME”).

 

 

1.4    EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided herein and in the applicable provisions of the DGCL, including Sections 251, 259, 260 and 261 of the DGCL.

 

1.5    ARTICLES OF INCORPORATION AND BY-LAWS.

(a)    The articles of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the Surviving Entity until thereafter changed or amended as provided therein or by the DGCL or applicable Law.

 

(b)    The by-laws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the by-laws of the Surviving Entity until thereafter changed or amended as provided therein or by applicable Law.

1.6    DIRECTORS. The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Entity, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

 

1.7    OFFICERS. The officers of the Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Entity, until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.

2.1    EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any Company Shares or any shares of capital stock of Merger Sub:

(a)    CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of capital stock of Merger Sub shall continue to be issued and outstanding and shall constitute the only issued and outstanding shares of the Surviving Entity.

 

(b)    CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Company Share that is owned by the Company, Parent or Merger Sub (or any direct or indirect wholly-owned subsidiary of Parent or Merger Sub) shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and no cash, Parent Company Shares or other consideration shall be delivered or deliverable in exchange therefore.

 

(c)    CONVERSION OF COMPANY SHARES.

 

 

(1)    Each issued and outstanding Company Share outstanding prior to the Effective Time shall be converted into the right to receive 0.081530 shares of Parent Preferred Stock as the“MERGER CONSIDERATION,” with each share of Parent Preferred Stock being convertible at anytime after the Effective Time into 906.6 shares of Parent Common Stock; based on the ratio of currently issued and outstanding Company Shares over 500,000 shares of Parent Preferred Stock proposed to be issued in connection with the Merger.

 

(2)    As of the Effective Time, all such Company Shares shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Company Shares shall cease to have any rights with respect thereto, except the right to receive Merger Consideration upon surrender of such certificate in accordance with Section 2.2.

 

(3)    DISSENTERS RIGHTS. For purposes of this Agreement, “Dissenting Shares” means Company Shares held as of the Effective Time by a Shareholder who has not voted such Company Shares in favor of the adoption of this Agreement and the Merger and with respect to which appraisal shall have been duly demanded and perfected in accordance with Section 262 of the GCL and not effectively withdrawn or forfeited prior to the Effective Time. Dissenting Shares shall not be converted into or represent the right to receive shares of Parent Company Shares unless such Shareholder’s right to appraisal shall have ceased in accordance with Section 262 of the GCL. If such Shareholder has so forfeited or withdrawn his, her or its right to appraisal of Dissenting Shares, then, (i) as of the occurrence of such event, such holder’s Dissenting Shares shall cease to be Dissenting Shares and shall be converted into and represent the right to receive the Merger Shares issuable in respect of such Company Shares promptly following the occurrence of such event, the Parent shall deliver to such Shareholder a certificate representing the Merger Shares to which such holder is entitled.

 

(d)    The Company shall give the Parent prompt notice of any written demands for appraisal of any Company Shares, withdrawals of such demands, and any other instruments that relate to such demands received by the Company. The Company shall not, except with the prior written consent of the Parent, make any payment with respect to any demands for appraisal of Company Shares or offer to settle or settle any such demands.

2.2    EXCHANGE OF CERTIFICATES.

 

(a)    EXCHANGE AGENT. Jones Garneau LLP shall serve as Exchange Agent (the “EXCHANGE AGENT”) for payment of Merger Consideration upon surrender of certificates representing Company Shares. Promptly following the Effective Time, Parent shall reserve and/or deposit with the Exchange Agent, for the benefit of the holders of Company Shares, for exchange in accordance with this Article II, through the Exchange Agent: certificates representing the number of shares of Parent Company Shares issuable and pursuant to Section 2.1(c) in exchange for outstanding Company Shares. The Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger Consideration contemplated to be issued pursuant to Section 2.1.

 

 

(b)    EXCHANGE PROCEDURES. As soon as reasonably practicable after the Effective Time, each holder of record of a certificate or certificates (the “CERTIFICATES”) that, immediately prior to the Effective Time, represented outstanding Company Shares whose shares were converted into the right to receive Merger Consideration pursuant to Section 2.1(c) shall surrender such holder's Certificate for cancellation to the Company and/or the Exchange Agent (or to such other agent or agents as may be appointed by Parent) together with a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Parent and shall be in such form and have such other provisions as Parent may reasonably specify), duly executed, and such other documents as may reasonably be required by the Parent or the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefore the holder's pro rata portion of the Merger Consideration, into which the aggregate number of Company Shares previously represented by such Certificate shall have been converted pursuant to Section 2.1(c), and the Certificate so surrendered shall forthwith be canceled. Thereafter, such holder shall be treated as a holder of Parent Company Shares for purposes of voting or quorum for any meeting of the stockholders of Company. In the event of a transfer of ownership of Company Shares that is not registered in the transfer records of the Company, payment may be made to a person other than the person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate or establish to the satisfaction of Parent that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration into which the Company Shares theretofore represented by such Certificate have been converted pursuant to Section 2.1(c). No interest shall be paid or accrue on any cash payable upon surrender of any Certificate.

 

(c)    FRACTIONAL SHARES. No certificates or scrip representing fractional Parent Company Shares shall be issued to Company Stockholders on the surrender for exchange of certificates that immediately prior to the Effective Time represented Company Shares converted into Merger Shares pursuant to Section 1.5 and such Company Stockholders shall not be entitled to any voting rights, rights to receive any dividends or distributions or other rights as a stockholder of the Parent with respect to any fractional Parent Company Shares that would have otherwise been issued to such Shareholder. In lieu of any fractional Parent Company Shares that would have otherwise been issued, each former Shareholder that would have been entitled to receive a fractional Parent Company Share shall, on proper surrender of such person’s Certificates, receive such whole number of Parent Company Shares as is equal to the precise number of Company Shares to which such Shareholder would be entitled, rounded up or down to the nearest whole number (with a fractional interest equal to 0.5 rounded upward to the nearest whole number); provided that each such Shareholder shall receive at least one Parent Company Share.

 

(d)    RESTRICTED SECURITIES. The Parent Company Shares and any Parent Common Stock converted from the Parent Company Shares (i) shall not be registered under the Securities Act or any state securities laws, (ii) will be offered and sold in reliance upon exemptions provided in the Securities Act and state securities laws for transactions not involving any public offering, and (iii) therefore, shall constitute “restricted securities” within the meaning of the Securities Act and cannot be resold or transferred unless they are subsequently registered under the Securities Act and such applicable state securities laws or unless an exemption from such registration is available.

 

 

(e)    INVESTMENT REPRESENTATION LETTERS. On or before the Closing Date, each of the Shareholders shall execute and deliver an Investment Representation Letter, in the form reasonably acceptable to the Company and Parent (the “INVESTOR REPRESENTATION LETTER”), which shall contains certain representations designed to confirm the availability to the Parent of the exemption from registration under Rule 506 of the Securities Act in connection with the issuance of the Parent Company Shares pursuant to this Agreement. Notwithstanding anything to the contrary in this Agreement, in the event that any Shareholder (a “DEFAULTING SHAREHOLDER”) is unable or fails to execute and deliver an Investor Representation Letter in favor of the Parent, or the Parent has a reasonable basis to believe that the representations of such Shareholder in the Investor Representation Letter are not true and correct in any material respects, then the Parent may in its sole and absolute discretion refuse to issue the Merger Consideration allocable to the Defaulting Shareholder.

 

(f)    NO FURTHER OWNERSHIP RIGHTS IN COMPANY SHARES. The Merger Consideration paid and/or issued in accordance with the terms of this Article II upon conversion of any Company Shares shall be deemed to have been paid and/or issued in full satisfaction of all rights pertaining to such Company Shares, subject, however, to the Surviving Entity's obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time that may have been declared or made by the Company on such Company Shares in accordance with the terms of this Agreement or prior to the date of this Agreement and which remain unpaid at the Effective Time, and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Entity of Company Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates formerly representing Company Shares are presented to the Surviving Entity or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II.

 

(g)    INCOME TAX TREATMENT. It is intended by the parties hereto that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The parties hereto hereby adopt this Agreement as a “plan of reorganization” within the meanings of Sections 1.368-2(g) and 1.368-3(a) of the U.S. Treasury Regulations promulgated under the Code.

2.3    COMPANY EQUITY AWARDS.

 

(a)    At the Effective Time, each Company Stock Option then outstanding, whether or not then exercisable, shall be assumed by Parent and converted into an option to purchase Parent Company Shares in accordance with this Section 2.3(a). Each Company Stock Option so converted shall continue to have, and be subject to, the same terms and conditions as set forth in the applicable Company Stock Option and any agreements thereunder immediately prior to the Effective Time. Notwithstanding the foregoing, the conversion of any Company Stock Options which are “incentive stock options,” within the meaning of Section 422 of the Code, into options to purchase Parent Company Shares shall be made so as not to constitute a “modification” of such Company Stock Options within the meaning of Section 424 of the Code.

 

 

(b)    Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Company Shares for delivery upon exercise or settlement of the Company Stock Options being assumed or settled in accordance with this Section 2.3.]]

3.1    REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The Company hereby represent and warrant to the Parent as follows:

 

(a)    AUTHORITY. The Company has the corporate power and authority to enter into and deliver this Agreement and each of the other agreements, certificates, instruments and documents contemplated hereby (collectively, the “ANCILLARY DOCUMENTS”) to which it is a party, to carry out its obligations hereunder and under any Ancillary Document and to consummate the transactions contemplated hereby and by the Ancillary Documents. All actions, authorizations and consents required by Law for the execution, delivery, and performance by the Company of this Agreement and each Ancillary Document to which it is a party, and the consummation of the transactions contemplated hereby and thereby, have been properly taken or obtained, including without limitation, the approval of this Agreement and the transactions contemplated by it by the Board of Directors of the Company.

 

(b)    EXECUTION AND DELIVERY. This Agreement has been, and each Ancillary Document to which the Company is a party will be at the Closing, duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms and conditions, except as enforceability thereof may be limited by applicable bankruptcy, reorganization, insolvency or other similar laws affecting or relating to creditors' rights generally or by general principles of equity.

 

(c)    NO CONFLICTS. The execution, delivery and performance by the Company of this Agreement and each Ancillary Document to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not violate, conflict with or result in a breach of any term, condition or provision of, or require the consent of any Person under, or result in the creation of or right to create any Lien upon any of the assets of the Company under, (i) any Laws to which the Company or any of its assets are subject, (ii) any permit, judgment, order, writ, injunction, decree or award of any Governmental Authority to which the Company or any of its assets are subject, (iii) the articles of incorporation or bylaws of the Company, or (iv) any license, indenture, promissory note, bond, credit or loan agreement, lease, agreement, commitment or other instrument or document to which the Company is a party or by which the Company or any of its assets are bound.

 

 

(d)    GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority, is required to be obtained by the Company in connection with or as a result of the execution and delivery of this Agreement or any of the Ancillary Documents, or the performance of its obligations hereunder and thereunder.

 

(e)    ORGANIZATION, STANDING AND QUALIFICATION. The Company is a corporation duly incorporated, validly existing, and in good standing under the Laws of the State of Delaware. The Company has corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, to use its name and is duly qualified, licensed or authorized to do business and in good standing, in each jurisdiction where the nature of the activities conducted by it or the character of the properties owned, leased or operated by it require such qualification, licensing or authorization. Each such jurisdiction is identified on SCHEDULE 3.1(E). The Company's corporate minute books reflect all resolutions approved and other actions taken by its shareholders or Board of Directors and any committees thereof since the date of its incorporation. The Shareholders or the Company have previously delivered to the Parent true, correct and complete copies of the Articles of Incorporation and Bylaws of the Company, each as currently in effect (collectively, the “ORGANIZATION DOCUMENTS”).

 

(f)    CAPITALIZATION. The authorized capital stock of the Company consists solely of Five Million (5,000,000) shares of Class A common stock with a par value of $0.0001 per share; Eight Hundred Seventy-Two Thousand Five-Hundred (872,500) shares of Class B common stock with a par value of $0.0001; and Two Hundred Sixty Thousand Two Hundred Sixteen (260,216) shares of Preferred Stock with a par value of $0.0001 per share (collectively,. As of the date hereof, each Shareholder owns of record such number of shares of Common Stock as is set forth opposite such Shareholder's name on SCHEDULE 3.1(F). The Company Shares constitute all of the issued and outstanding capital stock of the Company. All of the issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable. No shares of Common Stock are held in treasury. Except as disclosed in SCHEDULE 3.1(F), there are no outstanding subscriptions, options, warrants, calls, contracts, demands, commitments, convertible or exchangeable securities, profits interests, conversion rights, preemptive rights, rights of first refusal or other rights, agreements, arrangements or commitments of any nature whatsoever under which the Company is or may become obligated to issue, redeem, assign or transfer any shares of capital stock or purchase or make payment in respect of any shares of capital stock of the Company now or previously outstanding, and there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to or any shares of its capital stock.

 

(g)    SUBSIDIARIES AND OTHER EQUITY INTERESTS. SCHEDULE 3.1(G) sets forth: (i) the name of each Company Subsidiary; (ii) the number and type of outstanding equity securities of each Company Subsidiary and a list of the holders thereof; (iii) the jurisdiction of organization of each Company Subsidiary; (iv) the names of the officers and directors of each Company Subsidiary; and (v) the jurisdictions in which each Company Subsidiary is qualified or holds licenses to do business as a foreign corporation or other entity. For purposes of this Agreement, a “Company Subsidiary” shall mean any corporation, partnership, joint venture or other entity in which the Company has, directly or indirectly, an equity interest representing 50% or more of the equity securities thereof or other equity interests therein.  Each Company Subsidiary is an entity duly organized, validly existing and in corporate and tax good standing under the laws of the jurisdiction of its incorporation. Each Company Subsidiary is duly qualified to conduct business and is in corporate and tax good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires qualification to do business, except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. Each Company Subsidiary has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties

 

 

(k)    TITLE TO ASSETS. Except as disclosed on SCHEDULE 3.1(K), the Company has good and marketable title to all of the tangible and intangible assets owned by it, free and clear of any Liens, and none of such assets are owned by any Person other than the Company. The Company owns, leases, licenses or otherwise has the contractual right to use all of the assets used in or necessary for the conduct of its business as currently conducted. The Company has delivered to the Parent a schedule of the fixed assets of the Company dated within thirty (30) days prior to the date hereof. All personal property owned or leased by the Company, taken as a whole, is in good repair and is operational and usable in the operation of the Company, subject to ordinary wear and tear.

 

(l)    RECEIVABLES AND PAYABLES. (i) the accounts and notes receivable reflected on the Financial Statements or arising since the Balance Sheet Date (collectively, the “RECEIVABLES”), are bona fide, represent valid obligations to the Company, and have arisen or were acquired in the ordinary course of business and in a manner consistent with recent past practice and with the Company's regular credit practices; (ii) the Company's provision for doubtful accounts reflected on its Financial Statements or reserved on its books since the Balance Sheet Date has been determined in accordance with the generally accepted accounting principles consistently applied; (iii) the Receivables have been collected or are collectible in full, net of any allowance for uncollectibles recorded on the Financial Statements or properly reserved on its books since the Balance Sheet Date, in a manner consistent with past practice in the ordinary course of business and without resort to litigation; (iv) none of the Receivables is or will at the Closing Date be subject to any defense, counterclaim or setoff; (v) since the Balance Sheet Date, the Company has not canceled, reduced, discounted, credited or rebated or agreed to cancel, reduce, discount, credit or rebate, in whole or in part, any Receivables; and (vi) there has been no material adverse change since the Balance Sheet Date in the amounts of Receivables or the allowances with respect thereto, or accounts payable of the Company, from those reflected in the balance sheet of the Company as of such date. The Company has provided to the Parent a schedule of aged Receivables and payables for the Company as of a date which is within three (3) business days of the date hereof.

 

(m)    REAL PROPERTY.

 

(i)    The Company does not now own, and has never owned, any real property.

 

 

(ii)    SCHEDULE 3.1(M) sets forth a true and complete list of all real property leased or otherwise used by the Company, identifying the lessor or other owner thereof (the “REAL PROPERTY”).

 

(iii)    There is not existing or proposed as a matter of public record or, to the Knowledge of the Company, presently contemplated, any condemnation or similar action, or zoning action or proceeding, with respect to any portion of the Real Property. None of the existing buildings and improvements which in part comprise the Real Property fails to comply fully with all size, height, set back, use and other zoning restrictions and regulations applicable thereto, including, without limitation, the parking space requirements of all applicable zoning ordinances and regulations. The Company or its landlord has obtained all licenses, permits, approvals, certificates, and other authorizations required by applicable Laws for the use and occupancy of the Real Property as it is currently being utilized. None of the Real Property is subject to any encumbrance, easement, right-of-way, building or use restriction, exception, variance, reservation, limitation or other Liens which might in any material respect interfere with or impair the continued use thereof as currently utilized or proposed to be utilized by the Company.

(n)    PROPRIETARY RIGHTS.

 

(i)    The Company owns or possesses licenses or other rights to use all trademarks, trade and business names, internet domain names, service marks, service names, copyrights, customer lists, trade secrets and inventions (whether or not patentable) (collectively, “PROPRIETARY RIGHTS”) that are necessary to the conduct of the Company's business as currently conducted or anticipated.

 

(ii)    SCHEDULE 3.1(N)(II) sets forth a true and complete list of all trademarks, trade names, service marks, service names, internet domain names, copyrights and patents included in the Proprietary Rights of the Company (identifying which are owned and which are licensed), including all United States, state and foreign registrations or applications for registration thereof and all agreements relating thereto. All filing, registration, maintenance or similar fees payable in connection with each registration (or application therefor) of Proprietary Rights set forth on SCHEDULE 3.1(N)(II) have been paid and each such registration is valid and in full force and effect.

 

(iii)    Except as disclosed in SCHEDULE 3.1(N)(III), the Company is not required to pay any royalty, license fee or similar compensation in connection with the conduct of its business as currently conducted.

 

(iv)    To the knowledge of the Company, the Company has not interfered with, infringed upon, misappropriated or otherwise come into conflict with the Proprietary Rights of any other Person or committed any acts of unfair competition, and no claims have been asserted by any Person alleging such interference, infringement, misappropriation, conflict or act of unfair competition.

 

 

(v)    To the knowledge of the Company, no Person is infringing upon its Proprietary Rights.

 

(vi)    Except as disclosed in SCHEULE 3.1(n)(vi), there are no Proprietary Rights developed by any shareholder, director, officer, consultant or employee of the Company that are used in the Company's business and that have not been transferred to, or are not owned free and clear of any Liens by, the Company.

 

(o)    MATERIAL AGREEMENTS. SCHEDULE 3.1(O)(1) sets forth a true and complete list, and the Company has provided to the Parent complete copies (including all amendments and extensions thereof and all waivers thereunder) or, if oral, an accurate and complete description, of each of the following material agreements, whether written or oral, to which the Company is a party or is otherwise bound (each, a “MATERIAL AGREEMENT”):

 

(i)    all loan agreements, indentures, mortgages, notes, installment obligations, capital leases or other agreements or instruments relating to the borrowing of money (or guarantees thereof);

 

(ii)    all continuing contracts or commitments for the future purchase, sale or manufacture of products, materials, supplies, equipment or services requiring payment to or from the Company in an amount in excess of $50,000 per annum which are not terminable on 30 days' or less notice without cost or other liability at or any time after the Closing Date, or in which the Company has granted or received manufacturing rights, most favored nation pricing provisions or exclusive rights relating to any product or service;

 

(iii)    all contracts with any Governmental Authority;

 

(iv)    all leases, subleases or any other agreements or arrangements under which the Company has the right or license to use any personal property, whether tangible or intangible, owned or licensed by another Person;

 

(v)    all agreements or arrangements under which any other Person has the right or license to use any real property or personal property, whether tangible or intangible, owned, leased or licensed by the Company;

 

(vi)    all contracts or understandings which by their terms restrict the ability of the Company to conduct its business or to otherwise compete in any material respect, including as to manner or place;

 

(vii)   all joint venture or similar agreements or understandings;

 

(viii)   lease and other agreements pertaining to the Real Property;

 

(ix)    all collective bargaining, employment, severance, consulting, nondisclosure or confidentiality agreements, and agreements requiring a charge of control or parachute payments, or any other type of contract or understanding with any officer, employee or consultant, other than pursuant to Employee Benefit Plans, which is not immediately terminable by the Company without cost or other liability to the Company;

 

 

(x)    all agreements with sales agents or representatives, wholesalers, distributors and dealers;

 

(xi)    all agreements concerning any Hazardous Materials; and

 

(xii)   all other contracts, without regard to monetary amount, which were not entered into in the ordinary course of business consistent with past practice or which are material to the conduct of the Company's business and not listed above.

 

Except as disclosed on SCHEDULE 3.1(O)(2), the Company is not, and to the knowledge of the Company, any other party thereto is not, in default under any Material Agreement and no event has occurred or is reasonably expected to occur which (after notice or lapse of time or both) would become a breach or default under, or would otherwise permit modification, cancellation, acceleration or termination of, any Material Agreement or would result in the creation of or right to obtain any Lien upon, or any Person obtaining any right to acquire, any assets, rights or interests of the Company. Except as disclosed on SCHEDULE 3.1(O)(3): (i) each Material Agreement is in full force and effect and is a valid and binding obligation of the Company, and, to the knowledge of the Company, the other parties thereto; (ii) there are no unresolved disputes with respect to any Material Agreement; and (iii) the Company has no reasonable basis to believe that any party to a Material Agreement intends either to modify, cancel or terminate such Material Agreement.

 

(p)    LITIGATION. There is no claim, legal action, suit, arbitration, investigation or other proceeding pending, or to the knowledge of the Company, threatened against or relating to the Company or its assets. Neither the Company nor any of its assets are subject to any outstanding judgment, order, writ, injunction or decree of any Governmental Authority. There is currently no investigation or review by any Governmental Authority with respect to the Company pending or, to the Knowledge of the Company, threatened, nor has any Governmental Authority notified the Company of its intention to conduct the same.

 

(q)    COMPLIANCE WITH LAWS. The Company has all licenses, permits and other authorizations from all applicable Governmental Authorities necessary or desirable for the conduct of its business as currently conducted or as currently expected to be conducted following the Closing Date. SCHEDULE 3.1(Q) hereto sets forth a true and complete list of all such licenses, permits and other authorizations obtained by the Company, each of which is in full force and effect and no violations thereunder have been recorded. The Company is in compliance, and has complied, with all Laws applicable to it and has not received any notice of any violation thereof.

 

(r)    ENVIRONMENTAL MATTERS. To the knowledge of the Company, except as disclosed in SCHEDULE 3.1(R):

 

 

(i)    During the period that the Company has owned, leased or operated any properties or facilities, neither it nor any other Person has disposed, released, or participated in or authorized the release or threatened release of Hazardous Materials on, from or under such properties or facilities. There is not now nor has there ever been any presence, disposal, release or threatened release of Hazardous Materials on, from or under any of such properties or facilities, which may have occurred prior to the Company having taken possession of any of such properties or facilities. For the purposes of this Agreement, the terms “disposal,” “release,” and “threatened release” shall have the definitions assigned thereto by the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U. S.C. ss. 9601 et seq., as amended (“CERCLA”).

 

(ii)    The operations of the Company and properties that the Company owns, leases or operates, are in compliance with Environmental Law. During the time that the Company has owned, leased or operated its properties and facilities, neither the Company nor any other Person has used, generated, manufactured or stored on, under or about such properties or facilities or transported or arranged for disposal to or from such properties or facilities, any Hazardous Materials which may be considered a violation of applicable Environmental Law.

 

(iii)    During the time that the Company has owned, leased or operated its properties and facilities, there has been no litigation or proceeding brought or, to the Knowledge the Company, threatened against the Company by, or any settlement reached the Company with, any Persons alleging the presence, disposal, release or threatened release of any Hazardous Materials, on from or under any of such properties or facilities.

 

(iv)    There are no facts, circumstances or conditions relating to the properties and facilities owned, leased or operated by the Company which could give rise to a claim under any Environmental Law or to any material Environmental Costs and Liabilities.

(s)    RELATED PARTY TRANSACTIONS. Except as disclosed on SCHEDULE 3.1(S), no Related Party has been directly or indirectly a party to any contract or other arrangement (whether written or oral) with the Company providing for services (other than as an employee of the Company), products, goods or supplies, rental of real or personal property, or other wise requiring payments from or to the Company. For purposes hereof, the term “RELATED PARTY” shall mean any Shareholder or a director or officer of the Company or any member of his or her family or any corporation, partnership, limited liability company, other business entity or trust in which he or she or any member of his or her family has greater than a ten percent (10%) interest, or of which he or she or any member of his or her family is an officer, director, general partner, member or trustee.

 

(t)    INSURANCE. SCHEDULE 3.1(T)(L) sets forth a list of the Company's insurance policies (including property, casualty, liability (general, professional and directors and officers) and workers' compensation), listing for each policy the identity of the insurance carrier, the policy period, the limits and retentions and any special exclusions. Except as set forth on SCHEDULE 3.1(T)(2), such insurance coverage and coverage amounts are customary for the business engaged in by the Company. Such policies are currently in full force and effect, all premiums have been paid in full with respect thereto and the Company has not received any notice of termination or modification from the insurance carriers. SCHEDULE 3.1(T)(L) also sets forth a true and complete description of any self-insurance arrangement by or affecting the Company, including any reserves established thereunder, if any.

 

 

(u)    TAXES.

 

(i)    The Company has timely filed with the appropriate taxing authorities all returns and reports in respect of Taxes (“RETURNS”) required to be filed by it (taking into account any extension of time to file granted to or on the account of the Company). The information on such Returns is complete and accurate in all material respects. Except as set forth in SCHEDULE 3.1(u), the Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable. There are no Liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. As used in this SECTION 3.1(U), the Company shall mean, individually and collectively, (i) the Company and (ii) any individual, trust, corporation, partnership or other entity as to which the Company may be liable for Taxes incurred by such individual or entity as a transferee or pursuant to any provision of federal, state, local or foreign law or regulation.

 

(ii)    No unpaid (or unreserved in accordance with generally accepted accounting principles applied on a consistent basis) deficiencies for Taxes have been claimed, proposed or assessed by any taxing authority or other Governmental Authority with respect to the Company for any Pre-Closing Period and, to the best knowledge of the Company or the Shareholder, there are no pending audits, investigations or claims for or relating to any liability in respect of Taxes of the Company, nor has the Company been notified of any request for such an audit, investigation or claim. The Company has not requested any extension of time within which to file any currently unfiled returns in respect of any Taxes and no extension of a statute of limitations relating to any Taxes is in effect with respect to the Company.

 

(iii)    (1) The Company has made or will make provision for all Taxes payable by it with respect to any Pre-Closing Period which are not payable prior to the Closing Date; (2) the provisions for Taxes with respect to the Company for the Pre-Closing Period are adequate to cover all Taxes with respect to such period; (3) the Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party; (4) the Company has provided Parent with all relevant Tax returns; (5) the Company is not a “consenting corporation” under Section 341(f) of the Code, or any corresponding provision of state, local or foreign law; (6) there are no private letter rulings in respect of any Tax pending between the Company and any taxing authority; (7) the Company has never been a member of an affiliated group within the meaning of Section 1504 of the Code, or filed or been included in a combined, consolidated or unitary return of any Person other than the Company; (8) the Company is not liable for Taxes of any other Person, or is currently under any contractual obligation to indemnify any Person with respect to Taxes, or is a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (9) the Company is not, and has not been, a real

 

(v)    EMPLOYEE BENEFIT PLANS.

 

(i)    SCHEDULE 3.1(V)(I) lists all Employee Benefit Plans which have been maintained or contributed to by the Company or to which the Company has been obligated to contribute. Except as set forth on SCHEDULE 3.1(V)(II), neither the Company nor any of its ERISA Affiliates (as defined below), maintains or has maintained, contributed to or been obligated to contribute to a Pension Plan subject to Title IV of ERISA or Section 412 of the Code. Except as set forth on SCHEDULE 3.1(V)(III), each Pension Plan and Welfare Plan disclosed on SCHEDULE 3.1(V)(I) has been maintained in compliance with its terms and all material provisions of ERISA and the Code, applicable thereto (including rules and regulations thereunder).

 

(ii)    The Company has delivered or made available to Parent prior to the date hereof complete and correct copies of (a) any employment agreements and any procedures and policies relating to the employment of employees of the Company and the use of temporary employees and independent contractors by the Company (including summaries of any procedures and policies that are unwritten), (b) plan instruments and amendments thereto for all Employee Benefit Plans and related trust agreements, insurance and other contracts, summary plan descriptions, summaries of material modifications and material communications distributed to the participants of each Employee Benefit Plan (and written summaries of any unwritten Employee Benefit Plans, modifications to Employee Benefit Plans and employee communications), (c) to the extent annual reports on Form 5500 are required with respect to any Employee Benefit Plan, the three most recent annual reports and attached schedules for each Employee Benefit Plan as to which such report is required to be filed, (d) where applicable, the most recent (A) opinion, notification and determination letters, (B) actuarial valuation reports, and (C) nondiscrimination tests performed under the Code (including 401(k) and 401(m) tests) for each Employee Benefit Plan, (e) all material communications received from or sent to the Internal Revenue Service or the Department of Labor (including a written description of any oral communication), and (f) any Forms 5330 required to be filed by the Company or any Affiliate, whether related to an Employee Benefit Plan or otherwise.

 

 

(iii)    Each Pension Plan identified in SCHEDULE 3.1(V)(I) hereto which is intended to be “qualified” within the meaning of Section 401(a) of the Code has been determined by the Internal Revenue Service (the “IRS”) to be so qualified as of the date of the determination letter set forth on SCHEDULE 3.1(V)(III), and the Company is not aware of any fact which would indicate that the qualified status of each such Pension Plan or the tax exempt status of each trust created thereunder has been adversely affected. None of the Pension Plans identified in SCHEDULE 3.1(V)(I) hereto are currently the subject of an audit or other investigation by the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation (the “PBGC”) or any other Governmental Authority nor are any the subject of any law suits, complaints, claims or legal proceedings of any kind.

 

(iv)    No “prohibited transaction,” as such term is defined in Section 406 of ERISA, has occurred with respect to any Pension Plan or Welfare Plan identified in SCHEDULE 3.1(V)(I) hereto which has resulted or may result in Liability to the Company or any of the ERISA Affiliates. No breach of fiduciary responsibility under Part 4 of Title I of ERISA has occurred which has resulted or may result in Liability to the Company such Pension Plan or Welfare Plan. Except as disclosed on SCHEDULE 3.1(V)(IV), no ERISA Affiliate has incurred any material Liability for any penalty or Tax, nor, to the Knowledge of the Company, does any fact exist which would subject the Company to any penalty or Tax under Sections 4971, 4972, 4975, 4976, 4977, 4978, 4979, 4980, 4980B, 4980D, 5000 of the Code or Section 502 of ERISA with respect to any such Pension Plan or Welfare Plan.

 

(v)    Each Welfare Plan identified thereon has, to the extent applicable, at all times been in compliance with the provisions of Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA. Except as disclosed on SCHEDULE 3.1(V)(V) and except as described in the immediately preceding sentence, none of the Welfare Plans provides or promises post-retirement health or life benefits to current employees or retirees of the Company or its ERISA Affiliates.

 

(vi)    All contributions required to be paid under the terms of each Employee Benefit Plan identified in SCHEDULE 3.1(V)(I) hereto have been made. As of and including the Closing Date, the Company shall have made all contributions required to be made by it up to and including the Closing Date with respect to each Employee Benefit Plan, or adequate accruals therefor will have been provided for and will be reflected on an unaudited balance sheet of the Company provided to Parent by the Company.

 

(vii)    No Pension Plan identified in SCHEDULE 3.1(V)(I) hereto or trust created thereunder has been terminated or partially terminated by the Company and the Company has no knowledge of any events which would cause a voluntary or involuntary termination of any such Pension Plan.

 

 

(viii)    Neither the Company nor any of its ERISA Affiliates has maintained or contributed to, been obligated or required to contribute to, or withdrawn in a partial or complete withdrawal from, a “Multiemployer Plan,” as such term is defined in Section 4001(a)(3) of ERISA.

 

(ix)     With respect to each Pension Plan identified in SCHEDULE 3.1(V)(I) subject to Title IV of ERISA (A) neither the Company nor any ERISA Affiliate has withdrawn from any such Plan during a plan year in which it was a “substantial employer” (within the meaning of Section 4001 (a)(2) of ERISA), (B) neither the Company nor any ERISA Affiliate has filed a notice of intent to terminate any such Pension Plan or adopted any amendment to treat any such Pension Plan as terminated, (C) the PBGC has not instituted proceedings to terminate any such Pension Plan, and no other event or condition has occurred which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such Pension Plan, (D) no accumulated funding deficiency, whether or not waived, exists with respect to any such Pension Plan and no condition has occurred or exists which by the passage of time would be expected to result in an accumulated funding deficiency as of the last day of the current plan year of any such Pension Plan, (E) all required premium payments to the PBGC have been paid when due, (F) no reportable event (as described in Section 4043 of ERISA) for which the notice requirements to the PBGC have not been waived, has occurred with respect to any such Pension Plan, (G) no amendment with respect to which security is required under Section 307 of ERISA has been made or is reasonably expected to be made to any Pension Plan, and (H) as of the last day of the most recent prior plan year, the market value of assets under each such Pension Plan subject to the minimum funding standards equaled or exceeded the present value of benefit liabilities thereunder as determined in accordance with the actuarial valuation assumptions set forth in such Pension Plan.

 

(x)    Except as required by law or by the terms of an Employee Benefit Plan, the Company has not proposed or agreed to any changes to any Employee Benefit Plan that would cause an increase in benefits under any such Employee Benefit Plan (or the creation of new benefits or plans) nor to change any employee coverage which would cause an increase in the expense of maintaining any such Employee Benefit Plan.

 

(xi)    No Employee Benefit Plan provides benefits or payments based on or measured by the value of an equity security of or interest in the Company or any ERISA Affiliate.

 

(xii)    No Employee Benefit Plan is a plan, agreement or arrangement providing for benefits, in the nature of severance benefits, and the Company does not have outstanding any liabilities with respect to any severance benefits available under any Employee Benefit Plan.

(w)    EMPLOYEE MATTERS.

(i)    The Company has provided to the Parent lists all current employees of the Company and their hourly rates of compensation or base salaries (as applicable), the date of last increase in such compensation or salaries, and all other compensation paid to such employees. To the knowledge of the Company, no employee of the Company has any plans to terminate employment with the Company. The Company has complied with all Laws relating to the hiring of employees and the employment of labor, including provisions thereof relating to wages, hours, equal opportunity, collective bargaining and the withholding and payment of social security and other Taxes.

 

 

(ii)    (A) the Company is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them to date or amounts required to be reimbursed to such employees and, upon termination of the employment of any such employees, neither the Parent nor the Company will by reason of any event, fact or circumstance occurring or existing prior to the Closing be liable to any of such employees for severance pay or any other payments; (B) there is no unfair labor practice complaint against the Company pending before the National Labor Relations Board or any other Governmental Authority; (C) there is no labor strike, material dispute, slowdown or stoppage actually pending or, to the Knowledge of the Company, threatened against the Company; (D) the Company has not experienced any significant deterioration in its relationship with its employees; and (E) no labor union currently represents the employees of the Company and, to the knowledge of the Company, no labor union has taken any action with respect to organizing the employees of the Company.

 

(iii)    Except for payment of the Merger Consideration to the Shareholders, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (A) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director or employee of the Company, under any Employee Benefit Plan or otherwise; (B) increase any compensation or benefits payable under any Employee Benefit Plan or otherwise; or (C) result in the acceleration of the time of payment or vesting of any such compensation benefits. No Employee Benefit Plan or other arrangement provides benefits or payments contingent upon, triggered by or increased as a result of a change in the ownership or effective control of the Company.

 

(x)    BROKERAGE FEES. The Company has not engaged or authorized any broker, investment banker or other Person to act on its behalf, directly or indirectly, as a broker or finder who might be entitled to a fee, commission or other remuneration in connection with the transactions contemplated by this Agreement.

 

(y)    BOOKS AND RECORDS. All accounts, books, ledgers and official and other records prepared and kept by the Company are true, complete and accurate in all material respects and have been kept in accordance with sound business practices.

 

(z)    PROXY STATEMENT. The information supplied by the Company for inclusion in the Proxy Statement shall not, at the date the Proxy Statement (or any amendment or supplement thereto) is first mailed to stockholders of the Parent and at the time of the Stockholders’ Meeting, contain any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not false or misleading, or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Stockholders’ Meeting which shall have become false or misleading. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by the Parent or any of its representatives for inclusion in the Proxy Statement.

 

 

(aa)    DISCLOSURE. No representation or warranty made by the Company in this Agreement, nor any information contained in any Ancillary Document to be delivered by the Company or the Shareholder pursuant hereto, or any information relating to the Company provided or made available to the Parent in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements or facts contained herein or therein not misleading in any material respect in light of the circumstances under which they were made.

3.2    REPRESENTATIONS AND WARRANTIES OF THE PARENT. The Parent hereby represents and warrants to the Company as follows:

 

(a)    AUTHORITY. The Parent has all necessary power and authority to enter into and deliver this Agreement and each of the Ancillary Documents to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and by the Ancillary Documents, including, without limitation, the Merger. All actions, authorizations and consents required by Law for the execution, delivery and performance by Parent of this Agreement and each Ancillary Document to which it is a party, and the consummation of the transactions contemplated hereby and thereby, have been properly taken or obtained, other than (a) with respect to the Merger, the filing with the SEC of a proxy statement with respect to the Parent Stockholder Approval and (b) the filing of the Certificate of Merger as required by Delaware Law. The affirmative vote of the holders of a majority of the outstanding voting power of Parent Common Stock is the only vote of the holders of capital stock of the Parent necessary to adopt this Agreement, approve the Merger, and the Amendment (the “PARENT STOCKHOLDER APPROVAL”).

 

(b)    EXECUTION AND DELIVERY. This Agreement has been, and each Ancillary Document to which the Parent is a party will be at the Closing, duly authorized, executed and delivered by the Parent and constitutes a legal, valid and binding obligation of the Parent, enforceable against the Parent in accordance with its terms and conditions, except as enforceability thereof may be limited by applicable bankruptcy, reorganization, insolvency or other similar laws affecting or relating to creditors' rights generally or by general principles of equity.

 

(c)    NO CONFLICTS. The execution, delivery and performance by the Parent of this Agreement and each Ancillary Document to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not violate, conflict with or result in a breach of any term, condition or provision of, or require the consent of any Person under, or result in the creation of or right to create any Lien upon any of the assets of the Parent under, (i) any Laws to which the Parent or any of its assets are subject, (ii) any judgment, order, writ, injunction, decree or award of any Governmental Authority to which the Parent or any of its assets are subject, (iii) the Certificate of Incorporation or Bylaws of the Parent, or (iv) any license, indenture, promissory note, bond, credit or loan agreement, lease, agreement, commitment or other instrument or document to which the Parent is a party or by which any of its assets are bound, except where, in the case of clause (iv), such violation, conflict, breach, etc. would not, individually or in the aggregate, have a Material Adverse Effect on the Parent.

 

 

(d)    GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority, is required to be obtained by the Parent in connection with or as a result of the execution and delivery of this Agreement or any of the Ancillary Documents, or the performance of its obligations thereunder.

 

(e)    ORGANIZATION, STANDING AND QUALIFICATION. The Parent is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Nevada (or such other applicable jurisdiction of incorporation or formation). The Parent has all requisite power and authority to own, lease and operate its properties and to carry on their businesses as now being conducted, to use their names and are duly qualified, licensed or authorized to do business and in good standing, in each jurisdiction where the nature of the activities conducted by them or the character of the properties owned, leased or operated by them require such qualification, licensing or authorization.

 

(f)    PARENT STOCK. The authorized capital stock of the Parent consists solely of 500,000 shares of preferred stock, par value $.01 per share, of which none are issued and outstanding and 50,000,000 shares of common stock, par value $.001 per share, of which 44,831,444 shares remain issued, adjusted and outstanding, provided, however, such number of shares does not include 1,630,000 shares of Parent Common Stock that were lost and cancelled. All of the issued and outstanding shares of capital stock of the Parent have been, and all of the shares of the Parent Preferred Stock and Parent Common Stock issuable to the Shareholders pursuant to this Agreement will be when issued, duly authorized, validly issued, fully paid and non-assessable. Except as disclosed in SCHEDULE 3.2(F) or in any SEC Document, there are no outstanding subscriptions, options, warrants, calls, contracts, demands, commitments, convertible or exchangeable securities, profits interests, conversion rights, preemptive rights, rights of first refusal or other rights, agreements, arrangements or commitments of any nature whatsoever under which the Parent is or may become obligated to issue, redeem, assign or transfer any shares of capital stock or purchase or make payment in respect of any shares of capital stock of the Parent now or previously outstanding, and there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to or any shares of its capital stock. Except as set forth on SCHEDULE 3.2(F) or in any SEC Document, none of the Parent's stock purchase agreements or stock option documents contains a provision for acceleration of vesting (or lapse of a repurchase right) upon the occurrence of any event or combination of events. Except as set forth on SCHEDULE 3.2(F) or in any SEC Document, the Parent has never adjusted or amended the exercise price of any stock options previously awarded, whether through amendment, cancellation, replacement grant, repricing, or any other means. The Parent is not a party to any voting agreement with respect to shares of the capital stock of, or other equity or voting interests in, the Parent and, other than the Parent Voting Agreements and the irrevocable proxies granted pursuant to the Parent Voting Agreements, there are no irrevocable proxies, voting agreements, or voting trusts with respect to any Parent Common Stock.

 

 

(g)    SEC DOCUMENTS; FINANCIAL STATEMENTS. The Parent has filed, on a timely basis (except as permitted by Rule 12b-25 under the Exchange Act), all forms, reports and documents that to its knowledge were required to be filed by it with the SEC. The SEC Documents (i) complied in all material respects in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) to its knowledge contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as set forth on SCHEDULE 3.2(G), all material agreements to which the Parent is a party or to which the property or assets of the Parent are subject are, to its knowledge, included as part of or specifically identified in the SEC Documents to the extent required by the rules and regulations of the SEC as in effect at the time of filing. The Parent has to its knowledge prepared and filed with the SEC all filings and reports required by the Securities Act and the Exchange Act to make the Parent's filings and reports current in all respects. The financial statements included in SEC Documents filed by the Parent (the “PARENT FINANCIAL STATEMENTS”) fairly present in all material respects, and the Parent Financial Statements included in SEC Documents filed after the date of this Agreement will fairly present in all material respects, the consolidated financial position of the Parent as of the dates indicated and the consolidated income, changes in shareholders' equity and cash flows of the Parent for the periods then ended and each such financial statement has been or will be, as the case may be, prepared in conformity with GAAP applied on a consistent basis, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments (which individually and in the aggregate are not material), and may not contain certain related notes as may be permitted by the applicable rules promulgated by the SEC. The Parent Financial Statements included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto in effect at the time of filing. All “off-balance sheet arrangements” (as defined in Item 303(a)(4) of Regulation S-K promulgated by the SEC) which the Parent is required to disclose under Item 303(a) of Regulation S-K in its SEC Documents are set forth in the SEC Documents. The Parent maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, and (v) the Parent is otherwise in compliance with the Securities Act, the Exchange Act and all other rules and regulations promulgated by the SEC and applicable to the Parent, including such rules and regulations to implement the Sarbanes-Oxley Act of 2002, as amended. SCHEDULE 3.2(G) sets forth all liabilities of the Parent as of June 1, 2007 and as of the Closing.

 

 

(h)    BROKERAGE FEES. The Parent has not engaged or authorized any broker, investment banker or other Person to act on its behalf, directly or indirectly, as a broker or finder who might be entitled to a fee, commission or other remuneration in connection with the transactions contemplated by this Agreement.

 

(i)    DISCLOSURE. No representation or warranty made by the Parent in this Agreement, nor any information contained in any Ancillary Document to be delivered by the Parent pursuant hereto, or any information relating to the Parent provided or made available to the Company in connection with the transactions contemplated hereby, including any SEC Document, contains any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements or facts contained herein or therein not misleading in any material respect in light of the circumstances under which they were made.

 

(j)    PROXY STATEMENT. The proxy statement to be sent to the stockholders of the Parent in connection with the Stockholders’ Meeting (such proxy statement, as amended or supplemented, being referred to herein as the “PROXY STATEMENT”), shall not, at the date the Proxy Statement (or any amendment or supplement thereto) is first mailed to stockholders of the Company and at the time of the Stockholders’ Meeting, contain any statement which, at such time and in light of the circumstances under which it was made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies, if any, for the Stockholders’ Meeting which shall have become false or misleading. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent, Merger Sub or any of Parent’s or Merger Sub’s representatives in writing for inclusion in the Proxy Statement. The Proxy Statement shall comply in all material respects as to form with the requirements of the Exchange Act.

 

(k)    BOARD APPROVAL. The full Board of Directors of Parent, by resolutions duly adopted (and such resolutions not thereafter modified or rescinded) as of the date of this Agreement, has unanimously (a) approved this Agreement, the Amendment and the Merger and determined that this Agreement, the Amendment and the Merger are advisable and fair to, and in the best interests of, the stockholders of the Parent, and (b) directed that adoption of this Agreement and the Amendment be submitted to the Parent stockholders for consideration and recommended that the stockholders of the Parent adopt this Agreement and the Amendment.

3.4    REPRESENTATIONS AND WARRANTIES OF THE MERGER SUB. The Merger Sub hereby represents and warrants to the Company as follows:

 

(a)    AUTHORITY. The Merger Sub has all necessary power and authority to enter into and deliver this Agreement and each of the Ancillary Documents to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and by the Ancillary Documents. All actions, authorizations and consents required by Law for the execution, delivery and performance by Merger Sub of this Agreement and each Ancillary Document to which it is a party, and the consummation of the transactions contemplated hereby and thereby, have been or prior to the Closing will have been properly taken or obtained.

 

 

(b)    EXECUTION AND DELIVERY. This Agreement has been, and each Ancillary Document to which the Parent is a party will be at the Closing, duly authorized, executed and delivered by the Merger Sub and constitutes a legal, valid and binding obligation of the Merger Sub, enforceable against the Parent in accordance with its terms and conditions, except as enforceability thereof may be limited by applicable bankruptcy, reorganization, insolvency or other similar laws affecting or relating to creditors' rights generally or by general principles of equity.

 

(c)    ORGANIZATION, STANDING AND QUALIFICATION. The Merger Sub is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware.

 

(d)    MERGER SUB STOCK. The authorized capital stock of the Merger Sub consists solely of 500 shares of which 400 shares are common stock, par value $.01 per share with 100 shares issued and outstanding and owned solely by Parent and 100 shares of preferred stock of which no shares are issued and outstanding.

4.1    CONDUCT OF COMPANY BUSINESS PENDING THE CLOSING. The Company hereby covenants and agrees that, prior to the Closing, except as contemplated by this Agreement or as set forth in SCHEDULE 4.1, it shall (and each of the Shareholders hereby covenants and agrees to cause the Company to comply with the provisions of this SECTION 4.1):

 

(a)    conduct its business in the usual, regular and ordinary course consistent with recent past practice and use its commercially reasonable efforts to take, or refrain from taking, as the case may be, any action which would cause the representations and warranties made in SECTION 3.1, including, without limitation, SECTION 3.1(J), to become untrue or inaccurate; and

 

(b)    use its commercially reasonable efforts to maintain and preserve its business organization and relationships with its customers, vendors, suppliers and others having business dealings with it and retain the services of its officers and employees.

4.2    CONDUCT OF PARENT BUSINESS PENDING THE CLOSING. The Parent hereby covenants and agrees that, prior to the Closing, except as contemplated by this Agreement or as set forth in SCHEDULE 4.2, it shall:

 

(a)    conduct its business in the usual, regular and ordinary course consistent with recent past practice and use its commercially reasonable efforts to take, or refrain from taking, as the case may be, any action which would cause the representations and warranties made in SECTION 3.2, to become untrue or inaccurate; and

 

 

(b)    use its commercially reasonable efforts to maintain and preserve its business organization.

 

(c)    Without limiting the generality of the foregoing, prior to the Effective Time, the Parent shall not, without the written consent of the Company:

 

(i)    issue or sell, or redeem or repurchase, any stock or other securities of the Parent or any rights, warrants or options to acquire any such stock or other securities;

 

(ii)    split, combine or reclassify any shares of its capital stock; declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except as contemplated herein by the Amendment;

 

(iii)    create, incur or assume any indebtedness (including obligations in respect of capital leases); assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person or entity; or make any loans, advances or capital contributions to, or investments in, any other person or entity; excluding such amounts incurred in connection with the transactions contemplated hereby, unless otherwise agreed to in writing by Company and Parent;

 

(iv)    enter into, adopt or amend any Employee Benefit Plan or any employment or severance agreement or arrangement or increase in any manner the compensation or fringe benefits of, or materially modify the employment terms of, its directors, officers or employees, generally or individually, or pay any bonus or other benefit to its directors, officers or employee;

 

(v)    acquire, sell, lease, license or dispose of any assets or property (including without limitation any shares or other equity interests in or securities of any Parent Subsidiary or any corporation, partnership, association or other business organization or division thereof);

 

(vii)    mortgage or pledge any of its property or assets or subject any such property or assets to any security interest;

 

(viii)   discharge or satisfy any security interest or pay any obligation or liability other than in the ordinary course of business;

 

(ix)     except as provided herein amend its charter, by-laws or other organizational documents;

 

(x)     change in any material respect its accounting methods, principles or practices, except insofar as may be required by a generally applicable change in GAAP;

 

(xi)    enter into, amend, terminate, take or omit to take any action that would constitute a violation of or default under, or waive any rights under, any contract or agreement;

 

(xii)    institute or settle any legal proceeding; or

 

 

(xiv)    agree in writing or otherwise to take any of the foregoing actions.

  

(d)    The Parent shall permit representatives of the Company to have full access (at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Parent and the MERGER SUB) to all premises, properties, financial and accounting records, contracts, other records and documents, and personnel, of or pertaining to the Parent and MERGER SUB.

 

(e)    Each of the Company and any Company Subsidiary (i) shall treat and hold as confidential any Parent Confidential Information (as defined below), (ii) shall not use any of the Parent Confidential Information except in connection with this Agreement, and (iii) if this Agreement is terminated for any reason whatsoever, shall return to the Parent all tangible embodiments (and all copies) thereof which are in its possession. For purposes of this Agreement, “PARENT CONFIDENTIAL INFORMATION” means any information of the Parent that is furnished to the Company or any Company Subsidiary by the Parent in connection with this Agreement; provided, however, that it shall not include any information (A) which, at the time of disclosure, is available publicly other than as a result of non-permitted disclosure by the Company, any Company Subsidiary or their respective directors, officers, or employees, (B) which, after disclosure, becomes available publicly through no fault of the Company or any Company Subsidiary or their respective directors, officers, or employees, (C) which the Company or any Company Subsidiary knew or to which the Company or Company Subsidiary had access prior to disclosure, provided that the source of such information is not known by the Company or any Company Subsidiary to be bound by a confidentiality obligation to Parent or any Parent Subsidiary or (D) which the Company or any Company Subsidiary rightfully obtains from a source other than the Parent or MERGER SUB, provided that the source of such information is not known by the Company or any Company Subsidiary to be bound by a confidentiality obligation to Parent or MERGER SUB.

4.3    TAX MATTERS; COOPERATION AND RECORDS RETENTION. The Parent and the Company will (i) each provide the other with such assistance as may reasonably be requested by any of them in connection with the preparation of any Tax Return, audit or other examination by any taxing authority or judicial or administrative proceedings relating to liability for Taxes, (ii) each retain and provide the other with any records or other information which may be relevant to such Tax Return, audit or examination, proceeding or determination, and (iii) each provide the other with any final determination of such audit or examination, proceeding or determination that affects any amount required to be shown on any Tax Return of the other for any period. Without limiting the generality of the foregoing, the Parent and the Company will retain, until the applicable statutes of limitations (including all extensions) have expired, copies of all Tax Returns, supporting work schedules and other records or information which may be relevant to such Tax Returns for all Tax periods or portions thereof ending on or before the Closing and will not destroy or otherwise dispose of any such records without first providing the other party with a reasonable opportunity to review and copy the same.

 

4.4    NO SOLICITATION. Prior to the Closing (unless the Agreement is terminated sooner), the Parent shall not, and none of its officers or directors shall, directly or indirectly (through their respective Affiliates, employees, agents or representatives), initiate contact with, solicit, encourage, respond to or participate in any way in discussions or negotiations with, or provide any information or assistance to, or take any other action intended or designed to facilitate the efforts of (including without limitation, the execution of any letter of intent, term sheet or definitive agreement), any Person other than the Company concerning any acquisition of equity interest in the Parent or any significant portion of the assets of the Parent (including by merger or other similar transaction). The Parent shall promptly notify the Company if they are contacted or approached in respect of any such transaction, as well as the material terms of the proposed transaction and the identity of the contacting party.

 

 

4.5    REASONABLE EFFORTS; ASSURANCES. Upon the terms and subject to the conditions of this Agreement, each of the parties hereto shall use all reasonable efforts to take or cause to be taken all action, and to do or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including using commercially reasonable efforts to (a) obtain all consents or approvals required or desirable in connection with the transactions contemplated hereby, (b) effect promptly all necessary or appropriate registrations or filings with any Governmental Authorities, and (c) fulfill or cause the fulfillment of the conditions to Closing set forth in ARTICLE V. In case at any time after the Closing Date any further action is reasonably necessary or desirable to carry out the purposes of this Agreement, each of the parties hereto shall take such further action without additional consideration.

 

4.6    NOTIFICATION OF CERTAIN MATTERS. The Company and Parent shall promptly notify each other in writing:

 

(a)    if, subsequent to the date of this Agreement and prior to the Closing Date, either of them becomes aware of the occurrence of any event or the existence of any fact that would render any of the representations and warranties made by it (and, in case of the Company, made by any Shareholder) in SECTIONS 3.1 or 3.2, as the case may be, if made on or as of the date of such event or the Closing Date, inaccurate or untrue (other than with respect to representations and warranties made as of a specified date);

 

(b)    of any breach by either of them of any of its (and, in case of the Company, any of the Shareholders') covenant or agreement contained in this Agreement;

 

(c)    of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement; or

 

(d)    of any notice or other communication from any Governmental Authority in connection with or relating to the transactions contemplated hereby.

4.7    PUBLIC ANNOUNCEMENTS. No party will issue or make or cause the publication of, any press release or other public announcement with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other parties hereto; PROVIDED, HOWEVER, that nothing herein will prohibit any party from issuing, making or causing the publication of any such press release or public announcement to the extent that such party is advised by its legal counsel that such action is required by Law, in which case the party making such determination will use reasonable efforts to allow the other parties reasonable time to review and comment on such release or announcement in advance. For the purposes of this Section, the Company shall be entitled to give such prior written consent on behalf of the Shareholders.

 

 

4.8    TRANSFER TAXES. All stock transfer, real estate transfer, documentary, stamp, recording and other similar Taxes (including interest, penalties and additions to any such Taxes) (“TRANSFER TAXES”) incurred in connection with the transactions contemplated hereby shall be paid by either Merger Sub or the Surviving Entity (provided any such payments shall not be funded, directly or indirectly, by the Company), and the Company shall cooperate with Merger Sub and Parent in preparing, executing and filing any Tax Returns with respect to such Transfer Taxes.

 

4.9    FORM 8-K. The Parent and the Company shall prepare a Current Report on Form 8-K regarding the terms of the transaction under this Agreement which Form 8-K will be filed with the Securities and Exchange Commission no later than 4 Business Days following the execution date of this Agreement. Prior to the Closing Date, the Parent and the Company shall prepare a Current Report on Form 8-K, which report will contain the information that would be required if the Parent were filings a general form for registration of securities on Form 10-SB as more particularly described under Items 2.01(f) and 9.01 of Form 8-K, which Form 8-K will be filed with the Securities and Exchange Commission no later than 4 Business Days following the Closing Date. Parent shall take no action that shall change its designation as a shell company with the SEC, without the prior written consent of the Company.

 

4.10   DEBT FORGIVENESS. (a) In exchange for the Primary Shareholders Promissory Notes and the Parent Equipment Assignment (as each is defined below), the Primary Shareholders shall execute a debt forgiveness agreement in a form reasonably satisfactory to the Company, where by they agree that all outstanding liabilities of the Parent to them, jointly and severally, shall be canceled. Parent shall execute three promissory notes for accrued rent, compensation and personal loans to the Primary Shareholders in the aggregate principal amount of $382,500 (the “PRIMARY SHAREHOLDERS PROMISSORY NOTES”), each at an interest rate of 7% per annum. The forgiveness shall be deemed in the following order of priority: accumulated unpaid compensation shall be first, unpaid rent second and loans third; loans shall be paid first, unpaid rent second and compensation last to the extent money is paid under the Primary Shareholders Promissory Notes. The Primary Shareholders Promissory Notes shall be payable in the following manner:

 

(i)    an aggregate of One Hundred Fifty Thousand Dollars ($150,000) shall be due at the earlier of (A) the Effective Time, provided that either on or prior to the Effective Date, Parent, Merger Sub or Company, has received at least $1,500,000 of financing or more (the “QUALIFIED FINANCING”) or (B) if a Qualified Financing does not occur prior to or at the Effective Time, within three (3) days of the date of any Qualified Financing.

 

 

(ii)   an aggregate of Twenty Five Thousand Dollars ($25,000) of interest and principal per month, beginning the first month after the payment of after the payment of the One Hundred Fifty Thousand Dollars ($150,000) set forth in sub-section 4.10(a) hereof, with a final payment of Seven Thousand Five Hundred Dollars ($7,500) until all outstanding interest and principal of the Shareholders Promissory Notesis paid in full;

provided, however, that the aggregate principal amount of the Shareholders Promissory Notes shall be reduced to the extent that the total ASNI expenses consisting of current liabilities and longtime liabilities at the Closing Date exceed Sixty Seven Thousand Five Hundred Dollars ($67,500), subject to adjustment upon mutual agreement by Parent and Company; provided, further, that subject to Section 9.11, hereof, Parent and Company shall be entitled to a right of set-off any claims, expenses and liabilities Parent or Company incurs as a result of a breach by the Parent of any representations or warranties or covenants of Parent against the Wyatt Promissory Note for any breach of any covenant of the Parent.

(b)    Within 45 days after the effective date of the Effective Time, the Parent shall assign all of its rights title and interest in the Parent’s existing office assets including television studio equipment, video tape library and related miscellaneous assets, provided that all such assets have either been written off and/or are fully depreciated by the Parent as of the date hereof the “PARENT EQUIPMENT ASSIGNMENT”).

 

4.11   PROXY STATEMENT AND OTHER FILINGS.

 

(a)    As promptly as practicable after the audited financial statements of the Compnay are made available to the Parent, the Parent shall prepare, and file with the SEC a preliminary proxy materials relating to (i) the Parent Stockholder Approval and (ii) the removal of the existing board of directors of the Parent and election of directors designated by Company, which removal and appointment shall be effective upon the failure to obtain the Parent Stockholder Approval. Company shall provide promptly to the Parent such information concerning Company and the director nominees as, in the reasonable judgment of the Company, Parent and their respective counsel, may be required or appropriate for inclusion in the Proxy Statement, or in any amendments or supplements thereto. At the earliest practicable time following the later of (i) receipt and resolution of SEC comments thereon, or (ii) the expiration of the 10-day waiting period provided in Rule 14a-6(a) promulgated under the Exchange Act, the Parent shall file definitive proxy materials with the SEC and cause the Proxy Statement to be mailed to its stockholders. The Parent will cause all documents that it is responsible for filing with the SEC or other regulatory authorities in connection with the Merger and the Amendment (or as required or appropriate to facilitate the Merger and the Amendment) to comply in all material respects with all applicable Laws. Prior to filing the preliminary proxy materials, definitive proxy materials or any other filing with the SEC or any other Governmental Entity, the Parent shall provide Company with reasonable opportunity to review and comment on each such filing in advance and the Parent shall in good faith consider including in such filings all comments reasonably proposed by Company.

 

 

(b)    The Parent will notify Company promptly of the receipt of any comments from the SEC or its staff (or of notice of the SEC’s intent to review the Proxy Statement) and of any request by the SEC or its staff or any other government officials for amendments or supplements to the Proxy Statement or any other filing or for additional/supplemental information, and will supply Company with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Proxy Statement or other filing. The Parent and its outside counsel shall permit Company and its outside counsel to participate in all communications with the SEC and its staff (including all meetings and telephone conferences) relating to the Proxy Statement, this Agreement, the Merger or the Amendment. The Parent shall consult with Company prior to responding to any comments or inquiries by the SEC or any other Governmental Entity with respect to any filings related to (or necessary or appropriate to facilitate) the Merger, shall provide Company with reasonable opportunity to review and comment on any such written response in advance and shall include in such response all comments reasonably proposed by Company. Whenever any event occurs that is required to be set forth in an amendment or supplement to the Proxy Statement or any other filing, the Parent shall promptly inform Company of such occurrence, provide Company with reasonable opportunity to review and comment on any such amendment or supplement in advance, shall in good faith consider including in such amendment or supplement all comments reasonably proposed by Company, and shall cooperate in filing with the SEC or its staff or any other government officials, and/or mailing to the stockholders of the Parent, such amendment or supplement.

4.13   MEETING OF PARENT STOCKHOLDERS.

 

(a)    Promptly after the delivery of the audited financial statements of the Company to the Parent, the Parent shall take all action necessary in accordance with Nevada Law, the rules of OTC Bulletin Board and the articles of incorporation, as amended, and bylaws of Parent (the “PARENT CHARTER DOCUMENTS”) to convene a special meeting of its stockholders for the purpose of considering and taking action with respect to (i) the Parent Stockholder Approval (the “STOCKHOLDERS’ MEETING”) and (ii) the removal of the existing board of directors of the Parent and election of directors designated by Company, which removal and appointment shall be effective upon the failure to obtain the Parent Stockholder Approval, to be held as promptly as practicable. The Parent shall use all commercially reasonable efforts to solicit from its stockholders proxies in favor of the adoption of this Agreement and the Amendment and to take all other action necessary or advisable to secure the vote or consent of its stockholders required by Nevada Law to obtain such approvals. Notwithstanding anything to the contrary contained in this Agreement, the Parent may adjourn or postpone the Stockholders’ Meeting to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement is provided to the Parent’s stockholders in advance of a vote on this Agreement or, if as of the time for which the Stockholders’ Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient shares of Parent Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Stockholders’ Meeting or to approve this Agreement and the Merger. The Parent shall ensure that the Stockholders’ Meeting is called, noticed, convened, held and conducted, and that all proxies solicited by the Parent in connection with the Stockholders’ Meeting are solicited, in compliance with Nevada Law, the Parent Charter Documents, and all other applicable Laws.

 

 

(b)    (i) The Board of Directors of the Parent shall unanimously recommend that the Parent’s stockholders adopt and approve this Agreement, the Amendment and approve the Merger at the Stockholders’ Meeting; (ii) the Proxy Statement shall include a statement to the effect that the Board of Directors of the Parent has unanimously recommended that the Parent’s stockholders vote in favor of the Parent Stockholder Approval at the Stockholders’ Meeting; and (ii) neither the Board of Directors of the Company nor any committee thereof shall withdraw, amend, change or modify, or propose or resolve to withdraw, amend, change or modify in any manner adverse to Company, the unanimous recommendation of the Board that the Parent’s stockholders vote in favor of the Parent Stockholder Approval. For purposes of this Agreement, said recommendation of the Board of Directors of the Company shall be deemed to have been modified in a manner adverse to Company if said recommendation shall no longer be unanimous.

 

5.1    CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the Company to consummate the transactions contemplated hereby shall be subject to the satisfaction on or prior to the Closing of the following conditions (any of which may be waived in writing by the Company):

 

(a)    the Parent shall have performed and complied with all obligations and agreements required to be performed and complied with by it hereunder on or prior to the Closing (including, without limitation, those specified in SECTION 6.3);

 

(b)    the representations and warranties of the Parent and Merger Sub contained in this Agreement shall be true and correct as of the Closing Date as if made as of such date (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period);

 

(c)    there shall be no order, decree or ruling by any Governmental Authority nor any action, suit, claim or proceeding by or before any Governmental Authority shall be pending, which seeks to restrain, prevent or materially delay or restructure the transactions contemplated hereby or by any Ancillary Document, or which otherwise questions the validity or legality of any such transactions;

 

(d)    there shall be no statute, rules, regulation or order enacted, entered or enforced or deemed applicable to the transactions contemplated hereby which would prohibit or, render illegal the transactions contemplated by this Agreement or the Ancillary Documents;

 

(e)    The Parent Stockholder Approval shall have been obtained.

 

 

(g)    each of the documents to be delivered by the Parent pursuant to SECTION 6.3 shall have been so delivered by the Parent at the Closing.

5.2    CONDITIONS TO OBLIGATION OF THE PARENT. The obligation of the Parent to consummate the transactions contemplated hereby shall be subject to the satisfaction on or prior to the Closing of the following conditions (any of which may be waived in writing by the Parent):

 

(a)    the Shareholders and the Company shall have performed or complied with all obligations and agreements required to be performed or complied with by any of them hereunder on or prior to the Closing (including, without limitation, those specified in SECTION 6.2);

 

(b)    the representations and warranties of the Shareholders and the Company contained in this Agreement shall be true and correct as of the Closing Date as if made as of such date (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period);

 

(c)    there shall be no order, decree or ruling by any Governmental Authority nor any action, suit, claim or proceeding by or before any Governmental Authority shall be pending, which seeks to restrain, prevent or materially delay or restructure the transactions contemplated hereby or any Ancillary Document, or which otherwise questions the validity or legality of any such transactions;

 

(d)    there shall be no statute, rules, regulation or order enacted, entered or enforced or deemed applicable to the transactions contemplated hereby which would prohibit or render illegal the transactions contemplated by this Agreement or the Ancillary Documents;

 

(e)    the Company shall have obtained on terms and conditions satisfactory to the Parent all consents and approvals of third parties (including Governmental Authorities) that are required (i) for the consummation of the transactions contemplated hereby or any Ancillary Document, or (ii) in order to prevent a breach of, a default under or a termination, material change in the terms or conditions or material modification of, any Material Agreement as a result of the consummation of the transactions contemplated hereby;

 

(f)    each of the documents to be delivered by Shareholders or the Company pursuant to SECTION 6.2 shall have been so delivered by Shareholders or the Company at the Closing;

 

(g)    the Company shall have completed its audited financial statements as required by Item 9.01 of Form 8-K.

 

(h)    The Parent and Kent G. Wyatt Sr. shall enter into the Consulting Agreement, in the form attached as EXHIBIT B hereto.

 

(i)     Voting Agreements executed by a majority of the shareholders of the Company electing Kent G. Wyatt Sr. as a member of the board of directors of Parent (the “BOARD”) for up to three years from the Effective Time unless he otherwise resigns or is terminated for cause by a vote of 75% or more of the members of the Board and appointing him during his tenure as Chairman Emeritus.

 

6.1    CLOSING. The closing of the transactions contemplated hereby (the “CLOSING”) shall take place as set forth in Section 1.2 hereof.

 

6.2    COMPANY'S DELIVERIES AT CLOSING. At the Closing, the Company shall deliver or cause to be delivered to the Parent all of the following:

 

(a)    the Certificates that immediately prior to the Effective Time represented outstanding Company Shares whose shares were converted into the right to receive Merger Consideration pursuant to Section 2.1(c), together with a duly executed letter of transmittal;

 

(b)    the corporate minute book, seal, and stock ledger of the Company;

 

(c)    evidence that the Company has obtained on terms and conditions reasonably satisfactory to the Company all consents and approvals of third parties (including Governmental Authorities) that are required (i) for the consummation of the transactions contemplated hereby or (ii) in order to prevent a material breach of, a default under or a termination, material change in the terms or conditions or material modification of, any Contract as a result of the consummation of the transaction contemplated hereby;

 

(d)    original counterparts to the Investor Representation Letters duly executed by each Shareholder;

 

(f)    certified consents of the Board of Directors and Shareholders of the Company authorizing the consummation of the transactions contemplated by this Agreement;

 

(g)    a certificate of good standing of the Company from the state of California as of the most recent practicable date;

 

(h)    certificates of the Company, in form and substance reasonably satisfactory to the Company, dated the Closing Date, certifying compliance with the conditions set forth in SECTIONS 5.2(A) and 5.2(B);

 

(i)    a legal opinion from the Company's legal counsel in form and substance reasonably satisfactory to Parent;

 

(j)    Audited financial statements of the Company as required for the filing of the Current Report on Form 8-K Item 901, and

 

 

(k)    such other documents and instruments as shall be reasonably necessary to effect the transactions contemplated hereby.

6.3    PARENT'S DELIVERIES AT CLOSING. At the Closing, the Parent shall deliver or cause to be delivered to the Company all of the following:

 

(a)    certificates representing the Merger Consideration, registered in the names of the Shareholders (as of the Closing);

 

(b)    certified resolutions of the Board of Directors of the Parent authorizing the consummation of the transactions contemplated by this Agreement;

 

(c)    certified resolutions of the Board of Directors and Stockholders of the Merger Sub authorizing the consummation of the transactions contemplated by this Agreement;

 

(d)    written resignations of the officers of the Parent and Merger Sub effective as of the Closing Date in form satisfactory to the Company;

 

(e)    written resignations of the directors of the Parent and Merger Sub to be effective as of the Closing Date in form satisfactory to the Company;

 

(f)    certified resolutions of the Board of Directors of the Parent appointing the officers and directors of the Company (or their designees) as the officers and directors of the Parent and Merger Sub;

 

(g)    evidence, in form and substance satisfactory to the Company, of satisfaction, accord, settlement and/or full release of all Liabilities set forth on SCHEDULE 3(G) hereto;

 

(h)    a Form D pursuant to Regulation D promulgated under the Securities Act, the filing of which will be effected within fifteen (15) days of Closing;

 

(i)    a certificate of good standing of the Parent and from the State of Nevada and from Merger Sub from the State of Delaware as of the most recent practicable date;

 

(j)    a certificate of the Parent, in form and substance reasonably satisfactory to the Company, dated the Closing Date and signed by the President and the Chief Financial Officer of the Parent evidencing compliance with the conditions set forth in SECTIONS 5.1(A) and 5.1(B);

 

(k)    Executed Parent Voting Agreements;

 

(l)    a legal opinion from Parent's counsel regarding the legality of the issuance of the Parent Company Shares; and

 

(m)   (i) evidence that the Parent’s board of directors is authorized to consist of nine individuals, (ii) the resignations of all individuals who served as directors and/or officers of the Parent immediately prior to the Closing Date, which resignations shall be effective as of the Closing Date, except for Kent C. Wyatt Sr. (iii) evidence of the appointment of such directors of Parent and Merger Sub as designated by the Company to serve immediately following the Closing Date and (iv) evidence of the appointment of such executive officers of the Parent and Merger Sub to serve immediately upon the Closing Date as shall have been designated by the Company; and

 

 

(n)    such other documents and instruments as shall be reasonably necessary to effect the transactions contemplated hereby

6.4    OTHER DOCUMENTS. The parties agree to execute and deliver on or before the Closing all other documents that are reasonably necessary or desirable in order to consummate the transactions contemplated hereby and to carry out the intent of this Agreement.

 

6.5    EXPENSES. Except in the case of termination of the Merger for any reason, the Company shall pay the expenses, including, but not limited to, attorneys', accountants', financial advisors' and brokers' or finders' fees, incurred in connection with the transactions contemplated hereby (“EXPENSES”). If the Merger is terminated for breach of any representation or covenant set forth herein, Parent shall promptly reimburse Company for any bona fide Expenses incurred on Parent’s behalf by the Company.

7.1    TERMINATION. This Agreement may be terminated at any time prior to the Closing:

 

(a)    by mutual consent of the Parent and the Company;

 

(b)    by either the Parent or the Company if the Closing shall not have been consummated on or before March 1, 2008 (provided that the terminating party is not otherwise in material breach of its obligations under this Agreement), which date may be extended by written agreement of the Parent and the Company; or

 

(c)    by either the Parent or the Company, if a permanent injunction or other order by any Federal or state court which would make illegal or otherwise restrain or prohibit the consummation of the transactions contemplated hereby shall have been issued and shall have become final and non-appealable.

7.2    EFFECT OF TERMINATION. In the event of the termination of this Agreement in accordance with this ARTICLE VII, this Agreement shall thereafter become void and, except as set forth in Section 6.5 and this Section 7.2, there shall be no liability on the part of any party hereto or their respective directors, officers, stockholders or agents, provided, however, that any such termination shall be without prejudice to the rights of any party hereto arising out of any breach by any other party of this Agreement; provided, further, that in the event that this Agreement is terminated by Company due to a breach by the Parent or Merger Sub of Section 4.4, Parent, Merger Sub and Company agree to liquidated damages to be paid to the Company by Parent in the amount of $1,000,000 within 10 days of the date of Company reasonably determines such breach has occurred and can not be cured within 20 days. It is the intent of Parent, Merger Sub and Company that the foregoing damages constitute the sole and exclusive remedy for such a breach by Parent or Merger Sub of Section 4.4 hereof and that such sum is a reasonable estimate of damages and not a penalty.

 

 

For purposes of this Agreement, the following terms and phrases shall have the following meanings:

“AMENDMENT” shall mean an amendment to the Articles of Incorporation of the Parent which shall provide for (i) changing the name of the Parent to “Zealous Holdings, Inc.,” (ii) the increase of authorized shares of Parent Common Stock from 50,000,000 to 100,000,000 shares, , (iii) the increase of authorized shares of Parent Common Stock from 500,000 to 1,000,000 shares, (vi) authorization of the Certificate of Designations of the Parent Preferred Stock, (vii) authorization of the Board of Directors of the Parent to issue blank check preferred stock, (viii) a reverse split of the Parent Common Stock so that 12 issued and outstanding shares of Common stock be combined into one share of validly issued, fully paid, and nonassessable share of Parent Common Stock and (ix) such other changes to the Articles of Incorporation and/or By-Laws of the Parent that the Company and Board of Directors of Parent deem necessary to accomplish the transactions contemplated hereby.

 

“AFFILIATE” shall have the meaning ascribed to it in Rule 405 promulgated under the Securities Act.

 

“BUSINESS DAY” shall mean any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in the State of New York are authorized by law, regulation or executive order to close.

 

“COMPANY STOCK OPTION” shall mean any option to purchase Company Shares granted under the Company Stock Plan or otherwise.

 

“COMPANY STOCK PLAN” shall mean the 2007 Stock Incentive Plan of the Company.

 

“CODE” shall mean the Internal Revenue Code of 1986, as amended.

 

“EMPLOYEE BENEFIT PLAN” shall mean any “employee benefit plan” as defined in Section 3(3) of ERISA and any other plan, policy, program, practice, agreement, understanding or arrangement (whether written or unwritten) providing compensation or other benefits to any current or former director, officer, employee or consultant (or to any dependent or beneficiary thereof), of the Company or any ERISA Affiliate, which are now, or were within the past six years, maintained by the Company or any ERISA Affiliate, or under which the Company or any ERISA Affiliate has or could have any obligation or liability, whether actual or contingent (and including, without limitation, any liability arising out of an indemnification, guarantee, hold harmless or similar agreement), including, without limitation, all incentive, bonus, deferred compensation, vacation, holiday, cafeteria, medical, disability, stock purchase, stock option, stock appreciation, phantom stock, restricted stock or other stock-based compensation plans, policies, programs, practices or arrangements.

 

 

“ENVIRONMENTAL LAW” shall mean any federal, state, local or foreign law (including any common law), statute, code, ordinance, rule, regulation or other requirement relating to the environment, natural resources or public or employee health and safety, and includes, but not limited to, CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., as amended, the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as amended, the Clean Water Act, 33 U.S.C. ss. 2601 et seq., as amended, the Clean Air Act, 42 U.S.C. ss. 7401 et seq., as amended, the Toxic Substances Control Act, 15 U.S.C. ss. 6901 et seq., as amended, the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq., as amended, the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., as amended, the New York Navigation Law, as amended, and the Occupational Safety and Health Act, 29 U.S.C. ss. 6901 et seq., as amended.

 

“ENVIRONMENTAL COSTS AND LIABILITIES” shall mean any and all losses, liabilities, obligations, damages, fines, penalties, judgments, actions, claims, costs and expenses (including, without limitation, fees, disbursements and expenses of legal counsel, experts, engineers and consultants and the costs of investigation and feasibility studies and remedial activities) arising from or under any Environmental Law or order or contract with any Governmental Authority or any other Person.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA AFFILIATE” shall mean any entity that, together with the Company, is or was treated as a single employer under Section 414(b), (c) or (m) of the Code.

 

“EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended.

 

“GAAP” shall mean generally accepted accounting principles as in effect in the United States.

 

“GOVERNMENTAL AUTHORITY” shall mean any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign.

 

“HAZARDOUS MATERIALS” shall mean any petroleum or petroleum products, radioactive materials, asbestos-containing materials, radon gas, PCBs and any other hazardous or toxic substance, material or waste which is or becomes prior to the Closing regulated under, or defined as a “hazardous substance,” “pollutant,” “contaminant,” “hazardous waste,” “toxic chemical,” “hazardous materials,” “toxic substance” or “hazardous chemical” under any Environmental Law.

 

“LAWS” shall mean all applicable statutes, rules, regulations, ordinances, orders, writs, injunctions, judgments, decrees, awards or restrictions of any governmental entity.

 

 

“LIABILITIES” shall mean any liability or obligation, including without limitation, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, whether known or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured.

 

“LIENS” shall mean any security interest, mortgage, lien, charge, claims, option and encumbrance.

 

“MATERIAL ADVERSE EFFECT” used in connection with a party shall mean any event, change or effect that is or is reasonably likely to become materially adverse to the condition (financial or otherwise), properties, assets, liabilities, businesses, operations, results of operations or prospects of such party and its subsidiaries, if any, on a consolidated basis.

 

“PARENT COMMON STOCK” shall mean the common stock, par value $.001 per share.

 

“PENSION PLAN” shall mean any qualified or non-qualified Employee Pension Benefit Plan (including, any Multiemployer Plan), as such term is defined in Section 3(2) of ERISA.

 

“PERSON” shall mean any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental entity of any kind.

 

“PRE-CLOSING PERIOD” shall mean all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date.

 

“PRIMARY SHAREHOLDERS” shall mean Kent G. Wyatt Sr. and Sarah Wyatt.

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“SEC DOCUMENTS” shall mean all reports and registration statements filed, or required to be filed, by the Parent pursuant to the Securities Laws.

 

“SECURITIES ACT” shall mean the Securities Act of 1933, as amended.

 

“SECURITIES LAWS” shall mean the Securities Act; the Exchange Act; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules and regulations of the SEC promulgated thereunder.

“SHAREHOLDER” shall mean any holder of capital stock of the Company.

 

“SUBSIDIARY” shall mean, as to any Person, any corporation, partnership, limited liability company or other entity which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors, the general managers or other persons performing similar functions, are at the time directly or indirectly owned by such Person; unless otherwise specified, “Subsidiary” means a Subsidiary of the Company.

 

 

“TAXES” shall mean taxes, fees, levies, duties, tariffs, imposts, and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any federal, state, local or foreign taxing authority, including (without limitation) (i) income, franchise, profits, gross receipts, AD VALOREM, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (ii) interest, penalties, additional taxes and additions to tax imposed with respect thereto.

 

“WELFARE PLAN” shall mean any Employee Welfare Benefit Plan, as such term is defined in Section 3(1) of ERISA.

9.1    NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally (including delivery by courier service), or mailed by registered or certified mail, postage prepaid, return receipt requested, or sent by a nationally recognized overnight courier service, as follows:

 

(a)    If to the Parent, to:

 

Atlantic Syndication Network, Inc.

P.O. Box 30010

Las Vegas, Nevada 89173-0010

Att: Kent G. Wyatt, Sr.

 

with a copy (which shall not constitute notice to:

 

Fennemore Craig, P.C.

300 South Fourth Street

Suite 1400

Las Vegas, NV 89101

Att: David G. LeGrand

 

 

(b)    If to the Company, the Shareholders or the Shareholder Representative, to:

 

Zealous Holdings, Inc.

1800 Century Park East, Suite 200

Los Angeles, CA 90067 

Att: Milton C. Ault III

 

with a copy (which shall not constitute notice to: 

 

Jones Garneau LLP

670 White Plains Road

Scarsdale, NY 10583

Att: Robert Newman

 

or to such other address as the Person to whom notice is to be given may have previously furnished to the other parties in writing in accordance herewith. Notice shall be deemed given on the date received (or, if receipt thereof is refused, on the date of such refusal).

9.2    AMENDMENTS AND WAIVERS. This Agreement may not be amended, modified or supplemented except by written agreement of the parties hereto. No waiver by any party of any non-compliance, default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent non-compliance, default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

9.3    INTERPRETATION. The headings preceding the text of Articles and Sections included in this Agreement and the headings to Exhibits and Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively. References to any “Article”, “Section”, “Exhibit” or “Schedule” shall refer to an Article or Section of, or an Exhibit or Schedule to, this Agreement. In any case where the concept of materiality is applied more than once to qualify any provision of this Agreement (whether by cross-referencing or incorporation or otherwise), such provision shall be interpreted as if only one, but the broadest one, of such materiality qualification applied to it. Any due diligence review, audit or other investigation or inquiry undertaken or performed by or on behalf of a party shall not limit, qualify, modify or amend the representations, warranties or covenants of, or indemnities made by any other party pursuant to this Agreement, irrespective of the knowledge and information received (or which should have been received) therefrom by the investigating party and consummation of the transactions contemplated herein by a party shall not be deemed a waiver of a breach of or inaccuracy in any representation, warranty or covenant or of any other party's rights and remedies with regard thereto.

 

9.4    ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. None of the parties hereto may assign or delegate any of its rights or obligations hereunder without the prior written consent of the other parties hereto. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, legatees, distributees and assigns.

 

 

9.5    PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors, permitted assigns and legal representatives, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature.

 

9.6    COUNTERPARTS; FACSIMILES. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. Counterparts may be executed either in original, faxed form, or “.pdf” form and the parties adopt any signatures received by a receiving fax machine or an e-mail as original signatures of the parties; provided, however, that any party providing its signature in such manner shall promptly forward to the other party an original of the signed copy of this Agreement which was so faxed or e-mailed.

 

9.7    GOVERNING LAW; VENUE; JURISDICTION. The laws of the State of Delaware (irrespective of its choice of law principles) will govern the validity of this Agreement, the construction of its terms and the interpretation and enforcement of the rights and duties of the parties hereto. This Agreement shall be enforceable in any court of competent jurisdiction. In furtherance of and not in limitation of the foregoing, the parties hereto (i) agree and consent to the personal jurisdiction and venue of the state and Federal courts sitting in the State of Delaware in any action or proceeding arising out of or connected in any way with this Agreement, (ii) irrevocably waive, to the fullest extent permitted by law, any claim that any such proceeding brought in such a court has been brought in an inconvenient forum, and (iii) agree that service of process in any such action or proceeding will be sufficient if sent by certified mail, return receipt requested, to applicable address set forth above, and that such service shall constitute “personal service,” and further agree to the invocation of said jurisdiction by service of process in any other manner authorized by law.

 

9.8    SEVERABILITY. If any term or provision of this Agreement shall, to any extent, be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, shall not be affected thereby and this Agreement shall be deemed severable and shall be enforced otherwise to the full extent permitted by law.

 

9.9    ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits referred to herein and which form a part hereof) and the Ancillary Documents constitute the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral and written, among the parties hereto with respect to the subject matter hereof except for a confidentiality agreement by and among the parties hereto, if any.

 

9.10   SCHEDULES AND EXHIBITS. The Schedules and Exhibits attached hereto are incorporated herein and made a part hereof for all purposes.

 

 

9.11   SURVIVAL. The representations and warranties of the Company, Parent and Merger Sub contained in this Agreement and the other agreements, certificates and documents contemplated hereby shall terminate and be of no further force or effect at, and as of, the Effective Time, and only the covenants and agreements of the Parent and Company in this Agreement and the other agreements, certificates and documents contemplated hereby that by their terms survive the Effective Time shall survive the Effective Time.

 

9.12    RULES OF CONSTRUCTION. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

 

9.13    WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

IN WITNESS WHEREOF, this Agreement and Plan of Merger has been duly executed and delivered by the parties hereto on the date first above written.

 

	PARENT:   ATLANTIC SYNDICATION NETWORK, INC.   By: /s/ Kent G. Wyatt, Sr.                                         Name: Kent G. Wyatt, Sr. Title: President and CEO
	MERGER SUB:   ASNI II, INC.   By: /s/ Kent G. Wyatt, Sr.                                         Name: Kent G. Wyatt, Sr. Title: President
	COMPANY:   ZEALOUS HOLDINGS, INC.   By: /s/ Milton C. Ault III                                           Name: Milton C. Ault III Title: Chairman and CEO

 

 

 

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