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EXHIBIT 1.1
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PLAN AND AGREEMENT TO EXCHANGE STOCK
BY AND AMONG
Armitec.COM, INC.,
THE Armitec.COM SHAREHOLDERS,
and
Armitec, INC.
Dated September 15, 2000
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS......................................................................................................1
ARTICLE II
EXCHANGE AND PURCHASE OF SHARES; CLOSING
Section 2.01. The Armitec Shares.........................................................................2
Section 2.02. The Armitec.Com Shares.....................................................................3
Section 2.03. The Closing................................................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Armitec
Section 3.01. Due Organization; Good Standing............................................................4
Section 3.02. Authorized Capital of Armitec..............................................................4
Section 3.03. Financial Statements; Absence of Undisclosed Liabilities...................................5
Section 3.04. Taxes......................................................................................6
Section 3.05. Conduct of Business........................................................................6
Section 3.06. Legal Proceedings..........................................................................7
Section 3.07. Brokers....................................................................................7
Section 3.08. SEC Filings................................................................................7
Section 3.09. Required Approvals, Proxy and Special Shareholder's Meeting................................7
Section 3.10. Officers, Directors and Beneficial Owners..................................................8
Section 3.11. No Untrue Statements.......................................................................8
Section 3.12. Subsidiaries...............................................................................9
Section 3.13. Accounts Receivable; Accounts Payable......................................................9
Section 3.14. Real Property..............................................................................9
Section 3.15. Leased Real Property.......................................................................9
Section 3.16. Tangible Personal Property.................................................................9
Section 3.17. Contracts.................................................................................10
Section 3.18. Environmental Matters and OSHA............................................................13
Section 3.19. Insurance.................................................................................14
Section 3.20. Employee Relations and Employee Agreements................................................14
Section 3.21. Patents; Trademarks; Related Contracts....................................................17
Section 3.22. Availability of Books and Records.........................................................17
Section 3.23. Bank Accounts, Credit Cards...............................................................17
Section 3.24. Absence of Certain Changes or Events......................................................18
Section 3.25. Related Party Transactions................................................................20
Section 3.26. Adverse Conditions........................................................................20
Section 3.27. Annual Reports............................................................................20
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Section 3.28. Correctness of Representations............................................................20
Section 3.29. Investment Intent.........................................................................21
Section 3.30. Litigation................................................................................21
Section 3.31. Licenses, Permits and Approvals...........................................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ARMITEC.COM AND THE ARMITEC.COM SHAREHOLDERS
Section 4.01. Due Organization; Good Standing...........................................................22
Section 4.02. Authorized Capital of Armitec.Com.........................................................22
Section 4.03. Financial Statements; Absence of Undisclosed Liabilities..................................23
Section 4.04. Taxes.....................................................................................24
Section 4.05. Conduct of Business.......................................................................24
Section 4.06. Legal Proceedings.........................................................................25
Section 4.07. Required Approvals........................................................................25
Section 4.08. Officers and Directors....................................................................25
Section 4.09. No Untrue Statements......................................................................25
Section 4.10. Subsidiaries..............................................................................26
Section 4.11. Real Property.............................................................................26
Section 4.12. Leased Real Property......................................................................26
Section 4.13. Tangible Personal Property................................................................26
Section 4.14. Contracts.................................................................................26
Section 4.15. Brokers...................................................................................29
Section 4.16. Environmental Matters and OSHA............................................................30
Section 4.17. Insurance.................................................................................31
Section 4.18. Employee Relations and Employment Agreements..............................................31
Section 4.19. Patents; Trademarks; Related Trademarks...................................................34
Section 4.20. Books and Records; Fiscal Year; Method of Accounting......................................34
Section 4.21. Bank Accounts; Credit Cards...............................................................34
Section 4.22. Absence of Certain Changes or Events......................................................34
Section 4.23. Accounts Receivable; Accounts Payable.....................................................37
Section 4.24. Insider Transactions......................................................................37
Section 4.25. Adverse Conditions........................................................................37
Section 4.26. Authorization and Validity of Documents...................................................37
Section 4.27. Investment Intent.........................................................................37
Section 4.28. Correctness of Representations............................................................38
Section 4.29. Litigation................................................................................39
Section 4.30. Licenses, Permits and Approvals...........................................................39
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ARTICLE V
COVENANTS OF ARMITEC
Section 5.01. Conduct of Business Prior to Closing......................................................39
Section 5.02. Actions Prior to Closing..................................................................40
Section 5.03. Consents..................................................................................42
Section 5.04. Supplemental Disclosure...................................................................42
Section 5.05. Additional Reports........................................................................42
Section 5.06. Conditions Precedent......................................................................42
Section 5.07. Capital Expenditures......................................................................42
Section 5.08. SEC Filings...............................................................................42
Section 5.09. Shareholder and Other Required Consents...................................................43
Section 5.10. Other Transactions........................................................................43
ARTICLE VI
COVENANTS OF ARMITEC.COM
Section 6.01. Conduct of Business Prior to Closing......................................................43
Section 6.02. Actions Prior to Closing..................................................................44
Section 6.03. Consents..................................................................................46
Section 6.04. Supplemental Disclosure...................................................................46
Section 6.05. Additional Reports........................................................................47
Section 6.06. Conditions Precedent......................................................................47
Section 6.07. Capital Expenditures......................................................................47
Section 6.08. Shareholder and Other Required Consents...................................................47
Section 6.09. Other Transactions........................................................................47
ARTICLE VII
FURTHER AGREEMENTS
Section 7.01. Confidentiality...........................................................................47
Section 7.02. Public Announcements......................................................................48
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ARMITEC TO CONSUMMATE THE EXCHANGE
Section 8.01. Representations and Warranties............................................................48
Section 8.02. Covenants and Agreements..................................................................48
Section 8.03. Certified Resolutions.....................................................................48
Section 8.04. No Injunction, Etc........................................................................48
Section 8.05. Incumbency................................................................................49
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Section 8.06. Certificates..............................................................................49
Section 8.07. Deliveries at Closing.....................................................................49
Section 8.08. Certificates..............................................................................49
Section 8.09. Estoppel Certificates.....................................................................49
Section 8.10. Closing Certificate.......................................................................50
Section 8.11. Reimbursement.............................................................................50
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF ARMITEC.COM SHAREHOLDERS TO CONSUMMATE THE EXCHANGE
Section 9.01. Representations and Warranties............................................................50
Section 9.02. Covenants and Agreements..................................................................50
Section 9.03. Certified Resolutions.....................................................................50
Section 9.04. No Injunction, Etc........................................................................51
Section 9.05. Incumbency................................................................................51
Section 9.06. Certificates..............................................................................51
Section 9.07. Deliveries at Closing.....................................................................51
Section 9.08. Certificates..............................................................................51
Section 9.09. Estoppel Certificates.....................................................................51
Section 9.10. Closing Certificate......................................................................52
Section 9.11. Resignation of Officers and Directors.....................................................52
Section 9.12. Assets and Liabilities....................................................................52
ARTICLE X
TERMINATION
Section 10.01. Termination...............................................................................52
Section 10.02. Effect of Termination.....................................................................53
ARTICLE XI
INDEMNIFICATION
Section 11.01. Indemnification by the Company............................................................53
Section 11.02. Indemnification by Armitec.Com Shareholders...............................................54
ARTICLE XII
MISCELLANEOUS
Section 12.01. Survival of Representations, Warranties and Agreements....................................54
Section 12.02. Further Documents.........................................................................54
Section 12.03. Notices...................................................................................54
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Section 12.04. Entire Agreement..........................................................................54
Section 12.05. Assignability.............................................................................55
Section 12.06. Binding Effect; Benefit...................................................................55
Section 12.07. Severability..............................................................................55
Section 12.08. Amendment; Waiver.........................................................................55
Section 12.09. Section Headings..........................................................................55
Section 12.10. Counterparts..............................................................................55
Section 12.11. Applicable Law............................................................................55
Section 12.12. Remedies..................................................................................56
Section 12.13. Procedure.................................................................................56
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THIS PLAN AND AGREEMENT TO EXCHANGE STOCK (the "Agreement') is made and
entered into this 15th day of September, 2000, by and among (i) Armitec.Com,
Inc., a Georgia corporation ("Armitec.Com") with its principal place of business
in Atlanta, GA; (ii) the shareholders of Armitec.Com, all of whom are listed on
Schedule 1 attached hereto (collectively, the "Armitec.Com Shareholders"); and
(iii) Armitec, Inc., a Delaware corporation ("Armitec") with its principal place
of business in St. Simons Island, GA.
The Armitec.Com Shareholders and Armitec intend to effect a "B"
reorganization pursuant to Section 368 of the Code (as hereinafter defined)
whereby Armitec will acquire all of the outstanding shares of stock of
Armitec.Com from the Armitec.Com Shareholders in exchange solely for newly
issued shares of common stock of Armitec. After giving effect to all of the
transactions contemplated by this Agreement, (a) the Armitec Shareholders (as
defined below) and the Armitec.Com Shareholders will jointly own all of the
issued and outstanding shares of Armitec and (b) Armitec.Com will be a
wholly-owned subsidiary of Armitec.
For and in consideration of these premises and the mutual covenants,
promises, agreements, representations and warranties set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Armitec, Armitec.Com and the Armitec.Com Shareholders hereby
covenant, promise, agree, represent and warrant as follows:
ARTICLE I
DEFINITIONS
The capitalized terms listed below are used in this Agreement with the
meanings thereafter ascribed:
"Affiliate" has the meaning ascribed to such term in Rule 405
promulgated under the Securities Act, as such rule is in effect on the date
hereof.
"Armitec Common" means all of the issued and outstanding shares of
Common Stock of Armitec, par value $.00167.
"Armitec Shares" means all of the issued and outstanding shares of the
Armitec Common immediately prior to the closing of the transactions contemplated
by this Agreement.
"Armitec Shareholders" means all Persons owning Armitec Shares prior to
Closing and those Persons, other than the Armitec.Com Shareholders, owning
Armitec Shares after the Closing.
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"Armitec.Com Common" means the issued and outstanding Common Stock of
Armitec.Com.
"Armitec.Com Shares" means all of the issued and outstanding shares of
Armitec.Com which consists of ONE HUNDRED (100) shares of the Common Stock of
Armitec.Com.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section 101, and all future acts supplemental thereto or amendatory thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Exchange Act" means the Securities Act of 1934, or any similar Federal
statute, and the rules and regulations of the SEC promulgated thereunder, all as
the same shall be in effect at the relevant time.
"Fully-Diluted" means the number of shares of Common Stock of either
Armitec or Armitec.Com outstanding after giving effect to the exercise of
outstanding or committed options and other rights to purchase Common Stock.
"Hold" or "Held" as used herein and pertaining to share ownership shall
include ownership of record as well as beneficial ownership.
"Material" shall mean any condition, circumstance, change or effect (or
any development that, insofar as can be reasonably foreseen, would result in any
condition, circumstance, change or effect) that is material to the business,
assets, results of operations, prospects or condition (financial or otherwise)
of either Armitec or Armitec.Com. The parties hereby acknowledge and agree the
term "material" shall include any obligation, liability, commitment, claim,
expenditure or loss contingencies which individually equals or exceeds $10,000.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, government, or agency or political subdivision of a
government.
"SEC" means the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act or the Exchange Act.
"Securities Act" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect at the relevant time.
ARTICLE II
EXCHANGE AND PURCHASE OF SHARES; CLOSING
SECTION 2.01. THE ARMITEC SHARES.
On the terms and subject to the conditions set forth in this Agreement,
at the Closing (as such term is defined in Section 2.03 of this Agreement):
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(a) Schedule 2.01 attached hereto contains the names of
all Armitec.Com Shareholders holding Armitec.Com Common, the number of
shares held by each (set forth opposite such shareholder's name), and
the ratio such number bears to the total number of shares of
Fully-Diluted Armitec.Com Common. At Closing Armitec shall assign,
transfer, and deliver to the Armitec.Com Shareholders 13,940,785 shares
of Armitec Common. Additionally, at Closing, Armitec shall reserve
13,525,928 shares of Armitec Common from which 1,525,928 shares of
Armitec Common will be issued for consulting services, and 12,000,000
shares will be reserved for issuance through a private placement of the
shares to occur within six (6) months of the Closing. If the shares, or
any portion thereof, are not issued pursuant to a private placement
within six (6) months of the Closing, Galt Capital Corporation shall
have the right to purchase any of such shares not issued through a
private placement at a nominal price.
(b) The Armitec Shareholders of Armitec Common shall
retain their shares of Armitec Common which, immediately following the
issuance of Armitec Common as set forth in subsection (a) above, shall
constitute 3,051,857 shares or Ten per cent (10%) of the Fully-Diluted
Armitec Common.
(c) Prior to Closing, the exact number of shares of
Armitec Common to be issued to each Armitec.Com Shareholder shall be
appended to Schedule 2.01, as well as such other information as may be
reasonably necessary for the transfer agent of Armitec to issue
certificates evidencing the Armitec Common to the Armitec.Com
Shareholders at Closing.
SECTION 2.02. THE ARMITEC.COM SHARES.
On the terms and subject to the conditions set forth in this Agreement,
at the Closing (as such term is described in Section 2.03 of this Agreement),
each Armitec.Com Shareholders shall assign, transfer, and deliver to Armitec a
certificate(s) evidencing all of the Armitec.Com Shares held by such
shareholder. The certificates representing the Armitec.Com Shares shall be duly
endorsed, or accompanied by stock transfer powers duly endorsed, with the
signature of the Armitec.Com Shareholder thereon guaranteed by a bank, trust
company, or member of the New York Stock Exchange, and otherwise in a form
suitable for transfer on the stock transfer books of Armitec.Com.
SECTION 2.03. THE CLOSING.
The "Closing" shall mean the consummation of the exchange of Armitec
Shares and the Armitec.Com Shares, as set forth in Sections 2.01 and 2.02 above,
as well as the consummation of any other transactions which are contemplated by
this Agreement to occur at Closing. Closing shall take place no later than
within Two (2) days following the date upon which all of the conditions
precedent contained in Articles VIII and IX of this Agreement have occurred and
all regulatory matters have been complied with, at 10:00 a.m., local time, at
the offices of Kutak Rock, LLP, Suite 2100, 225 Peachtree Street, N.E. Atlanta,
GA 30303, or at such other time and place as the parties may agree in writing.
The date the Closing actually occurs is the "Closing Date."
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ARMITEC
Armitec represents and warrants to Armitec.Com and the Armitec.Com
Shareholders (which representations and warranties shall be valid and binding as
of the time of Closing) as follows:
SECTION 3.01. DUE ORGANIZATION; GOOD STANDING.
Armitec is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Armitec has the power and
authority to own, lease and operate its properties and to conduct its business
in each location where Armitec owns, leases or operates its property and
conducts business as such business is now being conducted by Armitec. Armitec is
duly qualified and is in good standing as a foreign corporation in each of the
jurisdictions in which the nature of the property or assets owned by Armitec or
the nature of the operations or business conducted by Armitec requires such
qualification. Complete and correct copies of the Certificate of Incorporation,
as amended, and the Bylaws, as amended, of Armitec, as certified by the
Secretary of State of Delaware and the Secretary of Armitec, respectively, are
attached hereto as Schedule 3.01, and no changes will be made therein prior to
Closing except such change(s) as may be necessary to effectuate the terms
hereof.
SECTION 3.02. AUTHORIZED CAPITAL OF ARMITEC.
The authorized capital of Armitec consists of FIFTY MILLION
(50,000,000) shares of Common Stock, Three Million Fifty One Thousand Eight
Hundred Fifty Seven (3,051,857) shares of which are validly issued and
outstanding, fully paid and nonassessable. The relative rights, powers,
preferences, qualifications, limitations, and restrictions in respect of each
class of authorized capital stock of Armitec are as set forth in the Certificate
of Incorporation, attached as Schedule 3.01 and the Certificate of Designation,
and all such rights, powers, preferences, qualifications, limitations, and
restrictions are valid, binding, and enforceable and in accordance with all
applicable laws. Except as contemplated by this Agreement or as set forth in
Schedule 3.02, (a) no subscription, warrant, option, convertible security, or
other right (contingent or other) to purchase or otherwise acquire equity
securities of Armitec is authorized or outstanding, and (b) there is no
commitment by Armitec to (i) issue any equity securities of Armitec, including
without limitation, Armitec Common and Armitec Preferred, or any subscriptions,
warrants, options, convertible securities, or other rights to purchase or
acquire equity securities of Armitec or securities convertible into or
exchangeable for equity securities of Armitec or (ii) distribute to holders of
Armitec Common, Armitec Preferred, or any other equity securities of Armitec,
any evidence of indebtedness, or any assets of Armitec. Except as set forth in
Schedule 3.02 or the Certificate of Incorporation, as amended, Armitec has no
obligation or right (contingent or other) to purchase, redeem, or otherwise
acquire any of its equity securities or any interests therein or to pay any
dividend or make any other distribution in respect thereof. Except as set forth
in Schedule 3.02, there are no voting trusts or agreements nor any preemptive
rights relating to any outstanding securities of Armitec (whether or not
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Armitec is a party thereto). All outstanding securities of Armitec were issued
in compliance with all applicable federal and state securities laws.
SECTION 3.03. FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES.
(a) Attached hereto as Schedule 3.03 are true, correct
and complete copies of:
(i) the audited Consolidated Balance Sheets of
Armitec and its subsidiaries dated as of August 31, 1998, 1999
and December 31, 1999 and the audited, consolidated statements
of income, cash flow and stockholders equity for the years
then ended, together with the notes thereto and the report
thereon of Moore Stephens Tiller LLC, independent certified
public accountants for Armitec.
Such financial statements and the notes thereto are
hereinafter referred to collectively as the "Armitec Financial
Statements."
(b) The Armitec Financial Statements (i) are in
accordance with the books and records of Armitec, (ii) present fairly
the consolidated financial condition of Armitec and its subsidiaries as
of the respective dates indicated and the results of operations for
such periods, (iii) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, and (iv) reflect adequate reserves for all
liabilities and losses. Armitec has no material liabilities or
obligations (secured or unsecured, whether accrued, absolute, direct,
indirect, contingent, or otherwise, and whether due or to become due)
that are not fully accrued or reserved against in the Armitec Financial
Statements or described in Schedule 3.03. Armitec has not received any
advice or notification from its independent certified public
accountants that Armitec has used any improper accounting practice that
would have the effect of not reflecting or incorrectly reflecting in
the Armitec Financial Statements or the books and records of Armitec,
any properties, assets, liabilities, revenues, or expenses. The Armitec
Financial Statements do not contain any items of special or
nonrecurring income, or other income not earned in the ordinary course
of business, except as set forth in the notes to the Armitec Financial
Statements or in Schedule 3.03. The books, records, and accounts of
Armitec accurately and fairly reflect, in reasonable detail, all
transactions, assets, and liabilities of Armitec. Armitec has not
engaged in any transaction, maintained any bank account, or used any of
the funds of Armitec, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and
records of Armitec.
(c) Armitec has no material liabilities or obligations
(secured or unsecured, whether accrued, absolute, direct, indirect,
contingent, or otherwise, and whether due or to become due) that are
not fully accrued or reserved against in the Armitec Financial
Statements, other than:
(i) liabilities incurred in the ordinary course
of business subsequent to the date of the Armitec Financial
Statements consistent with past practice, none of
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which deviate in any material respect from liabilities
incurred in prior comparable fiscal periods;
(ii) obligations under Contracts listed on
Schedule 3.03 or incurred in the ordinary course of business
and not required under generally accepted accounting
principles to be reflected in the Armitec Financial
Statements, which liabilities and obligations, individually or
in the aggregate, are not material to the financial condition
or operating results of Armitec; and
(iii) the liabilities listed on Schedule 3.03.
SECTION 3.04. TAXES.
Except as set forth on Schedule 3.04, Armitec has filed or obtained
filing extensions for all tax returns, federal, state, county, and local,
required to be filed by it, and Armitec has paid or established adequate
reserves (in accordance with generally accepted accounting principles) for the
payment of all taxes shown to be due by such returns as well as all other taxes,
assessments, and governmental charges which have become due or payable,
including, without limitation, all taxes which Armitec is obligated to withhold
from amounts owing to employees, creditors, and third parties. The federal
income tax returns of Armitec have never been audited by the Internal Revenue
Service and no state income or sales tax returns of Armitec have been audited.
No deficiency assessment with respect to or proposed adjustment of Armitec's
federal, state, county, or local taxes is pending or, to the best of Armitec's
knowledge, threatened. There is no tax lien, whether imposed by any federal,
state, county, or local taxing authority, outstanding against the assets,
properties, or business of Armitec. Neither Armitec nor any of its shareholders
has ever filed a consent pertaining to Armitec pursuant to Section 341(f) of the
IRC (as hereinafter defined), relating to collapsible corporations. Any amounts
reserved in the Armitec Financial Statements for taxes are sufficient for the
payment of all accrued and unpaid federal, state and local taxes of all types,
including interest and penalties thereon of Armitec for or on account of which
Armitec is or may become liable in any manner whatsoever for the quarter ending
June 30, 2000 and for all prior periods.
SECTION 3.05. CONDUCT OF BUSINESS.
(a) ORDINARY COURSE. Since September 1, 1997 the business
of Armitec has been operated, and prior to Closing will be operated,
only in the ordinary course except for: (i) any transactions contained
in Schedule 3.05.1 attached hereto; or (ii) any transactions disclosed
in the Form 10-K's and 10-QSB's filed by Armitec since that date (the
"Armitec Form 10-K's and QSB's").
(b) NO MATERIAL CHANGE. Since December 31, 1999, except
as set forth on Schedule 3.05.2, there has been, and prior to the
Closing there will be, no material adverse change, individually or in
the aggregate, in Armitec's condition (financial or otherwise) or in
Armitec's assets, liabilities or business.
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(c) NO LOSS OR DESTRUCTION. There has been, and prior to
Closing there will be, no damage, destruction or loss or other events
or conditions of any character, or any pending or threatened
developments, which individually or in the aggregate, would materially
and adversely affect Armitec's condition (financial or otherwise) or
Armitec's assets, liabilities or business.
SECTION 3.06. LEGAL PROCEEDINGS.
Except as set forth on Schedule 3.06 attached hereto and incorporated
by reference herein, there is, and as of Closing there will be, no action, suit,
proceeding or investigation pending or, to the best knowledge of Armitec,
threatened, against or affecting Armitec or any of its assets. Armitec is not,
and as of Closing will not be, in default under or with respect to any judgment,
order, writ, injunction or decree of any court or of any federal, state,
municipal or other governmental authority, department, commission, board, agency
or other instrumentality. Armitec has, and as of Closing will have, complied in
all material respects with all laws, rules, regulations and orders applicable to
it and to its business; and it has, and as of the Closing will have, performed
in all material respects all of its material obligations and duties to be
performed by it to the extent required in accordance with their respective
terms; and is not, and as of the Closing will not be, in any material respect in
default under or in breach of any material contract, agreement, commitment or
other instrument to which it is subject or a party or under which it is bound.
SECTION 3.07. BROKERS.
Neither Armitec nor any Affiliate of Armitec has any contract,
arrangement or understanding with, or has incurred any obligation or liability
to, any broker, finder, investment banker, intermediary or similar agent with
respect to this Agreement or the transactions contemplated hereby.
SECTION 3.08. SEC FILINGS.
Except as set forth of Schedule 3.08, Armitec and each of its officers
and directors are current in its or their filings with the SEC including all
registration statements, financial statements, applications, reports, schedules,
forms, proxy statements, Forms 3 and 4, and all other instruments, documents,
and written information (collectively "SEC Filings") required to have been filed
by Armitec, its officers and directors under the Securities Act and the Exchange
Act. None of the SEC Filings contained, as of its date, any untrue statement of
a material fact or omitted, as of its date, to state a 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 misleading.
SECTION 3.09. REQUIRED APPROVALS, PROXY AND SPECIAL SHAREHOLDER'S
MEETING.
The Board of Directors of Armitec, pursuant to the power and authority
legally vested in it, has duly authorized the execution and delivery of this
Agreement by Armitec, the issuance of shares of Armitec Common and the
transactions hereby contemplated, and no action,
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confirmation or ratification by the shareholders of Armitec or by any other
person, entity or governmental authority is required in connection therewith,
except:
(a) the filing of a Definitive Proxy which shall contain
the nominees for the Board of Directors of Armitec (one of whom is to
be named by Armitec Shareholders), the proposed Officers of Armitec,
and such other items as are necessary and appropriate, and the
obtaining of a majority vote of a quorum of Armitec Shareholders at a
Special or Annual Meeting of Shareholders to be held prior to or on the
date of the Closing which approves the transactions set forth in this
Agreement; or,
(b) the obtaining of the required shareholder approval of
these transactions by a written consent of a majority of Armitec
Shareholders and appropriate notification to Armitec Shareholders.
Except as may be otherwise set forth herein, Armitec has taken all
actions required by law, its Certificate of Incorporation, as amended,
its Bylaws, as amended, or otherwise, to authorize the execution,
delivery and performance of this Agreement, and as of Closing Armitec
will have the power and authority to consummate the transactions hereby
contemplated, including the issuance, sale, transfer and delivery of
the Armitec Shares pursuant to the provisions hereof and to take all
other actions required to be taken by it pursuant to the provisions
hereof, subject to obtaining prior shareholder approval and except as
may be otherwise set forth herein. This Agreement is valid and binding
upon Armitec in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will constitute a violation or breach of the
Articles of Incorporation, as amended, or the Bylaws, as amended, of
Armitec, or any agreement, stipulation, order, writ, injunction,
decree, law, rule or regulation applicable to Armitec.
SECTION 3.10. OFFICERS, DIRECTORS AND BENEFICIAL OWNERS.
Attached hereto as Schedule 3.10 is a list of all officers and
directors of Armitec and all beneficial owners of more than Five (5%) percent of
Armitec Shares known to Armitec, and the number of Armitec Shares owned of
record and beneficially by each such Officer and Director of Armitec.
SECTION 3.11. NO UNTRUE STATEMENTS.
Neither this Agreement nor any written information, statement, list or
certificate furnished or to be furnished to Armitec.Com or the Armitec.Com
Shareholders pursuant to this Agreement or in connection with this Agreement or
any of the transactions contemplated by this Agreement contains, or as of the
Closing will contain, any untrue statement of a material fact or omits, or as of
the Closing will omit, a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
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SECTION 3.12. SUBSIDIARIES.
Except as set forth on Schedule 3.12, Armitec does not have any
subsidiaries and does not, directly or indirectly, own a controlling interest in
any corporation, partnership, joint venture, or other entity.
SECTION 3.13. ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE.
Armitec's accounts receivable reflected in the December 31, 1999
Armitec Financial Statement, and all accounts receivable arising after the date
thereof (collectively, the "Accounts Receivable") were or are bona fide accounts
receivable, the full amount of which were or are actually owing to Armitec, and,
to the best of its knowledge, those not collected prior to Closing will be fully
collectible by Armitec within ninety (90) days of Closing without offset,
recoupment, counterclaim, claim or diminution. Armitec's accounts payable
reflected on the December 31, 1999 Armitec Financial Statement and all accounts
payable arising after the date thereof (collectively, the "Accounts Payable")
arose from bona fide transactions in the ordinary course of Armitec's business.
SECTION 3.14. REAL PROPERTY.
Except as set forth on Schedule 3.14 attached hereto, Armitec does not
own any real estate.
SECTION 3.15. LEASED REAL PROPERTY.
Schedule 3.15 contains a true and correct list of each parcel of real
property leased by Armitec (the "Armitec Leased Real Property"). Attached to
Schedule 3.15 is a true and correct copy of each lease pursuant to which Armitec
leases the Armitec Leased Real Property and any amendments, extensions, and
renewals thereof (the "Armitec Real Property Leases"). Each Armitec Real
Property Lease is in full force and effect and there is no existing default or
event of default, real or claimed, or event which with notice or lapse of time
or both would constitute a default thereunder. Except as described in Schedule
3.15, Armitec's interest in the Armitec Real Property Leases is free and clear
of any mortgages and liens, and is not subject to any deeds of trust,
assignments, subleases, or rights of any third parties other than the lessor
thereof. To the knowledge of Armitec, no lessor under any such lease is in
default under any such leases in its duties to the lessee. Armitec has not
assigned, transferred, conveyed or otherwise encumbered by way of security
interest or otherwise any of the Armitec Real Property Leases. Except as
described in Schedule 3.15, the continuation, validity, and effectiveness of
each Armitec Real Property Lease will in no way be affected by the consummation
of the transactions contemplated by this Agreement.
SECTION 3.16. TANGIBLE PERSONAL PROPERTY.
Attached hereto as Schedule 3.16 is a true, correct and complete list
of all tangible personal property owned by Armitec or used by Armitec in the
conduct of its business, including, but not limited to, all equipment, machinery
and fixtures (collectively, the "Armitec
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<PAGE> 16
Personal Property"), indicating whether it is owned or the manner in which it is
otherwise utilized by Armitec. Armitec has exclusive good and merchantable title
to all of the Armitec Personal Property owned by it, free and clear of all
pledges, claims, liens, restrictions, security interests, charges and other
encumbrances except those contained in said Schedule 3.16. All of the Armitec
Personal Property is in good repair and good operating condition, fit for its
intended purposes, and is adequate for the continuation of Armitec's business as
presently conducted.
SECTION 3.17. CONTRACTS.
(a) Schedule 3.17.1 contains a true and correct list of
all contracts, agreements, or understandings, written or oral, by which
Armitec receives any right or benefit or undertakes any liability or
obligation (the "Armitec Contracts"). Armitec has delivered or has
otherwise made available to Armitec.Com a correct and complete copy of
each contract or agreement set forth in Schedule 3.17.1. Except as
listed on Schedule 3.17.1, Armitec is not a party to any written or
oral:
(i) agreement, contract, or commitment with any
present or former employee or consultant or for the employment
of any person, including any consultant, contractor, or agent
who performs services for Armitec;
(ii) agreement, contract, or commitment for the
future purchase of, or payment for, supplies or products, or
for the performance of services by a third party which
supplies, products, or services are used by Armitec involving
in any one case an amount or value of five thousand dollars
($5,000) or more;
(iii) lease (relating to real property or personal
property) under which Armitec is lessor or lessee;
(iv) license, franchise, assignment or other
agreement of Armitec relating to trademarks, trade names,
patents, copyrights and service marks (or applications
therefor), unpatented designs or styles, know-how and
technical assistance;
(v) permit relating to the operation of the
business of Armitec;
(vi) agreement for the purchase, sale or lease of
goods, materials, supplies, machinery, equipment, capital
assets and services having a cost in excess of Ten Thousand
($10,000.00) Dollars in any one instance or in excess of
Twenty-Five Thousand ($25,000.00) Dollars in the aggregate;
(vii) agreement or arrangement with any supplier,
distributor, franchisor dealer, sales agent, broker or
representative;
(viii) agreement or arrangement for the
construction, modification or improvement of any building or
structure having a cost in excess of Ten
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Thousand ($10,00.00) Dollars, or any other capital expenditure
involving payments in excess of Ten Thousand ($10,000.00)
Dollars;
(ix) agreement or understanding which is material
in nature, involves the payment or receipt, in any 12 month
period, of more than Ten Thousand ($10,000.00) Dollars or has
a term of more than twelve (12) months;
(x) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement, or
other contract or commitment for the borrowing or lending of
money, or agreement or arrangement for a line of credit or
guarantee, pledge, or undertaking of the indebtedness of any
other person;
(xi) agreement, contract, or commitment for any
charitable or political contribution relating to Armitec's
business;
(xii) agreement, contract, commitment, or
outstanding proposal pursuant to which Armitec sells, or
proposes to sell, products and services for any amount or
value;
(xiii) agreement, contract, or commitment limiting
or restraining Armitec, its business, or any successor thereto
from engaging or competing in any manner or in any business;
(xiv) material agreement, contract, or commitment
relating to Armitec's business not made in the ordinary course
of business; or
(xv) any distributor agreement, reseller
agreement, franchise agreement, or any other agreement which
authorizes Armitec to (A) sell products or services of any
other person or entity, or (B) use the trademarks, trade
names, or trade styles of any other Person in Armitec's
business.
(b) Schedule 3.17.2 contains a true and correct list of
all commitments for capital expenditures that have been approved or
made prior to the date of this Agreement by Armitec and that remain
outstanding as of the date hereof.
(c) Except as may be otherwise noted in Schedule 3.17.1,
the Armitec Financial Statements or the Armitec Form 10-K's and Q's,
each of the Armitec Contracts was entered into in the ordinary course
of business on terms substantially consistent with Armitec's practice
prior thereto, is in full force and effect, and there exists no breach
or violation of, or default by Armitec under, any of the Armitec
Contracts nor, to the knowledge of Armitec by any other party to such
Contract, or any event which, with notice or the lapse of time, or
both, will create a breach or violation of, or default under by Armitec
nor, to the knowledge of Armitec by any other party to such Contract.
There is no Armitec Contract that contains any contractual requirement
with which there is a reasonable likelihood that Armitec or any other
party thereto will be unable to comply. Except as set forth on Schedule
3.17.1, the continuation, validity, and effectiveness of
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<PAGE> 18
each Armitec Contract will in no way be affected by the consummation of
the transactions contemplated by this Agreement.
(d) Schedule 3.17.3 contains a true and correct list of
all customers (ranked by annual revenue) of Armitec, and the annual
revenue obtained from each such customer for the year ended December
31, 1999. No customer reflected in Schedule 3.17.3, whose purchases of
products and services are material to Armitec (individually or in the
aggregate) has terminated its business relationship nor has suspended
nor significantly reduced its purchases of products and services from
Armitec from the levels reflected therein, if any, with Armitec; nor
does Armitec have knowledge of facts which suggest that such a
termination, suspension or significant reduction is likely within the
reasonably foreseeable future. Except as indicated on Schedule 3.17.3,
there exists no actual or, to the knowledge of Armitec, any threatened
termination, cancellation, or limitation of, or any amendment,
modification, or change to any Armitec Contract, which would have a
material adverse effect on the business or the condition, financial or
otherwise, of Armitec, including without limitation, (i) the business
relationship of Armitec with any customer, distributor, or related
group of customers or distributors whose purchases individually or in
the aggregate are material to the operations and financial condition of
Armitec, (ii) the requirements of any customer or related group of
customers of Armitec whose purchases individually or in the aggregate
are material to the operations and financial condition of Armitec, or
(iii) the business relationship of Armitec with any material supplier
to Armitec. Except as indicated on Schedule 3.17.3, there is no
Contract with any customer, the performance of which by Armitec will
result in a loss to Armitec.
(e) Except as indicated on Schedule 3.17.3, no customer
listed on Schedule 3.17.3 has notified Armitec, nor is Armitec
otherwise aware that any customer listed on Schedule 3.17.3 has, or has
plans to, reduce the volume of purchases made from Armitec.
(f) None of the Armitec Contracts is for materials,
supplies, equipment, or services in excess of Armitec's normal
requirements or as needed for reasonably anticipated needs of its
business.
(g) Armitec has not granted any power of attorney
affecting or with respect to any of its business, affairs, or assets,
or any combination thereof, that remains outstanding.
(h) Attached to Schedule 3.17.1 is a true and correct
copy (and if oral, a description of material terms) of each Armitec
Contract listed on Schedule 3.17.1 and all modifications, amendments,
renewals, or extensions thereof.
(i) Except as reflected in Schedule 3.17.4, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not terminate, breach, give rise to a right in
favor of any other party to an Armitec Contract
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to terminate such Contract, or constitute an event which with notice,
lapse of time or both, constitute an event of default under any
Contract.
SECTION 3.18. ENVIRONMENTAL MATTERS AND OSHA.
Except as set forth in Schedule 3.18.1:
(a) Armitec is and has been in compliance with all
environmental Laws. Armitec has not received notice of any
Environmental Claim filed or threatened against it or against any other
person or entity whose liability for any Environmental Claim has been
retained or assumed either contractually or by operation of law;
(b) Armitec has not disposed of, emitted, discharged,
handled, stored, transported, used, or released any Hazardous Materials
(or arranged for any of the foregoing), or exposed any employee or
other individual to any Hazardous Materials or condition so as to give
rise to any liability or corrective or remedial obligation under any
Environmental Laws;
(c) No Hazardous Materials are present in, on, or under
any properties owned, leased, or used at any time (including both land
and improvements thereon) by Armitec, and no reasonable likelihood
exists that any Hazardous Materials will come to be present in, on, or
under any properties owned, leased, or used at any time (including both
land and improvements thereon) by Armitec so as to give rise to any
material liability or corrective or remedial obligation under any
Environmental Laws.
As used herein, "Environmental Claim" means any notice, claim, act,
cause of action or investigation by any Person alleging potential liability
arising out of, based on or resulting from the presence, or release into the
environment, of any Hazardous Materials or any violation, or alleged violation,
of any Environmental Law. As used herein, "Environmental Laws" means all
federal, state, local and foreign laws and regulations relating to pollution or
protection of the environment or the protection of human health. As used herein,
"Hazardous Materials" means chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive and biological materials, asbestos-containing materials
(ACM), hazardous substances, petroleum and petroleum products or any fraction
thereof, excluding, however, any chemicals used or waste generated as a result
of typical office and janitorial activities. Except as set forth in Schedule
3.18.2, Armitec is in compliance with all applicable laws relating to employee
health and safety and has complied in the past with all applicable laws relating
to employee safety. Except as set forth in Schedule 3.18.2, Armitec has not
received any notice that past or present conditions of the assets and properties
of Armitec violate any applicable legal requirements or otherwise can be made
the basis of any claim, proceeding or investigation, based on OSHA violations or
otherwise related to employee health and safety. Except as set forth in Schedule
3.18.2, Armitec is not aware of any potential causes of action which may be
asserted against Armitec by third parties, including employees, former employees
and customers, arising out of (a) the handling or disposal of Hazardous
Materials by Armitec, (b) the violation of OSHA regulations, or (c) violation of
other applicable laws relating to employee safety.
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SECTION 3.19. INSURANCE.
Attached hereto as Schedule 3.19.1 is a list of all insurance policies
of Armitec setting forth with respect to each policy the name of the insurer, a
description of the policy, the dollar amount of coverage, the amount of the
premium, the date through which all premiums have been paid, and the expiration
date. Each insurance policy relating to the insurance referred to in Schedule
3.19.1 is in full force and effect, is valid and enforceable, and Armitec is not
in breach of or in default under any such policy. All policies listed on
Schedule 3.19.1 will be outstanding and duly in force at the Closing Date, the
premiums payable in respect of such policies have been paid in full, and none of
such policies provide for any retrospective premium adjustment or other
experience based liability on the part of Armitec. Armitec has not received any
notice of or any reason to believe that there is or has been any actual,
threatened, or contemplated termination or cancellation of any insurance policy
relating to the said insurance. Armitec has not since inception (a) been denied
or had revoked, canceled or rescinded any policy of insurance, or (b) self
insured against any risk ordinarily insured against by similar businesses.
Attached hereto as Schedule 3.19.2 is a true, correct and complete list and
summary of all claims which have been made under each insurance policy relating
to the said insurance. Armitec has not failed to give any notice or to present
any claim under any insurance policy in a due and timely fashion, and to the
best of its knowledge, all insurable risks are adequately covered by insurance
except for any exposure occasioned by lack of Directors' and Officers' insurance
coverage.
SECTION 3.20. EMPLOYEE RELATIONS AND EMPLOYEE AGREEMENTS.
(a) None of Armitec's employees is represented by a labor
organization. No petition for representation has ever been filed with
the National Labor Relations Board (the "NLRB") with respect to
Armitec's employees. Armitec is not aware of any union organizational
activity with respect to Armitec and have no reason to believe that any
such activity is being contemplated.
(b) Armitec is not in violation of applicable equal
employment opportunity laws, wage and hour laws, occupational safety
and health laws, federal labor laws, or any other laws of any
Government or Governmental Agency relating to employment. Schedule
3.20.2 attached hereto sets forth the status of all investigations,
claims, charges, and employment-related suits or controversies which
have occurred with respect to Armitec within the last 10 years or which
are presently pending or threatened with respect to Armitec under any
employment-related law of any Government or Governmental Agency
(including common law). Armitec has satisfied and performed fully all
judgments, decrees, conciliation agreements, or settlement agreements
by which it is bound or to which it is subject concerning
employment-related matters, and each such judgment, decree or agreement
is disclosed on Schedule 3.20.2.
(c) Except as set forth on Schedule 3.20.3, Armitec has
not entered into any employment agreement, and all employees can be
terminated at will. Armitec has no
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contractual obligation or special termination or severance arrangement
in respect of any employee.
(d) Except as set forth on Schedule 3.20.4 Armitec has
paid all wages due (including all required taxes, insurance and
withholding thereon). Schedule 3.20.4 attached hereto sets forth all
accrued vacation, sick leave and bonuses (including pro rata accruals
for a period of a year) due to employees of Armitec as of the Closing.
(e) Schedule 3.20.5 attached hereto sets forth each of
Armitec's employee's date of hire, position, present salary, amount of
bonus paid in the past year, and announced termination date (if any).
(f) Schedule 3.20.6 contains a true and complete list of
all the following agreements or plans of Armitec or any subsidiary of
Armitec which, together with Armitec constitutes a single employer
within the meaning of Section 414 of the Code (hereinafter collectively
referred to as the "Armitec Group") which are presently in effect or
which have been in effect at any time (if it may result in a material
liability), or, in the case of documents referred to in clause (i)
below, have been in effect at any time prior to the date hereof:
(i) "employee pension benefit plans" and
employee benefit plans" as defined in Sections 3(2) and 3(3)
of the Employee Retirement Income Security Act of 1974
("ERISA");
(ii) any other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock
option, incentive, bonus, vacation, severance, disability,
health, hospitalization, medical, life insurance, vision,
dental, prescription drug, supplemental unemployment, layoff,
automobile, apprenticeship and training, day care,
scholarship, group legal benefits, fringe benefits, or other
employee benefit plan, program, policy, or arrangement,
whether written or unwritten, formal or informal, including
any employee benefit plan covering any employees of Armitec
Group which any member of Armitec Group maintains or to which
any member of Armitec Group has any outstanding, present, or
future obligations to contribute or make payments under,
whether voluntary, contingent, or otherwise (the plans,
programs, policies, or arrangements described in clauses (ii)
or (iii) are herein collectively referred to as the "Armitec
Plans").
Included in said Schedule 3.20.6 are true and complete copies
of all documents as they may have been amended to the date hereof
involving or relating to clauses (i) and (ii) hereinabove, together
with all filings, IRS determination letters and financial statements,
including but not limited to, the most recent actuarial report for each
employee pension benefit plan and IRS Form 5500 for each Armitec Plan
for each of the five most recent plan years.
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(g) Except as to those plans identified on Schedule
3.20.7 as tax-qualified Armitec Plans (the "Armitec Qualified Plans"),
no member of Armitec Group maintains a tax-qualified employee plan
which meets or was intended to meet the requirements of Code Section
401 for the benefit of present or former employees. The Internal
Revenue Service has issued favorable determination letters to the
effect that each Armitec Qualified Plan qualifies under Code Section
401(a) and that any related trust is exempt from taxation under Code
Section 501(a), and such determination letters are in effect. Copies of
the most recent determination letters and any outstanding requests for
a determination letter with respect to each Armitec Qualified Plan have
been delivered to Armitec.Com. Armitec Qualified Plans have been
administered according to their terms, except for those terms which are
inconsistent with the changes required by the Tax Reform Act of 1986
and other acts, regulations, and rulings, in which case Armitec
Qualified Plans have been administered in accordance with the
provisions of those acts, regulations, and rulings in all material
respects. No member of Armitec Group or any fiduciary of any Armitec
Qualified Plan has done anything that would adversely affect the
qualified status of Armitec Qualified Plans or the related trusts.
Armitec Qualified Plans currently comply in form with the requirements
under Code Section 401(a), other than changes required by the Tax
Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986 and
other acts, regulations, and rulings for which amendments are not yet
required. Any Armitec Qualified Plan subject to Code Sections 401(k) or
401(m) has been tested for compliance with, and has satisfied the
requirements of, Code Sections 401(k)(3), 401(m)(2), or both, as
application, for each plan year ending prior to the Closing Date.
(h) With respect to any Armitec Qualified Plan or any
member of Armitec Group, no termination liability to the Pension
Benefit Guaranty Corporation ("PBGC") has been or is expected to be
incurred or would be incurred if any Armitec Qualified Plan were
terminated on the Closing Date. If any Armitec Qualified Plan were
terminated on the Closing Date, the present value of all benefit
liabilities under Armitec Qualified Plan would not, as of the Closing
Date, exceed the then current value of the assets of such Armitec
Qualified Plan. No Armitec Qualified Plan has suffered any accumulated
funding deficiency within the meaning of ERISA Section 302 and Code
Section 412. Armitec has made all quarterly contributions required
under Code Section 412(m) and no conditions exist which would subject
the assets of Armitec or Armitec.Com to a lien under Code Section
412(m) or ERISA Section 4068. No member of Armitec Group has any
outstanding liability under Code Section 4971. As of the Closing Date,
all contributions required to have been made on or prior to the Closing
Date under Armitec Plans will have been made or have been accrued on
the Financial Statements and all required premium payments for Armitec
Qualified Plans have been made, when due, to PBGC. No event or
condition exists with respect to any Armitec Qualified Plan which could
be deemed a "reportable event" as defined in ERISA Section 4043, with
respect to which the 30-day notice requirement has not been waived and
which could result in a liability to Armitec.Com, and no condition
exists which would subject Armitec.Com to a fine under ERISA Section
4071. No amendment has occurred to any Armitec Qualified
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Plan which has required or which would require Armitec Group to provide
security under Code Section 401(a)(29).
(i) No member of Armitec Group has any past, present, or
future obligation to contribute to any multiemployer plan as defined in
ERISA Section 3(37).
(j) No member of Armitec Group nor any other
"disqualified person" or "party in interest" (as defined in Code
Section 4975 and ERISA Section 3(14), respectively) with respect to
Armitec Plans, has engaged in any "prohibited transaction" (as defined
in Code Section 4975 or ERISA Section 406). Armitec Group and all other
"fiduciaries" (as defined in ERISA Section 3(21)) with respect to
Armitec Plans have complied in all respects with the requirements of
ERISA Section 404. Neither Armitec Group nor any party in interest or
disqualified person with respect to Armitec Plans has taken or omitted
any action which could lead to the imposition of an excise tax under
the Code or a fine under ERISA against Armitec.Com or Armitec Plans.
SECTION 3.21. PATENTS; TRADEMARKS; RELATED CONTRACTS.
Attached hereto as Schedule 3.21 is a true, correct and complete list
of all of Armitec's intangible personal property, including but not limited to,
patents, trademarks, trade names, or trademark or trade name registrations,
domain name registrations, service marks, and copyrights or copyright
registrations (the "Proprietary Rights"). All of Armitec's Proprietary Rights
are valid, enforceable, in full force and effect and free and clear of any and
all security interests, liens, pledges and encumbrances of any nature or kind.
Armitec has not infringed upon and is not infringing upon any patent, trademark,
trade name, or trademark or trade name registration, service mark, copyright, or
copyright registration of any other Person.
SECTION 3.22. AVAILABILITY OF BOOKS AND RECORDS.
Armitec will make available to Armitec.Com for inspection and its due
diligence hereunder during business hours all of its tax, accounting, corporate
and financial books and records as well as its personnel and employment and
other records of any nature which are pertinent to this Agreement. Such books
and records pertaining to Armitec's business are true, correct and complete,
have been maintained on a current basis, and fairly reflect the basis for
Armitec's financial condition and results of operations as set forth in Armitec
Financial Statements. In 1999, Armitec changed its fiscal year ending to
December 31; however, prior to such time, Armitec has consistently used the
fiscal year ending August 31 as its taxable year and has consistently used the
accrual method as its method of accounting for tax purposes.
SECTION 3.23. BANK ACCOUNTS, CREDIT CARDS.
Schedule 3.23 contains a true, correct and complete list of each bank,
savings and loan association, brokerage house or other financial institution
with which Armitec has an account, line of credit, safe deposit box, or other
relationship, the account numbers thereof, and the names of all persons
authorized to withdraw funds or other property from, or otherwise act in
connection therewith. Schedule 3.23 contains a true, correct, and complete
listing of the name,
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business address, and residence address of each person who has a credit card
which is billed to Armitec. Except as set forth on Schedule 3.23, Armitec has no
bank account, brokerage account, line of credit, safe deposit box, or credit
card account.
SECTION 3.24. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as permitted or required by this Agreement or as set forth in
Schedule 3.24 or elsewhere herein, since December 31, 1999, the business of
Armitec has been conducted in the ordinary course consistent with past practices
and there has not been any material transaction or occurrence in which Armitec
has:
(a) incurred any indebtedness, obligation or liability
(contingent or otherwise), except normal trade or business obligations
incurred in the ordinary course of its business, none of which was
entered into for inadequate consideration and none of which exceeds
$10,000.00 in amount;
(b) discharged or satisfied any claim, security interest,
lien or encumbrance or paid any indebtedness, obligation or liability
(contingent or otherwise), except (i) current liabilities, (ii)
scheduled payments pursuant to obligations under contracts, agreements
or leases listed in this Agreement, or (iii) in the ordinary course of
business consistent with past practice of liabilities reflected or
reserved against in the Armitec Financial Statements or incurred since
such date in the ordinary course of business consistent with past
practice;
(c) permitted, allowed or suffered any of its assets or
properties to be subjected to any mortgage, pledge, lien, charge,
restriction, security interest or other encumbrance of any kind;
(d) sold, assigned, transferred, leased, disposed of, or
agreed to sell, assign, transfer, lease, or dispose of, any of its
assets or properties;
(e) acquired or leased any assets or property of any
other Person;
(f) canceled or compromised any debt or claim;
(g) waived or released any rights or claims;
(h) granted, or made any contract, agreement, promise or
commitment to grant, or otherwise incurred any obligation for any
increase in, any wage, salary or employee benefit, or entered into any
employment contract, bonus, stock option, profit sharing, pension,
incentive, retirement or other similar arrangement or plan with, any
officer, employee or other Person, except in accordance with and in
amounts not greater than provided for in written agreements between
Armitec and employees of Armitec entered into prior to December 31,
1999 (copies of which shall be furnished to Armitec.Com) and except for
merit raises to hourly employees in the ordinary course of business
consistent with past practice;
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(i) entered into any collective bargaining or labor
agreement (oral or written), made any commitment or incurred any
liability to any labor organization, or experienced any slowdown, work
interruption, strike or work stoppage;
(j) made any capital expenditure in excess of Ten
Thousand ($10,000.00) Dollars or entered into any commitment therefor;
(k) suffered any casualty loss or damage in excess of
$5,000 in the aggregate, whether or not such loss or damage is or was
covered by insurance;
(l) changed the nature of its business or its method of
accounting or accounting principle, practice or policy;
(m) other than in the ordinary course of business,
entered into any transaction, contract or commitment;
(n) terminated or modified, or agreed to the termination
or modification of, any Service Contract, Participation Agreement or
any of the Commitments;
(o) suffered a loss of any supplier or suppliers, which
loss (individually or in the aggregate) has had, or may have, an
adverse effect on its financial condition, results of operations,
business or prospects;
(p) suffered any material adverse change in its business,
operations, condition (financial or otherwise), liabilities, assets,
earnings, or prospects of the Business nor, to Armitec's knowledge, has
there been any event which has had or may reasonably be expected to
have a material adverse effect on the Business;
(q) transferred or granted any rights with respect to, or
disposed of or permitted to lapse any right to the use of any software,
patent, trademark, assumed name, service mark, trade name, copyright,
license, or application therefor or disposed of or disclosed to any
person not authorized to have such information any trade secret,
proprietary information, formula, process, or know-how not previously a
matter of public knowledge or existing in the public domain;
(r) incurred any long term indebtedness;
(s) paid, loaned, distributed (by dividend or otherwise),
or advanced any amounts to, sold, transferred, or leased any properties
or assets (real, personal or mixed, tangible or intangible) to,
purchased, leased, licensed, or otherwise acquired any properties or
assets from, or entered into any other agreement or arrangement with
(i) any Shareholder, officer, employee, or director of Armitec, (ii)
any corporation or partnership in which any Affiliate is an officer,
director, or holder directly or indirectly of five percent (5%) or more
of the outstanding equity or debt securities, or (iii) any person
controlling, controlled by, or under common control with any such
partner, Shareholder, officer, director, or Affiliate except for
compensation not exceeding the rate
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of compensation in effect at December 31, 1999, and for routine travel
advances to officers and employees;
(t) made or agreed to make any charitable contributions
or incurred or agreed to incur any non-business expenses in excess of
$1,000 in the aggregate;
(u) taken any other action neither in the ordinary course
of business and consistent with past practice nor provided for in this
Agreement;
(v) increased (or experienced any change in the
assumptions underlying or the methods of calculating) any bad debt,
contingency, or other reserve, other than in the ordinary course of
business consistent with past practice; or
(w) written down or written up the value of any inventory
(including write-downs by reason of shrinkage or markdowns), determined
as collectible any Accounts Receivable or any portion thereof which
were previously considered uncollectible, or written off as
uncollectible any Accounts Receivable or any portion thereof, except
for write-downs, write-ups, and write-offs in the ordinary course of
business consistent with past practice, none of which is material in
amount.
SECTION 3.25. RELATED PARTY TRANSACTIONS.
Except for what is shown on Schedule 3.25 attached hereto and in the
Armitec Form 10-K's and Q's, there are not and have been no, indebtedness,
obligations, agreements, undertakings, liabilities or commitments (contingent or
otherwise) of Armitec since 1995 to or from any past or present officer,
director, member, shareholder or any Person related to, controlling, controlled
by or under common control with any of the foregoing. All such indebtedness,
obligations, agreements, undertakings, liabilities or commitments currently
outstanding or currently in effect are listed on Schedule 3.25.
SECTION 3.26. ADVERSE CONDITIONS.
Armitec has no knowledge of any present or future condition, state of
facts or circumstances which has affected or may affect adversely the business
of Armitec or prevent Armitec from carrying on its business other than may be
disclosed elsewhere in this Agreement.
SECTION 3.27. ANNUAL REPORTS.
Armitec has filed all of its 10-K Annual Reports required to be filed
through December 31, 1999.
SECTION 3.28. CORRECTNESS OF REPRESENTATIONS.
No representation or warranty of Armitec in this Agreement or in any
Exhibit, certificate, or Schedule attached hereto or furnished pursuant hereto,
contains, or on the Closing Date will contain, any untrue statement of fact or
omits, or on the Closing Date will omit, to state any material fact necessary in
order to make the statements contained therein not misleading, and all
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such statements, representations, warranties, Exhibits, certificates, and
Schedules shall be true and complete in all material respects on and as of the
Closing Date as though made on that date. All copies of mortgages, indentures,
notes, leases, agreements, plans, Armitec contracts and other instruments listed
on or referred to in the Schedules delivered or furnished to Armitec pursuant to
this Agreement are true copies thereof.
SECTION 3.29. INVESTMENT INTENT.
Armitec represents and warrants to Armitec.Com and the Armitec.Com
Shareholders that Armitec is acquiring the Armitec.Com Shares (the "Acquired
Shares") under this Agreement for investment only and for its own account and
not as nominee or agent; nor are the said shares being acquired with a view to
their offer for resale, distribution or transfer of any part thereof nor with
any present intention of selling, granting any participation in, or otherwise
distributing the same; nor are they being purchased for subdivision or
fractionalization thereof. By executing this Agreement, Armitec represents:
(a) That Armitec has no contract, undertaking, agreement
or arrangement with any Person to sell, hypothecate, pledge, donate or
otherwise transfer (with or without consideration) any of the Acquired
Shares, and that Armitec has no present plan or intention to enter into
any such contract, undertaking, agreement or arrangement.
(b) That Armitec covenants and agrees that none of the
Acquired Shares shall be sold, assigned or otherwise transferred other
than in transactions which are not in violation of the Securities Act
and applicable state securities laws. Each stock certificate of the
Acquired Shares shall bear the following legend, unless such legend may
be removed in accordance with its terms:
THE SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE (THE "SECURITIES")
HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS
(THE "STATE LAWS"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE 1933 ACT AND THE STATE LAWS AND (II) UPON RECEIPT BY THE
ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT AND ANY
APPLICABLE STATE LAWS. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF
COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
SECTION 3.30. LITIGATION. Schedule 3.30 sets forth each instance in
which Armitec or any of its officers or directors (a) is the subject to any
unsatisfied judgment, order, decree, stipulation, injunction or charge or (b) is
a party to or, to the knowledge of Armitec, is threatened to be made a party to,
any charge, complaint, action, suit, proceeding, hearing or investigation of in
any court or quasi-judicial or administrative agency of any federal, state,
local or foreign jurisdiction or before any arbitrator.
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SECTION 3.31. LICENSES, PERMITS AND APPROVALS. Schedule 3.31 lists all
governmental and regulatory licenses, permits and approvals necessary to conduct
Armitec's business. All such licenses, permits and approvals are in full force
and effect. There are no violations by Armitec of, or any claims, or proceedings
pending or to the knowledge or Armitec threatened, challenging the validity of
or seeking to discontinue, any such licenses, permits or approvals.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ARMITEC.COM AND THE
ARMITEC.COM SHAREHOLDERS
Armitec.Com represents and warrants, and the Armitec.Com Shareholders
represent and warrant to the best of their knowledge, to Armitec (which
representations and warranties shall be valid and binding as of the time of
Closing) as follows:
SECTION 4.01. DUE ORGANIZATION; GOOD STANDING.
Armitec.Com is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. Armitec.Com has the power
and authority to own, lease and operate its properties and to conduct its
business in each location where Armitec.Com owns, leases or operates its
property and conducts business, as such business is now being conducted by
Armitec.Com. Armitec.Com is duly qualified and is in good standing as a foreign
corporation in each of the jurisdictions in which the nature of the property or
assets owned by Armitec.Com or the nature of the operations or business
conducted by Armitec.Com requires such qualification. Complete and correct
copies of the Articles of Incorporation, as amended, and the Bylaws, as amended,
of Armitec.Com, as certified by the Secretary of State of Georgia and the
Secretary of Armitec.Com, respectively, are attached hereto collectively as
Schedule 4.01.
SECTION 4.02. AUTHORIZED CAPITAL OF ARMITEC.COM.
The authorized capital of Armitec.Com consists of _________(_____)
shares of Common Stock, ONE HUNDRED (100) shares of which are validly issued and
outstanding, fully paid and nonassessable. The relative rights, powers,
preferences, qualifications, limitations, and restrictions in respect of each
class of authorized capital stock of Armitec.Com are as set forth in the
Articles of Incorporation, attached as Schedule 4.02 and all such rights,
powers, preferences, qualifications, limitations, and restrictions are valid,
binding, and enforceable and in accordance with all applicable laws. Except as
contemplated by this Agreement or as set forth in Schedule 4.02, (a) no
subscription, warrant, option, convertible security, or other right (contingent
or other) to purchase or otherwise acquire equity securities of Armitec.Com is
authorized or outstanding, and (b) there is no commitment by Armitec.Com to (i)
issue any equity securities of Armitec.Com, or any subscriptions, warrants,
options, convertible securities, or other rights to purchase or acquire equity
securities of Armitec.Com or securities convertible into or exchangeable for
equity securities of Armitec.Com or (ii) distribute to Armitec.Com Shareholders
or other Persons any equity securities of Armitec.Com, any evidence of
indebtedness, or any assets of Armitec.Com. Except as set forth in the
Certificate of Incorporation, Armitec.Com has no obligation or right (contingent
or other) to purchase,
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redeem, or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any other distribution in respect
thereof. Except as set forth in Schedule 4.02, there are no voting trusts or
agreements, nor are there any preemptive rights relating to any outstanding
securities of Armitec.Com (whether or not Armitec.Com is a party thereto). All
outstanding securities of Armitec.Com were issued in compliance with all
applicable federal and state securities laws.
SECTION 4.03. FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES.
(a) Attached hereto as Schedule 4.03 are true, correct
and complete copies of the audited Consolidated Balance Sheet of
Armitec.com and its subsidiaries from inception through August 31,
2000, and the audited, consolidated statements of income, Cash Flow and
Stockholders equity for the same period, together with the notes
thereto and the report thereon of Habif Arogeti and Wynne PC,
independent certified public accountants.
(b) The Armitec.Com Financial Statements (i) are in
accordance with the books and records of Armitec.Com, (ii) present
fairly the financial condition of Armitec.Com as of the respective
dates indicated and the results of operations for such periods, (iii)
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, and
reflect adequate reserves for all liabilities and losses. Armitec.Com
has no material liabilities or obligations (secured or unsecured,
whether accrued, absolute, direct, indirect, contingent, or otherwise,
and whether due or to become due) that are not fully accrued or
reserved against in the Armitec.Com Financial Statements or described
in Schedule 4.03 Armitec.Com has not received any advice or
notification from its independent certified public accountants that
Armitec.Com has used any improper accounting practice that would have
the effect of not reflecting or incorrectly reflecting in the
Armitec.Com Financial Statements or the books and records of
Armitec.Com, any properties, assets, liabilities, revenues, or
expenses. The Armitec.Com Financial Statements do not contain any items
of special or nonrecurring income, or other income not earned in the
ordinary course of business, except as set forth in the notes to the
Armitec.Com Financial Statements or on Schedule 4.03. The books,
records, and accounts of Armitec.Com accurately and fairly reflect, in
reasonable detail, all transactions, assets, and liabilities of
Armitec.Com. Armitec.Com has not engaged in any transaction, maintained
any bank account, or used any of the funds of Armitec.Com, except for
transactions, bank accounts, and funds which have been and are
reflected in the normally maintained books and records of Armitec.Com.
(c) Armitec.Com has no material liabilities or
obligations (secured or unsecured, whether accrued, absolute, direct,
indirect, contingent, or otherwise, and whether due or to become due)
that are not fully accrued or reserved against in the Armitec.Com
Financial Statements, other than:
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(i) liabilities incurred in the ordinary course
of business subsequent to the date of the Armitec.Com
Financial Statements consistent with past practice, none of
which deviate in any material respect from liabilities
incurred in prior comparable fiscal periods;
(ii) obligations under Contracts listed on
Schedule 4.03 or incurred in the ordinary course of business
and not required under generally accepted accounting
principles to be reflected in the Armitec.Com Financial
Statements, which liabilities and obligations, individually or
in the aggregate, are not material to the financial condition
or operating results of Armitec.Com; and
(iii) the liabilities listed on Schedule 4.03.
SECTION 4.04. TAXES.
Except as set forth on Schedule 4.04, Armitec.Com has filed or obtained
filing extensions for all tax returns, federal, state, county, and local,
required to be filed by it, and Armitec.Com has paid or established adequate
reserves (in accordance with generally accepted accounting principles) for the
payment of all taxes shown to be due by such returns as well as all other taxes,
assessments, and governmental charges which have become due or payable,
including, without limitation, all taxes which Armitec.Com is obligated to
withhold from amounts owing to employees, creditors, and third parties. The
federal income tax returns of Armitec.Com have never been audited by the
Internal Revenue Service and no state income or sales tax returns of Armitec.Com
have been audited. No deficiency assessment with respect to or proposed
adjustment of Armitec.Com's federal, state, county, or local taxes is pending
or, to the best of the Armitec.Com's knowledge, threatened. There is no tax
lien, whether imposed by any federal, state, county, or local taxing authority,
outstanding against the assets, properties, or business of Armitec.Com. Neither
Armitec.Com nor any of its shareholders has ever filed a consent pursuant to
Section 341(f) of the IRC (as hereinafter defined), relating to collapsible
corporations. Any amounts reserved in the Armitec.Com Financial Statements for
taxes are sufficient for the payment of all accrued and unpaid federal, state
and local taxes of all types, including interest and penalties thereon of
Armitec.Com for or on account of which Armitec.Com is or may become liable in
any manner whatsoever for the quarter ending June 30, 2000 and for all prior
periods.
SECTION 4.05. CONDUCT OF BUSINESS. Since its inception:
(a) ORDINARY COURSE. The business of Armitec.Com has been
operated, and prior to the Closing will be operated, only in the
ordinary course.
(b) NO MATERIAL CHANGE. Since June 30, 2000, except as
set forth on Schedule 4.05, there has been, and prior to the Closing
there will be, no material adverse change, individually or in the
aggregate, in the condition (financial or otherwise) of Armitec.Com or
in the assets, liabilities or business of Armitec.Com.
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(c) NO LOSS OR DESTRUCTION. There has been, and prior to
the Closing there will be, no damage, destruction or loss or other
events or conditions of any character, or any pending or threatened
developments, which individually or in the aggregate, would materially
and adversely affect the condition (financial or otherwise) or the
assets, liabilities or business of Armitec.Com.
SECTION 4.06. LEGAL PROCEEDINGS.
Except as set forth on Schedule 4.06 attached hereto and incorporated
by reference herein, there is, and as of the Closing there will be, no material
action, suit, proceeding or investigation pending or, to the best knowledge of
Armitec.Com and the Armitec.Com Shareholders, threatened, against or affecting
Armitec.Com or any of its assets. Armitec.Com is not, nor as of the Closing will
be, in default under or with respect to any judgment, order, writ, injunction or
decree of any court or of any federal, state, municipal or other governmental
authority, department, commission, board, agency or other instrumentality.
Armitec.Com has, and as of the Closing will have, complied in all material
respects with all laws, rules, regulations and orders applicable to it and to
its businesses; has, and as of the Closing will have, performed in all material
respects all of its material obligations and duties to be performed by it to the
extent required in accordance with their respective terms; and is not, and as of
the Closing will not be, in any material respect in default under or in breach
of any material contract, agreement, commitment or other instrument to which it
is subject or a party or under which it is bound.
SECTION 4.07. REQUIRED APPROVALS. The Board of Directors of Armitec.Com
and the Armitec.Com Shareholders have duly authorized the execution and delivery
of this Agreement by Armitec.Com, the exchange of the Armitec.Com Shares and the
transactions hereby contemplated, and no further action, confirmation or
ratification by the Armitec.Com Shareholders or by any other person, entity or
governmental authority is required in connection therewith. Armitec.Com and the
Armitec.Com Shareholders have the power and authority to execute and deliver
this Agreement, to consummate the transactions hereby contemplated and to take
all other actions required to be taken by them pursuant to the provisions
hereof. This Agreement is valid and binding upon Armitec.Com and the Armitec.Com
Shareholders in accordance with its terms. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
constitute a violation or breach of the Articles of Incorporation, as amended,
or the Bylaws, as amended, of Armitec.Com, or any agreement, stipulation, order,
writ, injunction, decree, law, rule or regulation applicable to Armitec.Com or
the Armitec.Com Shareholders.
SECTION 4.08. OFFICERS AND DIRECTORS. Attached hereto as Schedule 4.08
is a list of all Officers and Directors of Armitec.Com.
SECTION 4.09. NO UNTRUE STATEMENTS. Neither this Agreement nor any
written information, statement, list or certificate furnished or to be furnished
to Armitec pursuant to this Agreement or in connection with this Agreement or
any of the transactions contemplated by this Agreement contains, or as of the
Closing will contain, any untrue statement of a material fact or
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omits, or as of the Closing will omit, a material fact necessary in order to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
SECTION 4.10. SUBSIDIARIES. Except as set forth on Schedule 4.10,
Armitec.Com does not have any subsidiaries and does not, directly or indirectly,
own a controlling interest in any corporation, partnership, joint venture, or
other entity.
SECTION 4.11. REAL PROPERTY. Except as set forth on Schedule 4.11,
Armitec.Com does not own any real estate.
SECTION 4.12. LEASED REAL PROPERTY. Schedule 4.12 contains a true and
correct list of each parcel of real property leased by Armitec.Com (the
"Armitec.Com Leased Real Property"). Attached to Schedule 4.12 is a true and
correct copy of each lease pursuant to which Armitec.Com leases the Armitec.Com
Leased Real Property and any amendments, extensions, and renewals thereof (the
"Armitec.Com Real Property Leases"). Each Armitec.Com Real Property Lease is in
full force and effect and there is no existing material default or event of
default, real or claimed, or event which with notice or lapse of time or both
would constitute a material default thereunder. Except as described in Schedule
4.12, Armitec.Com's interest in the Armitec.Com Real Property Leases is free and
clear of any mortgages and liens, and is not subject to any deeds of trust,
assignments, subleases, or rights of any third parties other than the lessor
thereof. Except as described in Schedule 4.12, the continuation, validity, and
effectiveness of each Armitec.Com Real Property Lease will in no way be affected
by the consummation of the transactions contemplated by this Agreement.
SECTION 4.13. TANGIBLE PERSONAL PROPERTY. Attached hereto as Schedule
4.13 is a true, correct and complete list of all tangible personal property
owned by Armitec.Com or used by it in the conduct of its business, including,
but not limited to, all equipment, machinery and fixtures (collectively, the
"Armitec.Com Personal Property"), indicating whether it is owned or the manner
in which it is otherwise utilized by Armitec.Com. Armitec.Com has sole and
exclusive, good and merchantable title to all of the Armitec.Com Personal
Property owned by it, free and clear of all pledges, claims, liens,
restrictions, security interests, charges and other encumbrances except those
contained on Schedule 4.13. All of the Armitec.Com Personal Property is in good
repair and good operating condition, fit for its intended purposes, and is
adequate for the continuation of Armitec.Com's business as presently conducted.
SECTION 4.14. CONTRACTS.
(a) Schedule 4.14.1 contains a true and correct list of
all contracts, agreements, or understandings, written or oral, by which
Armitec.Com receives any right or benefit or undertakes any liability
or obligation (the "Armitec.Com Contracts"). Armitec.Com has delivered
or has otherwise made available to Armitec a correct and complete copy
of each contract or agreement set forth in Schedule 4.14.1. Except as
listed on Schedule 4.14.1, Armitec.Com is not a party to any written or
oral:
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(i) agreement, contract, or commitment with any
present or former employee or consultant or for the employment
of any person, including any consultant, contractor, or agent
who performs services for Armitec.Com;
(ii) agreement, contract, or commitment for the
future purchase of, or payment for, supplies or products, or
for the performance of services by a third party which
supplies, products, or services are used by Armitec.Com
involving in any one case an amount or value of five thousand
dollars ($5,000) or more;
(iii) lease (relating to real or personal
property) under which Armitec.Com is lessor or lessee;
(iv) license, franchise, assignment or other
agreement of Armitec.Com relating to trademarks, trade names,
patents, copyrights and service marks (or applications
therefor), unpatented designs or styles, know-how and
technical assistance;
(v) permit relating to the operation of the
business of Armitec.Com;
(vi) agreement for the purchase, sale or lease of
goods, materials, supplies, machinery, equipment, capital
assets and services having a cost in excess of Ten Thousand
($10,000.00) Dollars in any one instance or in excess of
Twenty-five Thousand ($25,000.00) Dollars in the aggregate;
(vii) agreement or arrangement with any supplier,
distributor, franchisor, dealer, sales agent, broker or
representative;
(viii) agreement or arrangement for the
construction, modification or improvement of any building or
structure having a cost in excess of Ten Thousand ($10,00.00)
Dollars, or any other capital expenditure involving payments
in excess of Ten Thousand ($10,000.00) Dollars;
(ix) agreement or understanding which is material
in nature, involves the payment or receipt, in any 12 month
period, of more than Ten Thousand ($10,000.00) Dollars or has
a term of more than twelve (12) months;
(x) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement, or
other contract or commitment for the borrowing or lending of
money, or agreement or arrangement for a line of credit or
guarantee, pledge, or undertaking of the indebtedness of any
other person relating to Armitec.Com's business;
(xi) agreement, contract, or commitment for any
charitable or political contribution relating to Armitec.Com's
business;
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(xii) agreement, contract, commitment, or
outstanding proposal pursuant to which Armitec.Com sells, or
proposes to sell, products and services for any amount or
value;
(xiii) agreement, contract, or commitment limiting
or restraining Armitec.Com, its business, or any successor
thereto from engaging or competing in any manner or in any
business;
(xiv) material agreement, contract, or commitment
relating to Armitec.Com's business not made in the ordinary
course of business, or
(xv) any distributor agreement, reseller
agreement, franchise agreement, or any other agreement which
authorizes Armitec.Com to (A) sell products or services of any
other person or entity, or (B) use the trademarks, trade
names, or trade styles of any other Person in Armitec.Com's
business.
(b) Schedule 4.14.2 contains a true and correct list of
all commitments for capital expenditures that have been approved or
made prior to the date of this Agreement by Armitec.Com and that remain
outstanding as of the date hereof.
(c) Each of the Armitec.Com Contracts was entered into in
the ordinary course of business on terms substantially consistent with
Armitec.Com's practice prior thereto, is in full force and effect, and
there exists no breach or violation of, or default by Armitec.Com
under, any of the Armitec.Com Contracts nor, to the knowledge of
Armitec.Com by any other party to such Contract, or any event which,
with notice or the lapse of time, or both, will create a breach or
violation of, or default under by Armitec.Com nor, to the knowledge of
Armitec.Com by any other party to such Contract. There is no
Armitec.Com Contract that contains any contractual requirement with
which there is a reasonable likelihood that Armitec.Com or any other
party thereto will be unable to comply. Except as set forth on Schedule
4.14.1, the continuation, validity, and effectiveness of each
Armitec.Com Contract will in no way be affected by the consummation of
the transactions contemplated by this Agreement.
(d) Schedule 4.14.3 contains a true and correct list of
all customers (ranked by annual revenue) of Armitec.Com, and the
revenue obtained from each such customer, since inception. No customer
reflected therein whose purchases of products and services are material
to Armitec.Com (individually or in the aggregate) has terminated,
suspended, or significantly reduced its purchases of products and
services from Armitec.Com from the levels reflected therein, nor does
Armitec.Com have knowledge of facts which suggest that such a
termination, suspension, or significant reduction is likely within the
reasonably foreseeable future. Except as indicated on Schedule 4.14.3,
there exists no actual or, to the knowledge of Armitec.Com, any
threatened termination, cancellation, or limitation of, or any
amendment, modification, or change to any Armitec.Com Contract, which
would have a material adverse effect on the business or the condition,
financial or otherwise, of Armitec.Com, including without limitation:
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(i) the business relationship of Armitec.Com
with any customer, distributor, or related group of customers
or distributors whose purchases individually or in the
aggregate are material to the operations and financial
condition of Armitec.Com;
(ii) the requirements of any customer or related
group of customers of Armitec.Com whose purchases individually
or in the aggregate are material to the operations and
financial condition of Armitec.Com; or
(iii) the business relationship of Armitec.Com
with any material supplier to Armitec.Com. Except as indicated
on Schedule 4.14.3, there is no Contract with any customer,
the performance of which by Armitec.Com will result in a loss
to Armitec.Com.
(e) Except as indicated on Schedule 4.14.3, no customer
listed on Schedule 4.14.3 has notified Armitec.Com, nor is Armitec.Com
otherwise aware that any customer listed on Schedule 4.14.3 has, or has
plans to, reduce the volume of purchases made from Armitec.Com.
(f) None of the Armitec.Com Contracts is for materials,
supplies, equipment, or services in excess of Armitec.Com's normal
requirements or as needed for reasonably anticipated needs of its
business.
(g) Armitec.Com has not granted any power of attorney
affecting or with respect to any of its business, affairs, or assets,
or any combination thereof, that remains outstanding.
(h) Attached to Schedule 4.14.1 is a true and correct
copy (and if oral, a description of material terms) of each Armitec.Com
Contract listed on Schedule 4.14.1 and all modifications, amendments,
renewals, or extensions thereof.
(i) Except as reflected in Schedule 4.14.4, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and thereby will not terminate, breach, give rise
to a right in favor of any other party to a Armitec.Com Contract to
terminate such Contract, or constitute an event which with notice,
lapse of time or both, constitute an event of default under any
Contract.
SECTION 4.15. BROKERS.
Armitec.Com has entered into an agreement with VisionQuest Securities,
LLC for the provision of broker services in connection with this Agreement.
Except for the foregoing, neither Armitec.Com nor any Affiliate of Armitec.Com
has any contract, arrangement or understanding with, or has incurred any
obligation or liability to, any broker, finder, investment banker, intermediary
or similar agent with respect to this Agreement or the transactions contemplated
hereby.
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SECTION 4.16. ENVIRONMENTAL MATTERS AND OSHA.
Except as set forth in Schedule 4.16.1:
(a) Armitec.Com is and has been in compliance with all
Environmental Laws. Armitec.Com has not received notice of any
Environmental Claim filed or threatened against it or against any other
person or entity whose liability for any Environmental Claim has been
retained or assumed either contractually or by operation of law;
(b) Armitec.Com has not disposed of, emitted, discharged,
handled, stored, transported, used, or released any Hazardous Materials
(or arranged for any of the foregoing), or exposed any employee or
other individual to any Hazardous Materials or condition so as to give
rise to any liability or corrective or remedial obligation under any
Environmental Laws;
(c) No Hazardous Materials are present in, on, or under
any properties owned, leased, or used at any time (including both land
and improvements thereon) by Armitec.Com, and no reasonable likelihood
exists that any Hazardous Materials will come to be present in, on, or
under any properties owned, leased, or used at any time (including both
land and improvements thereon) by Armitec.Com so as to give rise to any
material liability or corrective or remedial obligation under any
Environmental Laws.
As used herein, "Environmental Claim" means any notice, claim, act,
cause of action or investigation by any Person alleging potential liability
arising out of, based on or resulting from the presence, or release into the
Environment, of any Hazardous Materials or any violation, or alleged violation,
of any Environmental Law. As used herein, "Environmental Laws" means all
federal, state, local and foreign laws and regulations relating to pollution or
protection of the environment or the protection of human health. As used herein,
"Hazardous Materials" means chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive and biological materials, asbestos-containing materials
(ACM), hazardous substances, petroleum and petroleum products or any fraction
thereof, excluding, however, any chemicals used or waste generated as a result
of typical office and janitorial activities. Except as set forth in Schedule
4.16.2, Armitec.Com is in compliance with all applicable laws relating to
employee health and safety and has not received any notice that past or present
conditions of the assets and properties of Armitec.Com violate any applicable
legal requirements or otherwise can be made the basis of any claim, proceeding,
or investigation, based on OSHA violations or otherwise related to employee
health and safety.
SECTION 4.17. INSURANCE. Attached hereto as Schedule 4.17.1 is a list
of all insurance policies of Armitec.Com setting forth with respect to each
policy the name of the insurer, a description of the policy, the dollar amount
of coverage, the amount of the premium, the date through which all premiums have
been paid, and the expiration date. Each insurance policy relating to the
insurance referred to in Schedule 4.17.1 is in full force and effect, is valid
and enforceable, and Armitec.Com is not in breach of or in default under any
such policy, nor received any notice of or any reason to believe that there is
or has been any actual, threatened, or
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contemplated termination or cancellation of any insurance policy relating to the
insurance referred to in Schedule 4.17.1. Attached hereto as Schedule 4.17.2 is
a true, correct and complete list and summary of all claims which have been made
under each insurance policy relating to the insurance referred to in Schedule
4.17.2. Armitec.Com has not failed to give any notice or to present any claim
under any insurance policy in a due and timely fashion.
SECTION 4.18. EMPLOYEE RELATIONS AND EMPLOYMENT AGREEMENTS.
(a) None of Armitec.Com's employees is represented by a
labor organization. No petition for representation has ever been filed
with the National Labor Relations Board (the "NLRB") with respect to
Armitec.Com's employees. Armitec.Com is not aware of any union
organizational activity with respect to Armitec.Com and has no reason
to believe that any such activity is being contemplated.
(b) Armitec.Com is not in violation of applicable equal
employment opportunity laws, wage and hour laws, occupational safety
and health laws, federal labor laws, or any other laws of any
Government or Governmental Agency relating to employment. Schedule
4.18.2 attached hereto sets forth the status of all investigations,
claims, charges, and employment-related suits or controversies which
have occurred with respect to Armitec.Com within the last 10 years or
which are presently pending or threatened with respect to Armitec.Com
under any employment-related law of any Government or Governmental
Agency (including common law). Armitec.Com has satisfied and performed
fully all judgments, decrees, conciliation agreements, or settlement
agreements by which it is bound or to which it is subject concerning
employment-related matters, and each such judgment, decree or agreement
is disclosed on Schedule 4.18.2.
(c) Except as set forth on Schedule 4.18.3, Armitec.Com
has not entered into any employment agreement, and all employees can be
terminated at will. Armitec.Com has no contractual obligation or
special termination or severance arrangement in respect of any
employee.
(d) Except as set forth on Schedule 4.18.4 Armitec.Com
has paid all wages due (including all required taxes, insurance and
withholding thereon). Schedule 4.18.4 attached hereto sets forth all
accrued vacation, sick leave and bonuses (including pro rata accruals
for a period of a year) due to employees of Armitec.Com as of the
Closing.
(e) Schedule 4.18.5 attached hereto sets forth each of
Armitec.Com's employee's date of hire, position, present salary, amount
of bonus paid in the past year, and announced termination date (if
any).
(f) Schedule 4.18.6 contains a true and complete list of
all the following agreements or plans of Armitec.Com or any subsidiary
of Armitec.Com which, together with Armitec.Com constitutes a single
employer within the meaning of Section 414 of the Code (hereinafter
collectively referred to as the"Armitec.Com Group") which are presently
in effect or which have been in effect at any time (if it may result in
a material
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liability), or, in the case of documents referred to in clause (i)
below, have been in effect at any time prior to the date hereof:
(i) "employee pension benefit plans" and
"employee benefit plans" as defined in Sections 3(2) and 3(3)
of the Employee Retirement Income Security Act of 1974
("ERISA");
(ii) any other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock
option, incentive, bonus, vacation, severance, disability,
health, hospitalization, medical, life insurance, vision,
dental, prescription drug, supplemental unemployment, layoff,
automobile, apprenticeship and training, day care,
scholarship, group legal benefits, fringe benefits, or other
employee benefit plan, program, policy, or arrangement,
whether written or unwritten, formal or informal, including
any employee benefit plan covering any employees of
Armitec.Com Group which any member of Armitec.Com Group
maintains or to which any member of Armitec.Com Group has any
outstanding, present, or future obligations to contribute or
make payments under, whether voluntary, contingent, or
otherwise (the plans, programs, policies, or arrangements
described in clauses (ii) or (iii) are herein collectively
referred to as the "Armitec.Com Plans").
Included in said Schedule 4.18.6 are true and complete copies of all
documents as they may have been amended to the date hereof involving or relating
to clauses (i) and (ii) hereinabove, together with all filings, IRS
determination letters and financial statements, including but not limited to,
the most recent actuarial report for each employee pension benefit plan and IRS
Form 5500 for each Armitec.Com Plan for each of the five most recent plan years.
(g) Except as to those plans identified on Schedule
4.18.2 as tax-qualified Armitec.Com Plans (the "Armitec.Com Qualified
Plans"), no member of Armitec.Com Group maintains a tax-qualified
employee plan which meets or was intended to meet the requirements of
Code Section 401 for the benefit of present or former employees. The
Internal Revenue Service has issued favorable determination letters to
the effect that each Armitec.Com Qualified Plan qualifies under Code
Section 401(a) and that any related trust is exempt from taxation under
Code Section 501(a), and such determination letters are in effect.
Copies of the most recent determination letters and any outstanding
requests for a determination letter with respect to each Armitec.Com
Qualified Plan have been delivered to Armitec. Armitec.Com Qualified
Plans have been administered according to their terms, except for those
terms which are inconsistent with the changes required by the Tax
Reform Act of 1986 and other acts, regulations, and rulings, in which
case Armitec.Com Qualified Plans have been administered in accordance
with the provisions of those acts, regulations, and rulings in all
material respects. No member of Armitec.Com Group or any fiduciary of
any Armitec.Com Qualified Plan has done anything that would adversely
affect the qualified status of Armitec.Com Qualified Plans or the
related trusts. Armitec.Com Qualified Plans currently comply in form
with the requirements under Code Section 401(a), other than changes
required by the Tax Reform
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Act of 1986, the Omnibus Budget Reconciliation Act of 1986 and other
acts, regulations, and rulings for which amendments are not yet
required. Any Armitec.Com Qualified Plan subject to Code Sections
401(k) or 401(m) has been tested for compliance with, and has satisfied
the requirements of, Code Sections 401(k)(3), 401(m)(2), or both, as
application, for each plan year ending prior to the Closing Date.
(h) With respect to any Armitec.Com Qualified Plan or any
member of Armitec.Com Group, no termination liability to the Pension
Benefit Guaranty Corporation ("PBGC") has been or is expected to be
incurred or would be incurred if any Armitec.Com Qualified Plan were
terminated on the Closing Date. If any Armitec.Com Qualified Plan were
terminated on the Closing Date, the present value of all benefit
liabilities under Armitec.Com Qualified Plan would not, as of the
Closing Date, exceed the then current value of the assets of such
Armitec.Com Qualified Plan. No Armitec.Com Qualified Plan has suffered
any accumulated funding deficiency within the meaning of ERISA Section
302 and Code Section 412. Armitec.Com has made all quarterly
contributions required under Code Section 412(m) and no conditions
exist which would subject the assets of Armitec.Com or Armitec to a
lien under Code Section 412(m) or ERISA Section 4068. No member of
Armitec.Com Group has any outstanding liability under Code Section
4971. As of the Closing Date, all contributions required to have been
made on or prior to the Closing Date under Armitec.Com Plans will have
been made or have been accrued on the Financial Statements and all
required premium payments for Armitec.Com Qualified Plans have been
made, when due, to PBGC. No event or condition exists with respect to
any Armitec.Com Qualified Plan which could be deemed a "reportable
event" as defined in ERISA Section 4043, with respect to which the
30-day notice requirement has not been waived and which could result in
a liability to Armitec.Com or Armitec, and no condition exists which
would subject Armitec.Com to a fine under ERISA Section 4071. No
amendment has occurred to any Armitec.Com Qualified Plan which has
required or which would require Armitec.Com Group to provide security
under Code Section 401(a)(29).
(i) No member of Armitec.Com Group has any past, present,
or future obligation to contribute to any multiemployer plan as defined
in ERISA Section 3(37).
(j) No member of Armitec.Com Group nor any other
"disqualified person" or "party in interest" (as defined in Code
Section 4975 and ERISA Section 3(14), respectively) with respect to
Armitec.Com Plans, has engaged in any "prohibited transaction" (as
defined in Code Section 4975 or ERISA Section 406). Armitec.Com Group
and all other "fiduciaries" (as defined in ERISA Section 3(21)) with
respect to Armitec.Com Plans have complied in all respects with the
requirements of ERISA Section 404. Neither Armitec.Com Group nor any
party in interest or disqualified person with respect to Armitec.Com
Plans has taken or omitted any action which could lead to the
imposition of an excise tax under the Code or a fine under ERISA
against Armitec.Com Plans.
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SECTION 4.19. PATENTS; TRADEMARKS; RELATED TRADEMARKS. Attached hereto
as Schedule 4.19 is a true, correct and complete list of all of Armitec.Com's
intangible personal property, including, but not limited to, all patents,
trademarks, trade names, or trademark or trade name registrations, domain name
registrations, service marks, and copyrights or copyright registrations
("Armitec.Com's Proprietary Rights"). All of Armitec.Com's Proprietary Rights
are valid, enforceable, in full force and effect and free and clear of any and
all security interests, liens, pledges and encumbrances of any nature or kind.
Armitec.Com has not infringed upon and is not infringing upon any patent,
trademark, trade name, or trademark or trade name registration, service mark,
copyright, or copyright registration of any other Person.
SECTION 4.20. BOOKS AND RECORDS; FISCAL YEAR; METHOD OF ACCOUNTING.
Armitec.Com will make available to Armitec for inspection and its due diligence
hereunder during business hours all of its tax, accounting, corporate and
financial books and records as well as its personnel and employment and other
records of any nature which are pertinent to this Agreement. Such books and
records pertaining to Armitec.Com's business are true, correct and complete,
have been maintained on a current basis, and fairly reflect the basis for
Armitec.Com's financial condition and results of operations as set forth in the
Armitec.Com Financial Statements. Armitec.Com has consistently used the fiscal
year ending December 31 as its taxable year and has consistently used the
accrual method as its method of accounting for tax purposes.
SECTION 4.21. BANK ACCOUNTS; CREDIT CARDS. Schedule 4.21 contains a
true, correct and complete list of each bank, savings and loan association,
brokerage house or other financial institution with which Armitec.Com has an
account, line of credit, safe deposit box, or other relationship, the account
numbers thereof, and the names of all persons authorized to withdraw funds or
other property from, or otherwise act in connection therewith. Schedule 4.21
contains a true, correct, and complete listing of the name, business address,
and residence address of each person who has a credit card which is billed to
Armitec.Com. Except as set forth on Schedule 4.21, Armitec.Com has no bank
account, brokerage account, line of credit, safe deposit box, or credit card
account.
SECTION 4.22. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as permitted
or required by this Agreement or as set forth in Schedule 4.22, since inception,
the business of Armitec.Com has been conducted in the ordinary course consistent
with past practices and there has not been any material transaction or
occurrence in which Armitec.Com has:
(a) incurred any indebtedness, obligation or liability
(contingent or otherwise), except normal trade or business obligations
incurred in the ordinary course of its business, none of which was
entered into for inadequate consideration and none of which exceeds
$25,000.00 in amount;
(b) discharged or satisfied any claim, security interest,
lien or encumbrance or paid any indebtedness, obligation or liability
(contingent or otherwise), except (i) current liabilities, (ii)
scheduled payments pursuant to obligations under contracts, agreements
or leases listed in this Agreement, or
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(i) (iii) in the ordinary course of business
consistent with past practice of liabilities reflected or
reserved against in the Armitec.Com Financial Statements or
incurred since such date in the ordinary course of business
consistent with past practice;
(c) permitted, allowed or suffered any of its assets or
properties to be subjected to any mortgage, pledge, lien, charge,
restriction, security interest or other encumbrance of any kind;
(d) sold, assigned, transferred, leased, disposed of, or
agreed to sell, assign, transfer, lease, or dispose of, any of its
assets or properties;
(e) acquired or leased any assets or property of any
other Person;
(f) canceled or compromised any debt or claim;
(g) waived or released any rights or claims;
(h) granted, or made any contract, agreement, promise or
commitment to grant, or otherwise incurred any obligation for any
increase in, any wage, salary or employee benefit, or entered into any
employment contract, bonus, stock option, profit sharing, pension,
incentive, retirement or other similar arrangement or plan with, any
officer, employee or other Person, except in accordance with and in
amounts not greater than provided for in written agreements between
Armitec.Com and employees of Armitec.Com entered into prior to June 30,
2000 and except for merit raises to hourly employees in the ordinary
course of business consistent with past practice;
(i) entered into any collective bargaining or labor
agreement (oral or written), made any commitment or incurred any
liability to any labor organization, or experienced any slowdown, work
interruption, strike or work stoppage;
(j) made any capital expenditure in excess of Ten
Thousand ($10,000.00) Dollars or entered into any commitment therefor;
(k) suffered any casualty loss or damage in excess of
$5,000 in the aggregate, whether or not such loss or damage is or was
covered by insurance;
(l) changed the nature of its business or its method of
accounting or accounting principle, practice or policy;
(m) other than in the ordinary course of business,
entered into any transaction, contract or commitment;
(n) terminated or modified, or agreed to the termination
or modification of, any Service Contract, Participation Agreement or
any of the Commitments;
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(o) suffered a loss of any supplier or suppliers, which
loss (individually or in the aggregate) has had, or may have, an
adverse effect on its financial condition, results of operations,
business or prospects;
(p) suffered any material adverse change in its business,
operations, condition (financial or otherwise), liabilities, assets,
earnings, or prospects of the Business nor, to Armitec.Com's knowledge,
has there been any event which has had or may reasonably be expected to
have a material adverse effect on the Business;
(q) transferred or granted any rights with respect to, or
disposed of or permitted to lapse any right to the use of any software,
patent, trademark, assumed name, service mark, trade name, copyright,
license, or application therefor or disposed of or disclosed to any
person not authorized to have such information any trade secret,
proprietary information, formula, process, or know-how not previously a
matter of public knowledge or existing in the public domain;
(r) incurred any long term indebtedness;
(s) paid, loaned, distributed (by dividend or otherwise),
or advanced any amounts to, sold, transferred, or leased any properties
or assets (real, personal or mixed, tangible or intangible) to,
purchased, leased, licensed, or otherwise acquired any properties or
assets from, or entered into any other agreement or arrangement with
(i) any shareholder, officer, employee, or director of Armitec.Com,
(ii) any corporation or partnership in which any Affiliate is an
officer, director, or holder directly or indirectly of five percent
(5%) or more of the outstanding equity or debt securities, or (iii) any
person controlling, controlled by, or under common control with any
such partner, shareholder, officer, director, or Affiliate except for
compensation not exceeding the rate of compensation in effect at June
30, 2000, and for routine travel advances to officers and employees;
(t) made or agreed to make any charitable contributions
or incurred or agreed to incur any non-business expenses in excess of
$5,000 in the aggregate;
(u) taken any other action neither in the ordinary course
of business and consistent with past practice nor provided for in this
Agreement;
(v) increased (or experienced any change in the
assumptions underlying or the methods of calculating) any bad debt,
contingency, or other reserve, other than in the ordinary course of
business consistent with past practice; or
(w) written down or written up the value of any inventory
(including write-downs by reason of shrinkage or markdowns), determined
as collectible any Accounts Receivable or any portion thereof which
were previously considered uncollectible, or written off as
uncollectible any Accounts Receivable or any portion thereof, except
for write-downs, write-ups, and write-offs in the ordinary course of
business consistent with past practice, none of which is material in
amount.
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SECTION 4.23. ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE. Armitec.Com's
accounts receivable reflected in the Armitec.Com Financial Statements, and all
accounts receivable arising after the date of the Armitec.Com Financial
Statements (collectively the "Accounts Receivable") were or are bona fide
accounts receivable, the full amount of which was or is actually owing to
Armitec.Com. And, to the best of its knowledge, those not collected prior to
Closing will be fully collectible by Armitec.Com within ninety (90) days of
Closing without offset, recoupment, counterclaim, claim or diminution.
Armitec.Com's accounts payable reflected in the Armitec.Com Financial Statements
and all accounts payable arising after the date of the Armitec.Com Financial
Statements (collectively, the "Accounts Payable") arose from bona fide
transactions on the ordinary course of Armitec.Com's business.
SECTION 4.24. INSIDER TRANSACTIONS. Attached hereto as Schedule 4.24 is
a true, correct and complete list of the amounts and other essential terms of
all currently outstanding indebtedness or other obligations, agreements,
undertakings, liabilities or commitments (contingent or otherwise) of
Armitec.Com to or from any past or present officer, director, member,
shareholder or any person related to, controlling, controlled by or under common
control with any of the foregoing.
SECTION 4.25. ADVERSE CONDITIONS. Neither Armitec.Com nor any of the
Armitec.Com Shareholders has any knowledge of any present or future condition,
state of facts or circumstances which has affected or may affect adversely the
business of Armitec.Com or prevent Armitec.Com from carrying on its business.
SECTION 4.26. AUTHORIZATION AND VALIDITY OF DOCUMENTS. The execution,
delivery and performance of this Agreement by Armitec.Com and the Armitec.Com
Shareholders, and the consummation by Armitec.Com and the Armitec.Com
Shareholders of the transactions contemplated hereby, have been duly and validly
authorized by Armitec.Com and Armitec.Com Shareholders. This Agreement has been
duly executed and delivered by Armitec.Com and each Armitec.Com Shareholder and
is a legal, valid and binding obligation of Armitec.Com and the Armitec.Com
Shareholders, enforceable against each of in accordance with its terms except as
such enforceability may be limited by the applicable laws of bankruptcy,
insolvency, moratorium and similar governing laws relating to creditors' rights.
SECTION 4.27. INVESTMENT INTENT. Each Armitec.Com Shareholder
represents and warrants to Armitec that the Armitec.Com Shareholders are
acquiring Armitec Shares (the "Acquired Shares") under this Agreement for
investment only and for their own accounts and not as nominees or agents; nor
are the said shares being acquired with a view to their offer for resale,
distribution or transfer of any part thereof nor with any present intention of
selling, granting any participation in, or otherwise distributing the same; nor
are they being purchased for subdivision or fractionalization thereof. By
executing this Agreement, each Armitec.Com Shareholder represents:
(a) That shareholder has no contract, undertaking,
agreement or arrangement with any Person to sell, hypothecate, pledge,
donate or otherwise transfer (with or
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without consideration) any of the Acquired Shares, and that shareholder
has no present plan or intention to enter into any such contract,
undertaking, agreement or arrangement.
(b) That shareholder is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and is aware of
Armitec's business affairs and financial condition and has had access
to and has acquired sufficient information about Armitec to reach an
informed and knowledgeable decision to acquire the Acquired Shares, and
has such business and financial experience as is required to provide
the capacity to protect one's own interests in connection with the
purchase of such shares. Nor is that shareholder a "broker" or a
"dealer" as defined in the Exchange Act.
(c) That shareholder covenants and agrees that none of
the Acquired Shares shall be sold, assigned or otherwise transferred
other than in transactions which are not in violation of the Securities
Act and applicable state securities laws. Each stock certificate of the
Acquired Shares shall bear the following legend, unless such legend may
be removed in accordance with its terms:
THE SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE (THE "SECURITIES")
HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS
(THE "STATE LAWS"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE 1933 ACT AND THE STATE LAWS AND (II) UPON RECEIPT BY THE
ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT AND ANY
APPLICABLE STATE LAWS. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF
COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
SECTION 4.28. CORRECTNESS OF REPRESENTATIONS. No representation or
warranty of Armitec.Com in this Agreement or in any Exhibit, certificate, or
Schedule attached hereto or furnished pursuant hereto, contains, or on the
Closing Date will contain, any untrue statement of fact or omits, or on the
Closing Date will omit, to state any material fact necessary in order to make
the statements contained therein not misleading, and all such statements,
representations, warranties, Exhibits, certificates, and Schedules shall be true
and complete in all material respects on and as of the Closing Date as though
made on that date. All copies of mortgages, indentures, notes, leases,
agreements, plans, Armitec.Com Contracts, and other instruments listed on or
referred to in the Schedules delivered or furnished to Armitec pursuant to this
Agreement are true copies thereof.
SECTION 4.29. LITIGATION. Schedule 4.29 sets forth each instance in
which Armitec.Com or any of its officers or directors (a) is the subject to any
unsatisfied judgment, order, decree, stipulation, injunction or charge or (b) is
a party to or, to the knowledge of Armitec.Com, is threatened to be made a party
to, any charge, complaint, action, suit, proceeding, hearing or
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investigation of in any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator.
SECTION 4.30. LICENSES, PERMITS AND APPROVALS. Schedule 4.30 lists all
governmental and regulatory licenses, permits and approvals necessary to conduct
Armitec.Com's business. All such licenses, permits and approvals are in full
force and effect. There are no violations by Armitec.Com of, or any claims, or
proceedings pending or to the knowledge or Armitec.Com threatened, challenging
the validity of or seeking to discontinue, any such licenses, permits or
approvals.
ARTICLE V
COVENANTS OF ARMITEC
Armitec covenants and agrees with Armitec.Com and the Armitec.Com
Shareholders as follows:
SECTION 5.01. CONDUCT OF BUSINESS PRIOR TO CLOSING. From the date
hereof to the Closing Date, and except to the extent that Armitec.Com shall
otherwise consent in writing, Armitec shall:
(a) operate the business of Armitec substantially as
previously operated and only in the regular and ordinary course, not
make any purchase or sale, or introduce any new method of management or
operation except in the ordinary course of business and in a manner
consistent with past practices, and use its best efforts to maintain
and preserve intact each of the goodwill, reputation, present business
organization, and relationships of Armitec with persons having business
dealings with it, and maintain the services of present employees of
Armitec;
(b) maintain its assets and properties in good order and
condition, reasonable wear and use excepted, and maintain all policies
of insurance covering its assets and properties in amounts and on terms
substantially equivalent to those in effect on the date hereof;
(c) take all steps reasonably necessary to maintain the
Armitec Proprietary Rights and other intangible assets of Armitec;
(d) pay all accounts payable when due and collect all
accounts receivable in accordance with prudent business practices; and
(e) comply with all laws applicable to the conduct of the
business of Armitec where the failure to so comply would have a
material adverse affect on the business or condition of Armitec;
(f) maintain the books and records of Armitec in the
usual, regular, and ordinary manner, on a basis consistent with past
practices and prepare and file all foreign,
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federal, state, and local tax returns and amendments thereto required
to be filed by Armitec after taking into account any extensions of time
granted by such taxing authorities.
SECTION 5.02. ACTIONS PRIOR TO CLOSING. From the date of this Agreement
through the Closing Date, Armitec shall not, without the prior written consent
of Armitec.Com:
(a) incur any obligations, liabilities, or expenses of
any nature (whether absolute, accrued, contingent, or otherwise and
whether due or to become due) that would constitute liabilities other
than items incurred in the ordinary course of business consistent with
past practice;
(b) permit, allow, or suffer any of Armitec's assets to
be subjected to any mortgage, pledge, lien, or encumbrances;
(c) suffer any material adverse change in Armitec's
assets or in the operations, condition (financial or otherwise),
liabilities, earnings, or prospects of the Business;
(d) waive any claims or rights with respect to and
materially and adversely affecting any of Armitec's business or assets;
(e) sell, transfer, or otherwise dispose of any of
Armitec's assets, except in the ordinary course of business consistent
with past practice;
(f) dispose of or permit to lapse any right to the use of
any of Armitec's Proprietary Rights, except for the expiration of any
proprietary rights to use patents that may expire by law;
(g) other than in accordance with, and in amounts not
greater than provided for in, existing agreements between Armitec and
its employees, grant any increase in the salary and wages of any
employee or any increase in such salary and wages payable or to become
payable at any time in the future to any of the employees, except
pursuant to promotions previously disclosed to Armitec.Com that will
become effective on or prior to the Closing Date;
(h) make any change in any material method of accounting
or accounting principle, practice, or policy affecting or relating to
Armitec's assets or liabilities including, without limitation, any
extension of the useful lives of Armitec's assets and consequent
adjustments to the depreciation or valuation thereof on the books and
records of Armitec with respect to its business;
(i) make any change (or change any assumption underlying
or method of calculating) in the amount of any bad debt, contingency,
or other reserve, other than in the ordinary course of business
consistent with past practice;
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(j) write-down or write-up the value of any inventory
(including write-downs by reason of shrinkage or mark downs), except
for write-downs, write-ups, and write-offs in the ordinary course of
business consistent with past practice, none of which are or will be
material in amount;
(k) except consistent with past practices or existing
programs, pay, loan, or advance any amount to, sell, transfer, or lease
any properties or assets (real, personal or mixed, tangible, or
intangible) to, or enter into any agreement or arrangement with, any
employee, or any spouse or Affiliate of any such person except for
routine travel advances to employees, and compensation to employees
consistent with Section 5(g) hereof;
(l) dispose of or permit to lapse any right to the use of
any patent, trademark, assumed name, service mark, trade name,
copyright, license, or application therefor or dispose of or disclose
to any person not authorized to have such information, any trade
secret, proprietary information, formula, process, or know-how not
previously a matter of public knowledge or existing in the public
domain;
(m) waive, terminate, or breach under any provision under
or relating to any of the Armitec Contracts;
(n) enter into any contracts or agreements or other
transactions with respect to or affecting Armitec's liabilities other
than contracts or agreements entered into in the ordinary course of
business and consistent with past practices;
(o) with respect to Armitec's assets, permit any option
to renew any lease or any option to purchase any property to expire or
exercise any such option;
(p) omit to do any act or permit any act which could
reasonably be expected to cause a breach of any material Armitec
Contract, commitment, or obligation with respect to or affecting
Armitec's assets or any breach of any representation, warranty,
covenant, or agreement made by Armitec in this Agreement;
(q) default regarding the provisions of any insurance
policy or fail to give notice or present any claim under any such
policy in due and timely fashion if such default or failure to give
notice would give the insurer the right to cancel any policy, deny
claims, or limit coverage;
(r) take any other action not in the ordinary course of
business consistent with past practice or omit to take any other action
that would be taken in the ordinary course of business consistent with
past practice if such action or omission to take action would
materially and adversely affect the assets or liabilities of Armitec.
SECTION 5.03. CONSENTS. Armitec shall obtain prior to Closing, at
its sole cost and expense, all consents and estoppels required for the
continuation of the Armitec Contracts after Closing. All such consents and
estoppels shall be in writing and in form and substance
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satisfactory to Armitec.Com, and executed counterparts thereof will be delivered
to Armitec.Com promptly after receipt thereof but in no event later than the
Closing Date.
SECTION 5.04. SUPPLEMENTAL DISCLOSURE. Armitec shall have the
continuing obligation up to and including the Closing Date to disclose in
writing to Armitec.Com and the Armitec.Com Shareholders any matter or
information hereafter arising or becoming known that, if known on the date of
Armitec's execution and delivery of this Agreement, would have been required to
be set forth or listed in a Schedule hereto. Any such matter or information
hereafter disclosed shall be deemed to amend the Schedules hereto (to the extent
of such written disclosure) as of the date hereof unless Armitec.Com or the
Armitec.Com Shareholders shall within five (5) business days after receipt of
such written disclosure by Armitec and its counsel, but in any event prior to
the Closing, notify Armitec in writing that the matter or information so
disclosed materially varies from, or materially and adversely to the interests
Armitec.Com and the Armitec.Com Shareholders, changes, the information disclosed
on the Schedules on the date hereof. In such event, the Schedules hereto shall
not be deemed amended or changed by the matter or information so disclosed, and,
unless the acts or circumstances giving rise to the matter or information so
disclosed is corrected prior to the Closing, the matter or information so
disclosed shall constitute items at variance with the warranties and
representations of Armitec herein.
SECTION 5.05. ADDITIONAL REPORTS. Subject to the confidentiality
restrictions set forth in Article VII hereof, promptly after they become
available, Armitec shall deliver to Armitec.Com and the Armitec.Com Shareholders
true and correct copies of all internal management and control reports and
financial statements furnished to management of Armitec. Each such report shall
be in accordance with the books and records of Armitec, and, in the case of
financial statements shall present fairly the consolidated financial condition
of Armitec and its subsidiaries as of the dates indicated and the results of
operations for the periods then ended, and be prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, and shall reflect adequate reserves for all known liabilities
and reasonably anticipated losses.
SECTION 5.06. CONDITIONS PRECEDENT. Armitec shall use its best
efforts to satisfy the conditions enumerated in Article IX hereof.
SECTION 5.07. CAPITAL EXPENDITURES. Armitec shall discuss with
Armitec.Com and the Armitec.Com Shareholders any proposed significant capital
expenditure to be made by Armitec after the date of this Agreement prior to
entering into any contract or commitment for such capital expenditure.
SECTION 5.08. SEC FILINGS. Prior to Closing, Armitec shall make all
necessary filings and reports such that, as of the Closing Date, Armitec will be
current in its filings with the SEC of all required SEC Filings, including, but
not limited to, filing the Armitec Form 10-K for the year ended December 31,
1999, and filing the Armitec Form 10-Q for the quarters ended March 31, 2000 and
June 30, 2000, and none of Armitec's SEC Filings will contain any untrue
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statement of a material fact or omit to state a material fact required or
necessary in order to make the statements therein not misleading.
SECTION 5.09. SHAREHOLDER AND OTHER REQUIRED CONSENTS. Armitec
shall take all actions necessary and use its best efforts to obtain any and all
consents, approvals, ratifications and authorizations of its Board of Directors,
its shareholders and any other person, entity or governmental authority
necessary for the execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby.
SECTION 5.10. OTHER TRANSACTIONS. Armitec shall deal exclusively
and in good faith with Armitec.Com and the Armitec.Com Shareholders with regard
to the transactions contemplated by this Agreement and will not, and will direct
its officers, directors, financial advisors, accountants, agents, and counsel
not to (a) solicit submission of proposals or offers from any person other than
Armitec.Com and the Armitec.Com Shareholders relating to any acquisition of all
or any material part of the assets of Armitec, the sale or issuance of any
capital stock of Armitec or of any corporation formed by Armitec or its
Affiliates to which any of the assets of Armitec may be contributed, or any
merger or consolidation of Armitec or of any corporation formed by Armitec or
its Affiliates to which any of the assets of Armitec may be contributed (an
"Acquisition Proposal"), (b) participate in any discussions or negotiations
regarding, or furnish any non-public information to any other person regarding
Armitec other than Armitec.Com and the Armitec.Com Shareholders and their
representatives or otherwise cooperate in any way or assist, facilitate, or
encourage any Acquisition Proposal by any person other than Armitec.Com and the
Armitec.Com Shareholders or, (c) enter into any agreement or understanding,
whether oral or in writing, that would have the effect of preventing the
consummation of the transactions contemplated by this Agreement. If,
notwithstanding the foregoing, Armitec, or its representatives or agents should
receive any Acquisition Proposal or any inquiry regarding such proposal from a
third party, such persons shall promptly inform Armitec.Com and its counsel
thereof. This covenant shall survive the termination of this Agreement for a
period of ninety (90) days.
ARTICLE VI
COVENANTS OF ARMITEC.COM
Armitec.Com covenants and agrees with Armitec as follows:
SECTION 6.01. CONDUCT OF BUSINESS PRIOR TO CLOSING. From the date
hereof to the Closing Date, and except to the extent that Armitec shall
otherwise consent in writing, Armitec.Com shall:
(a) operate the business of Armitec.Com substantially as
previously operated and only in the regular and ordinary course, not
make any purchase or sale, or introduce any new method of management or
operation except in the ordinary course of business and in a manner
consistent with past practices, and use its best efforts to maintain
and preserve intact each of the goodwill, reputation, present business
organization, and
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relationships of Armitec.Com with persons having business dealings with
it, and maintain the services of present employees of Armitec.Com;
(b) maintain its assets and properties in good order and
condition, reasonable wear and use excepted, and maintain all policies
of insurance covering its assets and properties in amounts and on terms
substantially equivalent to those in effect on the date hereof;
(c) take all steps reasonably necessary to maintain the
Armitec.Com Proprietary Rights and other intangible assets of
Armitec.Com;
(d) pay all accounts payable when due and collect all
accounts receivable in accordance with prudent business practices; and
(e) comply with all laws applicable to the conduct of the
business of Armitec.Com where the failure to so comply would have a
material adverse affect on the business or condition of Armitec.Com;
(f) maintain the books and records of Armitec.Com in the
usual, regular, and ordinary manner, on a basis consistent with past
practices and prepare and file all foreign, federal, state, and local
tax returns and amendments thereto required to be filed by Armitec.Com
after taking into account any extensions of time granted by such taxing
authorities.
SECTION 6.02. ACTIONS PRIOR TO CLOSING. From the date of this
Agreement through the Closing Date, Armitec.Com shall not, without the prior
written consent of Armitec:
(a) incur any obligations, liabilities, or expenses of
any nature (whether absolute, accrued, contingent, or otherwise and
whether due or to become due) that would constitute liabilities other
than items incurred in the ordinary course of business consistent with
past practice;
(b) permit, allow, or suffer any of Armitec.Com's assets
to be subjected to any mortgage, pledge, lien, or encumbrances;
(c) suffer any material adverse change in Armitec.Com's
assets or in the operations, condition (financial or otherwise),
liabilities, earnings, or prospects of Armitec.Com's business;
(d) waive any claims or rights with respect to and
materially and adversely affecting any of Armitec.Com's business or
assets;
(e) sell, transfer, or otherwise dispose of any of
Armitec.Com's assets, except in the ordinary course of business
consistent with past practice;
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(f) dispose of or permit to lapse any right to the use of
any of Armitec.Com's Proprietary Rights, except for the expiration of
any proprietary rights to use patents that may expire by law;
(g) other than in accordance with, and in amounts not
greater than provided for in, existing agreements between Armitec.Com
and its employees, grant any increase in the salary and wages of any
employee or any increase in such salary and wages payable or to become
payable at any time in the future to any of the employees, except
pursuant to promotions previously disclosed to Armitec that will become
effective on or prior to the Closing Date;
(h) make any change in any material method of accounting
or accounting principle, practice, or policy affecting or relating to
Armitec.Com's assets or liabilities including, without limitation, any
extension of the useful lives of Armitec.Com's assets and consequent
adjustments to the depreciation or valuation thereof on the books and
records of Armitec.Com with respect to the business;
(i) make any change (or change any assumption underlying
or method of calculating) in the amount of any bad debt, contingency,
or other reserve, other than in the ordinary course of business
consistent with past practice;
(j) write-down or write-up the value of any inventory
(including write-downs by reason of shrinkage or mark downs), except
for write-downs, write-ups, and write-offs in the ordinary course of
business consistent with past practice, none of which are or will be
material in amount;
(k) except consistent with past practices or existing
programs, pay, loan, or advance any amount to, sell, transfer, or lease
any properties or assets (real, personal or mixed, tangible, or
intangible) to, or enter into any agreement or arrangement with, any
employee, or any spouse or Affiliate of any such person except for
routine travel advances to employees, and compensation to employees
consistent with Section 6.02(g) hereof;
(l) dispose of or permit to lapse any right to the use of
any patent, trademark, assumed name, service mark, trade name,
copyright, license, or application therefor or dispose of or disclose
to any person not authorized to have such information, any trade
secret, proprietary information, formula, process, or know-how not
previously a matter of public knowledge or existing in the public
domain;
(m) waive, terminate, or breach under any provision under
or relating to any of the Armitec.Com Contracts;
(n) enter into any contracts or agreements or other
transactions with respect to or affecting Armitec.Com's liabilities
other than contracts or agreements entered into in the ordinary course
of business and consistent with past practices;
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(o) with respect to Armitec.Com's assets, permit any
option to renew any lease or any option to purchase any property to
expire or exercise any such option;
(p) omit to do any act or permit any act which could
reasonably be expected to cause a breach of any material Armitec.Com
Contract, commitment, or obligation with respect to or affecting
Armitec.Com's assets or any breach of any representation, warranty,
covenant, or agreement made by Armitec.Com in this Agreement;
(q) default regarding the provisions of any insurance
policy or fail to give notice or present any claim under any such
policy in due and timely fashion if such default or failure to give
notice would give the insurer the right to cancel any policy, deny
claims, or limit coverage; or
(r) take any other action not in the ordinary course of
business consistent with past practice or omit to take any other action
that would be taken in the ordinary course of business consistent with
past practice if such action or omission to take action would
materially and adversely affect the assets or liabilities of
Armitec.Com.
SECTION 6.03. CONSENTS. Armitec.Com shall obtain prior to Closing,
at its sole cost and expense, all consents and estoppels required for the
continuation of the Armitec.Com Contracts after Closing. All such consents and
estoppels shall be in writing and in form and substance satisfactory to Armitec,
and executed counterparts thereof will be delivered to Armitec promptly after
receipt thereof but in no event later than the Closing Date.
SECTION 6.04. SUPPLEMENTAL DISCLOSURE. Armitec.Com shall have the
continuing obligation up to and including the Closing Date to disclose in
writing to Armitec any matter or information hereafter arising or becoming known
that, if known on the date of Armitec.Com's execution and delivery of this
Agreement, would have been required to be set forth or listed in a Schedule
hereto. Any such matter or information hereafter disclosed shall be deemed to
amend the Schedules hereto (to the extent of such written disclosure) as of the
date hereof unless Armitec shall within five (5) business days after receipt of
such written disclosure by Armitec.Com and its counsel, but in any event prior
to the Closing, notify Armitec.Com in writing that the matter or information so
disclosed materially varies from, or materially and adversely to the interests
of Armitec, changes, the information disclosed on the Schedules on the date
hereof. In such event, the Schedules hereto shall not be deemed amended or
changed by the matter or information so disclosed, and, unless the acts or
circumstances giving rise to the matter or information so disclosed is corrected
prior to the Closing, the matter or information so disclosed shall constitute
items at variance with the warranties and representations of Armitec.Com herein.
SECTION 6.05. ADDITIONAL REPORTS. Subject to the confidentiality
restrictions set forth in Article VII hereof, promptly after they become
available, Armitec.Com shall deliver to Armitec true and correct copies of all
internal management and control reports and financial statements furnished to
management of Armitec.Com. Each such report shall be in accordance with the
books and records of Armitec.Com, and, in the case of financial statements shall
present fairly the consolidated financial condition of the business as of the
dates indicated and the results of
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operations for the periods then ended, and be prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, and shall reflect adequate reserves for all known liabilities
and reasonably anticipated losses.
SECTION 6.06. CONDITIONS PRECEDENT. Armitec.Com shall use its best
efforts to satisfy the conditions enumerated in Article VIII hereof.
SECTION 6.07. CAPITAL EXPENDITURES. Armitec.Com shall discuss with
Armitec any proposed significant capital expenditure to be made by Armitec.Com
after the date of this Agreement prior to entering into any contract or
commitment for such capital expenditure.
SECTION 6.08. SHAREHOLDER AND OTHER REQUIRED CONSENTS. Armitec.Com
shall take all actions necessary and use its best efforts to obtain any and all
consents, approvals, ratifications and authorizations of its Board of Directors,
its shareholders and any other person, entity or governmental authority
necessary for the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 6.09. OTHER TRANSACTIONS. Armitec.Com shall deal
exclusively and in good faith with Armitec with regard to the transactions
contemplated by this Agreement and will not, and will direct its officers,
directors, financial advisors, accountants, agents, and counsel not to, (a)
solicit submission of proposals or offers from any person other than Armitec
relating to any acquisition of all or any material part of the assets of
Armitec.Com, the sale or issuance of any capital stock of Armitec.Com or of any
corporation formed by Armitec.Com or its affiliates to which any of the assets
of Armitec.Com may be contributed, or any merger or consolidation of Armitec.Com
or of any corporation formed by Armitec.Com or its affiliates to which any of
the assets of Armitec.Com may be contributed (an "Acquisition Proposal"), (b)
participate in any discussions or negotiations regarding, or furnish any
non-public information to any other person regarding Armitec.Com other than
Armitec and its representatives or otherwise cooperate in any way or assist,
facilitate, or encourage any Acquisition Proposal by any person other than
Armitec, or (c) enter into any agreement or understanding, whether oral or in
writing, that would have the effect of preventing the consummation of the
transactions contemplated by this Agreement. If, notwithstanding the foregoing,
Armitec.Com or its representatives or agents should receive any Acquisition
Proposal or any inquiry regarding such proposal from a third party, such persons
shall promptly inform Armitec and its counsel thereof. This covenant shall
survive the termination of this Agreement for a period of ninety (90) days.
ARTICLE VII
FURTHER AGREEMENTS
SECTION 7.01. CONFIDENTIALITY. Armitec and Armitec.Com agree that
each shall hold in confidence any confidential information about the other that
it has received, or hereafter receives, pursuant to any provision of this
Agreement under circumstances indicating the confidentiality of such information
unless (a) such information shall have been publicly disclosed other than as a
result of any wrongful action by the recipient of such information, or (b) the
recipient of such information independently develops or is aware of such
information.
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SECTION 7.02. PUBLIC ANNOUNCEMENTS. Armitec, Armitec.Com and the
Armitec.Com Shareholders will consult with each other before issuing any press
releases or otherwise making any public statements or filings with governmental
entities with respect to this Agreement or the transactions contemplated hereby
and shall not issue any press releases or make any public statements or filings
with governmental entities prior to such consultation and shall modify any
portion thereof if the other party objects thereto, unless the same may be
required by applicable law.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ARMITEC TO CONSUMMATE THE EXCHANGE
The obligation of Armitec to acquire the Armitec.Com Shares from the
Armitec.Com Shareholders in exchange for Armitec Shares and to consummate the
transactions as contemplated by this Agreement shall be subject to the
fulfillment and satisfaction, at or before the Closing, of each of the following
conditions precedent, any or all of which may be waived in writing, in whole or
in part, by Armitec:
SECTION 8.01. REPRESENTATIONS AND WARRANTIES. All information
required to be furnished or delivered by Armitec.Com pursuant to this Agreement
shall have been furnished or delivered as of the date hereof and the Closing
Date as required hereunder; the representations and warranties made by
Armitec.Com in Article IV hereof shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date.
SECTION 8.02. COVENANTS AND AGREEMENTS. Armitec.Com and the
Armitec.Com Shareholders shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed by them prior to or as of the Closing.
SECTION 8.03. CERTIFIED RESOLUTIONS. Armitec shall have received
from Armitec.Com a certificate executed by the Secretary of Armitec.Com
containing a true and correct copy of resolutions duly adopted by Armitec.Com's
Board of Directors approving and authorizing the execution and delivery by
Armitec.Com of each of this Agreement to which Armitec.Com is a party, and the
consummation of each of the transactions contemplated hereby and thereby. The
Secretary of Armitec.Com shall also certify that, as of the Closing Date, such
resolutions have not been rescinded, revoked, modified, or otherwise affected
and remain in full force and effect.
SECTION 8.04. NO INJUNCTION, ETC. No action, proceeding,
investigation, regulation, or legislation shall be pending or overtly threatened
which seeks to enjoin, restrain, or prohibit Armitec or to obtain substantial
damages from Armitec in respect of the consummation of the transactions
contemplated hereby, which, in the reasonable judgment of Armitec would make it
inadvisable to consummate such transactions.
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SECTION 8.05. INCUMBENCY. Armitec shall have received a certificate
of incumbency of Armitec.Com executed by the President and Secretary of
Armitec.Com listing the officers of Armitec.Com authorized to execute this
Agreement and certifying the authority of each such officer to execute the
agreements, documents, and instruments on behalf of Armitec.Com in connection
with the consummation of the transactions contemplated herein.
SECTION 8.06. CERTIFICATES. Armitec shall have received from
Armitec.Com all such certificates, dated as of the Closing Date, as Armitec
shall reasonably request to evidence the fulfillment by Armitec.Com, or such
other satisfaction as of the Closing Date, of the terms and conditions of this
Agreement.
SECTION 8.07. DELIVERIES AT CLOSING. At the Closing, Armitec.Com
and the Armitec.Com Shareholders shall have delivered to Armitec each of the
following:
(a) certificates evidencing all Armitec.Com Shares, duly
endorsed for transfer and otherwise in a form suitable for transfer on
the books of Armitec.Com;
(b) the certificates described in Articles VIII and IX
hereof;
(c) a certificate of good standing, as of the most recent
practicable date prior to the Closing Date, from the jurisdiction of
incorporation and each jurisdiction in which Armitec.Com is qualified
to do business as a foreign corporation;
(d) the written opinion of counsel for Armitec.Com, dated
as of the Closing Date, in substantially the form of Exhibit B hereto;
SECTION 8.08. CERTIFICATES. Armitec.Com and the Armitec.Com
Shareholders shall have delivered to Armitec all such certificates, dated as of
the Closing Date, as Armitec shall reasonably request to evidence the
fulfillment by Armitec.Com and the Armitec.Com Shareholders or other
satisfaction as of the Closing Date, of the terms and conditions of this
Agreement. The form and substance of all opinions, certificates, assignments,
orders, and other documents and instruments hereunder shall be satisfactory in
all reasonable respects to Armitec and its counsel.
SECTION 8.09. ESTOPPEL CERTIFICATES. Armitec.Com shall obtain, at
its cost and expense, prior to Closing an Estoppel Certificate, in form and
substance satisfactory to Armitec, from:
(a) The lessors of the Armitec.Com Leased Real Property,
to the effect that there are no events of default or events which with
notice or lapse of time or both would be events of default under the
lease, attaching a true and correct copy of the lease, and indicating
the date through which rent is paid and the amounts of any deposits
held by such lessor; and
(b) Each lessor of personal property, to the effect that
there are no events of default or events which with notice or lapse of
time or both would be events of default under any such lease, attaching
a true and correct copy of any such lease, and indicating
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the date through which rent is paid and the amounts of any deposits
held by the lessor under each such lease agreement;
SECTION 8.10. CLOSING CERTIFICATE. Armitec shall have received a
certificate of the President of Armitec.Com, whose signature, as such President,
shall be attested by the Secretary of the Armitec.Com, dated the Closing Date,
in form reasonably satisfactory to Armitec certifying that, to the best of his
knowledge, each of the conditions precedent specified in Sections 9.01 and 9.02
of this Agreement has been fulfilled and satisfied.
SECTION 8.11. REIMBURSEMENT. Armitec has incurred accounting and
legal expenses to Colonial Corporation in connection with the reorganization of
Armitec. Armitec.Com has agreed to pay an amount up to $100,000 to Colonial
Corporation for reimbursement of such expenses incurred by Colonial Corporation
on behalf of Armitec. Armitec acknowledges the receipt by Colonial Corporation
of $25,000 cash from Armitec.Com for such reimbursement, and Armitec.com agrees
to deliver to Colonial Corporation, at the Closing, a note in the amount of
$75,000 due upon the earlier of the completion of a Private Placement by Armitec
or Ninety (90) days from the Closing. The note will be guaranteed by Bruce R.
Davis.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF ARMITEC.COM
SHAREHOLDERS TO CONSUMMATE THE EXCHANGE
The obligation of the Armitec.Com Shareholders to acquire the Exchange
Shares from Armitec in exchange for Armitec.Com Shares and the obligation of
Armitec.Com to consummate the transactions as contemplated by this Agreement are
subject to the fulfillment and satisfaction at Closing of each of the following
conditions precedent, any or all of which may be waived in whole or in part at
or prior to the Closing by Armitec.Com and the Armitec.Com Shareholders:
SECTION 9.01. REPRESENTATIONS AND WARRANTIES. All information
required to be furnished or delivered by Armitec pursuant to this Agreement
shall have been furnished or delivered as of the date hereof and the Closing
Date as required hereunder; the representations and warranties made by Armitec
in Article III hereof shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
SECTION 9.02. COVENANTS AND AGREEMENTS. Armitec shall have
performed and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed by them prior to or as
of the Closing.
SECTION 9.03. CERTIFIED RESOLUTIONS. Armitec.Com shall have
received from Armitec a certificate executed by the Secretary of Armitec
containing a true and correct copy of resolutions duly adopted by Armitec's
Board of Directors approving and authorizing the execution and delivery by
Armitec of each of this Agreement to which Armitec is a party, and the
consummation of each of the transactions contemplated hereby and thereby. The
Secretary of
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Armitec shall also certify that, as of the Closing Date, such resolutions have
not been rescinded, revoked, modified, or otherwise affected and remain in full
force and effect.
SECTION 9.04. NO INJUNCTION, ETC. No action, proceeding,
investigation, regulation, or legislation shall be pending or overtly threatened
which seeks to enjoin, restrain, or prohibit Armitec or to obtain substantial
damages from Armitec.Com in respect of the consummation of the transactions
contemplated hereby, which, in the reasonable judgment of Armitec.Com would make
it inadvisable to consummate such transactions.
SECTION 9.05. INCUMBENCY. Armitec.Com shall have received a
certificate of incumbency of Armitec executed by the President and Secretary of
Armitec listing the officers of Armitec authorized to execute this Agreement and
certifying the authority of each such officer to execute the agreements,
documents, and instruments on behalf of Armitec in connection with the
consummation of the transactions contemplated herein.
SECTION 9.06. CERTIFICATES. Armitec.Com shall have received from
Armitec all such certificates, dated as of the Closing Date, as Armitec.Com
shall reasonably request to evidence the fulfillment by Armitec, or such other
satisfaction as of the Closing Date, of the terms and conditions of this
Agreement.
SECTION 9.07. DELIVERIES AT CLOSING. At the Closing, Armitec shall
have delivered to Armitec.Com each of the following:
(a) certificates evidencing all Armitec Shares, duly
endorsed for transfer and otherwise in a form suitable for transfer on
the books of Armitec;
(b) the certificates described in Articles VIII and IX
hereof;
(c) a certificate of good standing, as of the most recent
practicable date prior to the Closing Date, from the jurisdiction of
incorporation and each jurisdiction in which Armitec.Com is qualified
to do business as a foreign corporation;
(d) the written opinion of counsel for Armitec, dated as
of the Closing Date, in substantially the form of Exhibit C hereto;
SECTION 9.08. CERTIFICATES. Armitec shall have delivered to
Armitec.Com all such certificates, dated as of the Closing Date, as Armitec.Com
shall reasonably request to evidence the fulfillment by Armitec or other
satisfaction as of the Closing Date, of the terms and conditions of this
Agreement. The form and substance of all opinions, certificates, assignments,
orders, and other documents and instruments hereunder shall be satisfactory in
all reasonable respects to Armitec.Com and its counsel.
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SECTION 9.09. ESTOPPEL CERTIFICATES. Armitec shall obtain, at its
cost and expense, prior to Closing an Estoppel Certificate, in form and
substance satisfactory to Armitec.Com, from:
(a) The lessors of the Armitec Leased Real Property, to
the effect that there are no events of default or events which with
notice or lapse of time or both would be events of default under the
lease, attaching a true and correct copy of the lease, and indicating
the date through which rent is paid and the amounts of any deposits
held by such lessor; and
(b) Each lessor of personal property, to the effect that
there are no events of default or events which with notice or lapse of
time or both would be events of default under any such lease, attaching
a true and correct copy of any such lease, and indicating the date
through which rent is paid and the amounts of any deposits held by the
lessor under each such lease agreement.
SECTION 9.10. CLOSING CERTIFICATE. Armitec.Com shall have received
a certificate of the President of Armitec, whose signature, as such President,
shall be attested by the Secretary of the Armitec, dated the Closing Date, in
form reasonably satisfactory to Armitec.Com certifying that, to the best of his
knowledge, each of the conditions precedent specified in Sections 8.01 and 8.02
of this Agreement has been fulfilled and satisfied.
SECTION 9.11. RESIGNATION OF OFFICERS AND DIRECTORS. Prior to or at
the Closing, all of the officers and directors of Armitec will resign from their
respective positions.
SECTION 9.12. ASSETS AND LIABILITIES. At the closing, the balance
sheet of Armitec shall reflect the absence of any assets or liabilities for
Armitec.
ARTICLE X
TERMINATION.
SECTION 10.01. TERMINATION.
This Agreement may be terminated and the exchange of stock contemplated
hereby may be abandoned at any time prior to the completion of the Closing,
whether before or after approval by the shareholders of Armitec:
(a) by mutual consent in writing of Armitec and
Armitec.Com; or
(b) by either Armitec or Armitec.Com if any court of
competent jurisdiction in the United States or any State shall have
issued an order, judgment or decree (other than a temporary restraining
order) restraining, enjoining or otherwise prohibiting the exchange of
stock and such order, judgment or decree shall have become final and
nonappealable; provided that the right to terminate this Agreement
under this Section 10.01(b) shall not be available to any party whose
failure to fulfill any obligation
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under this Agreement has been the cause of, or resulted in, the failure
of the completion of the Closing to occur on or before such date; or
(c) by Armitec if there has been (i) a material breach of
any covenant or agreement or of a representation or warranty herein on
the part of Armitec.Com which has not been cured, or adequate assurance
(acceptable to Armitec in its sole discretion) of cure given, in either
case, within 15 business days following receipt of notice of such
breach; or
(d) by Armitec.Com if (i) there has been a material
breach of any covenant or agreement or of a representation or warranty
herein on the part of Armitec which has not been cured, or adequate
assurance (acceptable to Armitec.Com in its sole discretion) of cure
given, in either case, within 15 business days following receipt of
notice of such breach or (ii) at Closing Armitec shall not be listed on
the Over-the-Counter Bulletin Board (OTC:BB) exchange, provided
Armitec.Com has made its best efforts to assist Armitec in obtaining
such listing; or
(e) by either Armitec or Armitec.Com (and the Armitec.Com
Shareholders) if either of such party's due diligence investigation has
disclosed the existence of (i) any matter relating to the other party
or its business that is materially and adversely (to the investigating
party) at variance with those matters theretofore disclosed to the
investigating party, or (ii) any matter which, in the investigating
party's reasonable judgement, (A) indicates a material adverse change
in the condition, assets or prospects of the other party, or (B) would
make it inadvisable to consummate the exchange of stock and other
transactions contemplated by this Agreement.
SECTION 10.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Armitec or Armitec.Com as provided in Section 10.01,
all obligations of the parties hereunder shall terminate unless otherwise
specifically stated herein and except that the confidentiality provisions of
Article VII hereof shall survive the termination hereof. Nothing in this Article
X hereof shall relieve any party from liability for any breach of this
Agreement.
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. INDEMNIFICATION BY THE COMPANY. Armitec shall defend,
indemnify and hold harmless: Armitec.Com and the Armitec.Com Shareholders and
their respective heirs, personal and legal representatives, guardians,
successors and assigns, from and against any and all claims, threats,
liabilities, taxes, interest, fines, penalties, suits, actions, proceedings,
demands, damages, losses, costs and expenses (including attorneys' and experts'
fees and court costs) of every kind and nature arising out of, resulting from or
in connection with any misrepresentation or omission or breach by Armitec of any
representation or warranty contained in this Agreement.
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SECTION 11.02. INDEMNIFICATION BY ARMITEC.COM SHAREHOLDERS. The
Armitec.Com Shareholders shall defend, indemnify and hold harmless Armitec and
its respective representatives, successors and assigns, from and against any and
all claims, threats, liabilities, taxes, interest, fines, penalties, suits,
actions, proceedings, demands, damages, losses, costs and expenses (including
attorneys' and experts' fees and court costs) of every kind and nature arising
out of, resulting from, or in connection with any misrepresentation or omission
or breach by Armitec.Com or the Armitec.Com Shareholders of any representation
or warranty contained in this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. All of the covenants, promises, agreements, representations and
warranties set forth in this Agreement shall survive the Closing and the
consummation of the transactions contemplated by this Agreement.
SECTION 12.02. FURTHER DOCUMENTS. At any reasonable time upon prior
reasonable notice by a party to another party (whether at or after the Closing),
the other party shall execute and deliver such further instruments and documents
and take such other actions as the other party may reasonably request to vest
more effectively in the other party full right, title and interest in and to the
shares being conveyed hereunder and to secure for that party the full benefits
intended to be secured by this Agreement.
SECTION 12.03. NOTICES. All notices, requests, demands, consents and
other communications which are required or may be given under this Agreement
(collectively, the "Notices") shall be in writing and shall be given either (a)
by personal delivery against a receipted copy, or (b) by certified or registered
U. S. mail, postage prepaid, or (c) by overnight courier service to the
following addresses or to such other address of which written notice in
accordance with this Section 12.03 shall have been provided by such party to the
others. Notices may only be given in the manner hereinabove described in this
Section 12.03 and shall be deemed received when given in such manner.
If to Armitec: Armitec, Inc.
P.O. Box 21238
St. Simons Island, GA 31522
Attention: Mr. Don Carman
If to the Armitec.Com Shareholders: c/o Armitec.Com, Inc.
1295 West Garmon Road, NW
Atlanta, GA 30327
Attention: Mr. Bruce Davis
If to Armitec.Com: Armitec.Com, Inc.
1295 West Garmon Road, NW
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Atlanta, GA 30327
Attention: Mr. Bruce Davis
SECTION 12.04. ENTIRE AGREEMENT. This Agreement (including the
Exhibits and Schedules hereto) constitutes the full, entire and integrated
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior negotiations, correspondence, understandings and
agreements among the parties hereto respecting the subject matter hereof.
SECTION 12.05. ASSIGNABILITY. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other parties
hereto.
SECTION 12.06. BINDING EFFECT; BENEFIT. This Agreement shall inure
to the benefit of and be binding upon the parties hereto, each other Person who
is indemnified under any provision of this Agreement, and their respective
heirs, personal and legal representatives, guardians and successors. Nothing in
this Agreement, express or implied, is intended to confer upon any other Person
any rights, remedies, obligations or liabilities except as may be otherwise set
forth herein.
SECTION 12.07. SEVERABILITY. Any provision of this Agreement which
is held by a court of competent jurisdiction to be prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability,
without invalidating or rendering unenforceable the remaining provisions of this
Agreement.
SECTION 12.08. AMENDMENT; WAIVER. No provision of this Agreement may
be amended, waived or otherwise modified without the prior written consent of
all of the parties hereto. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action or compliance by the other party with any
representation, warranty, covenant or agreement herein contained. The effective
written waiver by any party hereto of a breach of any provision or condition
contained in this Agreement shall not operate or be construed as a waiver of any
subsequent breach or of any other conditions hereof.
SECTION 12.09. SECTION HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
SECTION 12.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be the same Agreement.
SECTION 12.11. APPLICABLE LAW. This Agreement is made and entered
into, and shall be governed by and construed in accordance with, the laws of the
State of Georgia.
SECTION 12.12. REMEDIES. The parties hereto acknowledge that the
Shares being exchanged hereunder are unique, that any claim for monetary damages
may not constitute an adequate remedy, and that it may therefore be necessary
for the protection of the parties and to
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carry out the terms of this Agreement to apply for the specific performance of
the provisions hereof. It is accordingly hereby agreed by all parties that no
objection to the form of the action or the relief prayed for in any proceeding
for specific performance of this Agreement shall be raised by any party, in
order that such relief may be expeditiously obtained by an aggrieved party. All
parties may proceed to protect and enforce their rights hereunder by a suit in
equity or at law or other appropriate proceeding, whether for specific
performance or for an injunction against a violation of the terms hereof or in
aid of the exercise of any right, power or remedy granted hereunder or by law,
equity or statute or otherwise. No course of dealing and no delay on the part of
any party hereto in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice its rights, powers or remedies, and no
right, power or remedy conferred hereby shall be exclusive of any other right,
power or remedy referred to herein or now or hereafter available at law, in
equity, by statute or otherwise.
SECTION 12.13. PROCEDURE. Within _______ (__) days of the execution
hereof, Armitec and Armitec.Com each shall provide to the other all of the
Schedules required of it hereunder, and their respective attorneys shall agree
on exemplars of the requisite Exhibits B and C described herein. Armitec and
Armitec.Com each shall have an additional five (5) business days to notify the
other of its decision to invoke Section 10.01(e)(ii)(B) hereof and terminate
this Agreement because it deems it inadvisable to consummate the transactions
contemplated hereby. Failing such notice by either Armitec or Armitec.Com within
such time, all parties shall be deemed, conclusively, to have waived the
provisions of Section 10.01(e)(ii)(B) hereof, which provisions shall thereupon
become null and void.
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Attest: ARMITEC, INC.
By
-------------------------- -----------------------------------
(CORPORATE SEAL) Don Carman, Chief Executive Officer
Attest: ARMITEC.COM, INC.
By
-------------------------- -----------------------------------
(CORPORATE SEAL) Bruce Davis, Chief Executive Officer
THE ARMITEC.COM SHAREHOLDERS
-------------------------- --------------------------------------
Witness Name
-------------------------- --------------------------------------
Witness Name
-------------------------- --------------------------------------
Witness Name
-------------------------- --------------------------------------
Witness Name
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