THIS
EXCHANGE AGREEMENT AND MUTUAL RELEASE (the “Release”), dated as of December 30,2006, is made and entered into by and between Gabriel Technologies Corporation
(“Gabriel”), a Delaware corporation, and Resilent, LLC (“Resilent”), a Nebraska
limited liability company.
RECITALS:
A. On
or
about January 11, 2006, Gabriel and Mutual Protective Insurance Company
(“Mutual”) entered into that certain Securities Exchange Agreement (the “Mutual
Agreement”), pursuant to the terms of which Gabriel acquired 2,333 Class C
membership units in Resilent (the “Mutual Units”) from Mutual in exchange for
1,593,750 shares of Gabriel’s common stock issued to Mutual by
Gabriel.
B. On
or
about January 19, 2006, Gabriel and Resilent entered into that certain
Securities Exchange Agreement (the “January Exchange Agreement”), a copy of
which is attached hereto as Exhibit “A” and is incorporated herein by this
reference, and that certain Plan of Exchange (the “Plan”), a copy of which is
attached hereto as Exhibit “B” and is incorporated herein by this reference,
pursuant to the terms of which Gabriel acquired 11,868 Class A membership units
in Resilent (the “Gabriel Units”) in exchange for 3,000,000 shares of Gabriel’s
common stock issued to Resilent by Gabriel (the “Resilent Shares”) and Gabriel’s
promissory note payable to the order of Resilent in the original principal
amount of $2,000.000 (the “Gabriel Note”).
C. Certain
disagreements have arisen between Gabriel and Resilent relating to the January
Exchange Agreement and the Plan (collectively, the “Underlying Agreements”),
including but not limited to (i) the accuracy of representations made by
Resilent, (ii) the timeliness and aggregate amount of the payments made by
Gabriel under the Gabriel Note, (iii) the beneficial ownership of the Resilent
Shares, (iv) the failure of Gabriel to file a Registration Statement as provided
in Section 8.0 of the Plan, (v) whether Gabriel has the right to “claw-back” any
of the Resilent Shares pursuant to Section 10.0 of the Plan and (vi) whether
Gabriel has forfeited any of the Gabriel Units pursuant to Section 11.0 of
the
Plan.
D. Gabriel
and Resilent desire to avoid the expense of protracted litigation and wish
to
settle all claims of every kind between them with respect to the Underlying
Agreements.
E. Gabriel
and Resilent further agree that it is in the best interest of their respective
companies for Gabriel to become a minority member in Resilent such that,
immediately following implementation of this Release, Resilent will no longer
be
a majority-owned subsidiary
of Gabriel.
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AGREEMENT:
NOW
THEREFORE, in consideration of the mutual covenants, undertakings and conditions
set forth in this Release, Gabriel and Resilent agree as follows:
SECTION
1EXCHANGE
Simultaneously
with the execution of this Release, Gabriel will transfer and assign 2,500
of
the Gabriel Units represented by Certificate No. 8A to Resilent and Resilent
will transfer and assign all 3,000,000 of the Resilent Shares to Gabriel. The
Gabriel Units will be canceled on surrender.
SECTION
2GABRIEL
NOTE
Gabriel
and Resilent acknowledge and agree that the Gabriel Note has been paid in full
and that neither party has any liability or obligation to the other under or
by
virtue of the Gabriel Note or any payments made on account of the Gabriel
Note.
SECTION
3BOARD
REPRESENTATION
Simultaneously
with the exchange described in Section 1, Steven E. Campisi (“Campisi”), the
Manager of Resilent, will resign as an officer and director of Gabriel.
Notwithstanding any provision contained in the Underlying Agreements or in
the
Operating Agreement of Resilent, Gabriel will have the right to designate two
of
the five members of the board of directors of Resilent, Campisi will have the
right to designate two of the five members of the board of directors of Resilent
and the remaining member of the board of directors of Resilent will be elected
by the mutual consent of Gabriel and Campisi. Gabriel and Campisi agree to
vote
all membership units in Resilent owned by each to elect members of the board
of
directors of Resilent as provided in the preceding sentence.
SECTION
4REPRESENTATIONS
AND WARRANTIES OF GABRIEL
Gabriel
represents and warrants to Resilent as follows:
(a) Gabriel
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware.
(b) Gabriel
has full corporate power and authority to enter into this Release and to
consummate the transactions contemplated hereby. This Release has been duly
executed and delivered by Gabriel and constitutes the valid and binding
obligation of Gabriel enforceable against
Gabriel in accordance with its terms.
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(c) The
execution, delivery and performance by Gabriel of this Release, and the
consummation of the transactions contemplated hereby, does not and will not
(i)
violate or conflict with any provision of its Articles of Incorporation or
its
Bylaws, (ii) breach any provision of, or be an event that is (or with the
passage of time would result in) a default, or result in the cancellation or
acceleration of (whether after the giving of notice or lapse of time or both)
any obligation under, or result in the imposition or creation of any encumbrance
upon any of the assets of Gabriel pursuant to, any material contract, mortgage,
lien, lease, agreement or instrument to which Gabriel is a party or by which
Gabriel is bound, or (iii) require any authorization, consent, order, permit
or
approval of, or notice to, or filing, registration or qualification with, any
government authority.
(d) Gabriel
is the lawful owner of the Gabriel Units and has good right and authority to
sell the same, the Gabriel Units are free from all claims and encumbrances
and
Gabriel will warrant and defend the same against all persons lawfully claiming
the whole or any part thereof.
SECTION
5REPRESENTATIONS
AND WARRANTIES OF RESILENT
Resilent
represents and warrants to Gabriel as follows:
(a) Resilent
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Nebraska.
(b) Resilent
has full corporate power and authority to enter into this Release and to
consummate the transactions contemplated hereby. This Release has been duly
executed and delivered by Resilent and constitutes the valid and binding
obligation of Resilent enforceable against Resilent in accordance with its
terms.
(c) The
execution, delivery and performance by Resilent of this Release, and the
consummation of the transactions contemplated hereby, does not and will not
(i)
violate or conflict with any provision of its Certificate of Organization or
its
Operating Agreement, (ii) breach any provision of, or be an event that is (or
with the passage of time would result in) a default, or result in the
cancellation or acceleration of (whether after the giving of notice or lapse
of
time or both) any obligation under, or result in the imposition or creation
of
any encumbrance upon any of the assets of Resilent pursuant to, any material
contract, mortgage, lien, lease, agreement or instrument to which Resilent
is a
party or by which Resilent is bound, or (iii) require any authorization,
consent, order, permit or approval of, or notice to, or filing, registration
or
qualification with, any government authority.
(d) Resilent
is the lawful owner of the Resilent Shares and has good right and authority
to
sell the same, the Resilent Shares are free from all claims and encumbrances
and
Resilent
will warrant and defend the same against all persons lawfully claiming the
whole
or any part thereof.
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SECTION
6RELEASE
OF GABRIEL
In
consideration of the covenants, undertakings and conditions of Gabriel set
forth
in this Release, the sufficiency of which are hereby acknowledged by Resilent,
Resilent hereby forever releases, discharges and acquits Gabriel, and its
shareholders, directors, officers, employees, successors and assigns, and each
of them, of and from any and all cause or causes of action, claims, demands,
obligations, liabilities, indebtednesses, breaches of contract, breaches of
duty
or any relationship, acts, omissions, misfeasance, malfeasance, debts, sums
of
money, accounts, compensations, contracts, controversies, promises, damages,
costs, losses and expenses, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, whether founded on any theory of direct liability,
or any theory of indemnity, subrogation, contribution or any other theory of
indirect, vicarious or shared responsibility or liability, each as though fully
set forth herein at length, which in any way arise out of, are connected with
or
relate to the Underlying Agreements.
SECTION
7RELEASE
OF RESILENT
In
consideration of the covenants, undertakings and conditions of Resilent set
forth in this Release, the sufficiency of which are hereby acknowledged by
Gabriel, Gabriel hereby forever releases, discharges and acquits Resilent,
and
its shareholders, directors, officers, employees, successors and assigns, and
each of them, of and from any and all cause or causes of action, claims,
demands, obligations, liabilities, indebtednesses, breaches of contract,
breaches of duty or any relationship, acts, omissions, misfeasance, malfeasance,
debts, sums of money, accounts, compensations, contracts, controversies,
promises, damages, costs, losses and expenses, whether known or unknown,
suspected or unsuspected, liquidated or unliquidated, whether founded on any
theory of direct liability, or any theory of indemnity, subrogation,
contribution or any other theory of indirect, vicarious or shared responsibility
or liability, each as though fully set forth herein at length, which in any
way
arise out of, are connected with or relate to the Underlying
Agreements.
SECTION
8COOPERATION
Since
on
or about January 19, 2006, Gabriel has performed certain accounting functions
and has prepared and maintained certain business records on behalf of Resilent.
Gabriel agrees to provide copies of all such work product and business records
as Resilent may from time to time request and to cooperate with Resilent as
may
be reasonably required in the preparation and filing of all federal, state
and
local tax returns and other mandatory or discretionary filings with governmental
or regulatory agencies.
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SECTION
9COMPROMISE
This
Release is a compromise of all disputes and claims between Resilent and Gabriel
relating to the Underlying Agreements, each and all of which are expressly
denied by the other. This Release is not and shall not be construed as an
admission against interest by any party hereto or be deemed to be evidence
of
the validity of any of the claims asserted by either Gabriel or Resilent. This
Release shall not be offered or received in evidence in any proceeding as an
admission of any wrongdoing or liability by any party hereto. The parties hereto
are entering into this Release solely for the purpose of settling disputed
and
doubtful claims and to avoid protracted and expensive litigation.
SECTION
10COSTS
AND EXPENSES
Each
party shall pay all costs and expenses incurred by them in connection with
this
Release and any transactions contemplated by this Release, including, but not
limited to, filing fees, court costs and legal and accounting fees.
SECTION
11GENERAL
PROVISIONS
11.1 Each
of
the terms, obligations and provisions of this Release are to be determined
and
governed by the laws of the State of Nebraska.
11.2 This
Release may be executed in any number of counterparts, each of which shall
be
deemed to be an original and all of which taken together shall constitute one
and the same instrument. Either party may execute this Release by signing any
such counterpart.
11.3 This
Release shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
11.4 Section
and paragraph headings contained in this Release are for reference purposes
only
and shall not in any manner affect the meaning or interpretation of this
Release.
11.5 This
Release constitutes the entire agreement among the parties with respect to
the
subject matter hereof. There are no prior or contemporaneous agreements,
understandings, restrictions, warranties or representations among the parties
with respect thereto.
11.6 No
amendment of any provision of this Release shall be effective unless the
amendment is in writing and signed by each of the parties to this Release.
Neither this Release, nor any of the provisions hereof, may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the
party
against whom the enforcement of such change, waiver, discharge or termination
is
sought.
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11.7 Except
as
otherwise expressly provided in this Release, any and all remedies conferred
upon a party will be deemed to be cumulative with and not exclusive of any
other
remedy conferred by this Release, or by law or equity upon such party, and
the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy. No failure or delay on the part of either party in the exercise
of
any right under this Release shall impair such right or be construed to be
a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement contained in this Release, nor shall any single or partial exercise
of
any such right preclude other or further exercise thereof or of any other
right.
11.8 The
representations, warranties, covenants and provisions contained in this Release
shall survive the date hereof and the exchange described in Section 1 of this
Release.
IN
WITNESS WHEREOF, the parties have caused this Release to be executed at the
place and on the date set forth opposite their respective names
below.
GABRIEL
TECHNOLOGIES CORP.
Executed
at Omaha, Nebraska,
on
December 30,
2006.
By:
/s/ Keith
Feilmeier
Keith
Feilmeier, President
RESILENT,
LLC
Executed
at Omaha, Nebraska,
on
December 30,
2006.
By:
/s/ Steven
E.
Campisi
Steven
E. Campisi, Manager
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Exhibit
A
SECURITIES
EXCHANGE AGREEMENT
THIS
SECURITIES EXCHANGE AGREEMENT
(this
“Agreement”) is made as of January 19, 2006, by and between Gabriel Technologies
Corporation., a Delaware corporation (the “Buyer”), and Resilent LLC, a Nebraska
limited liability company (the “Company”).
Whereas,
Buyer
desires to acquire, the majority of the issued and outstanding units (the
“Units”) of membership interests of the Company for the consideration and on the
terms set forth in this Agreement.
Now,
therefore,
the
parties, intending to be legally bound, agree as follows:
SECTION
1. DEFINITIONS
For
purposes of this Agreement, the following terms have the meanings specified
or
referred to in this Section 1:
“Affiliate”—shall
have the meaning set forth in Rule 12b-2 of the Rules and Regulations under
the
Exchange Act.
“Applicable
Contract”—any
Contract (a) under which the Company has or may acquire any rights, (b) under
which the Company has or may become subject to any obligation or liability,
or
(c) by which the Company or any of the assets owned or used by it is or may
become bound.
“Balance
Sheet”—as
defined in Section 3.4.
“Best
Efforts”—the
efforts that a prudent Person desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as expeditiously
as
possible; provided, however, that an obligation to use Best Efforts under this
Agreement does not require the Person subject to that obligation to take actions
that would result in a materially adverse change in the benefits to such Person
of this Agreement and the Contemplated Transactions.
“Business
Day”—any
day
other than a Saturday, a Sunday or a day on which commercial banks in Omaha,
Nebraska are required or authorized to be closed.
“Buyer”—as
defined in the preamble of this Agreement.
“Buyer’s
Shares”—as
used
herein shall mean shares of the common stock of Gabriel Technologies Corporation
which have not been registered under the Securities Act.
“Closing”—as
defined in Section 2.3.
1
“Closing
Date”—the
date
and time as of which the Closing actually takes place.
“Company”—as
defined in the preamble of this Agreement.
“Consent”—any
approval, consent, ratification, waiver, or other authorization (including
any
Governmental Authorization).
“Contemplated
Transactions”—all
of
the transactions contemplated by this Agreement, including:
(a)
the
issuance of the Units to Buyer;
(b)
the
issuance of a Promissory Note for the payment of $2,000,000 to the Company
as
set forth herein;
(c)
the
issuance of 3,000,000 restricted shares of Buyer’s common stock to the Company,
subject to performance conditions set forth herein;
(d)
the
execution, delivery, and performance of the Employment Agreement;
(e)
the
execution and delivery of Buyer’s Voting Proxy as set forth herein;
(f)
the
performance by Buyer and Company of their respective covenants and obligations
under this Agreement; and
(g)
Buyer’s acquisition and ownership of the Units.
“Contract”—any
agreement, contract, obligation, promise, or undertaking (whether written or
oral and whether express or implied) that is legally binding.
“Employment
Agreement”—as
defined in Section 2.4(a) (ii).
“Encumbrance”—any
charge, claim, community property interest, condition, equitable interest,
lien,
option, pledge, security interest, right of first refusal, or restriction of
any
kind, including any restriction on use, voting, transfer, receipt of income,
or
exercise of any other attribute of ownership.
“ERISA”—the
Employee Retirement Income Security Act of 1974 or any successor law, and
regulations and rules issued pursuant to that Act or any successor
law.
“Exchange
Act”—the
Securities Exchange Act of 1934, as amended, or any successor law, and
regulations and rules issued pursuant thereto.
“Facilities”—any
real
property, leaseholds, or other interests currently or formerly owned or operated
by the Company and any buildings, plants, structures, or equipment (including
motor vehicles, tank cars, and rolling stock) currently or formerly owned or
operated by the Company.
2
“GAAP”—generally
accepted United States accounting principles, applied on a basis consistent
with
the basis on which the Balance Sheet and the other financial statements referred
to in Section 3.4(b) were prepared.
“Governmental
Authorization”—any
approval, consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
“Governmental
Body”—any:
(a)
nation, state, county, city, town, village, district, or other jurisdiction
of
any nature;
(b)
federal, state, local, municipal, foreign, or other government;
(c)
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court
or
other tribunal);
(d)
multi-national organization or body; or
(e)
body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any
nature.
“Intellectual
Property Assets”—as
defined in Section 3.22.
“Interim
Balance Sheet”—as
defined in Section 3.4.
“IRC”—the
Internal Revenue Code of 1986 or any successor law, and regulations issued
by
the IRS pursuant to the Internal Revenue Code or any successor law.
“IRS”—the
United States Internal Revenue Service or any successor agency, and, to the
extent relevant, the United States Department of the Treasury.
“Knowledge”—an
individual will be deemed to have “Knowledge” of a particular fact or other
matter if such individual is actually aware of such fact or other matter after
reasonable investigation. A Person (other than an individual) will be deemed
to
have “Knowledge” of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at
any
time had, Knowledge of such fact or other matter.
“Legal
Requirement”—any
federal, state, local, municipal, foreign, international, multinational, or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.
“material”—
shall
have the meaning set forth in Rule 12b-2 of the Rules and Regulations under
the
Exchange Act.
“material
adverse effect”
or
“material
adverse change”—
any
effect or change that would be materially adverse to the business, assets,
condition (financial or otherwise), operating results, operations, or business
prospects of the specified Person and its Subsidiaries, taken as a whole, or
on
the ability of any party to consummate timely the transactions contemplated
hereby.
3
“Order”—any
award, decision, injunction, judgment, order, ruling, subpoena, or verdict
entered, issued, made, or rendered by any court, administrative agency, or
other
Governmental Body or by any arbitrator.
“Ordinary
Course of Business”—an
action taken by a Person will be deemed to have been taken in the “Ordinary
Course of Business” only if:
(a)
Such
action is consistent with the past practices of such Person and is taken in
the
ordinary course of the normal day-to-day operations of such Person;
(b)
Such
action is not required to be authorized by the board of directors of such Person
(or by any Person or group of Persons exercising similar authority);
and
(c)
Such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business
as
such Person.
“Organizational
Documents”—(a) the
articles or certificate of incorporation and the bylaws of a corporation;
(b) the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (e) any amendment to any of the
foregoing.
“Person”—any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental
Body.
“Plan”—as
defined in Section 3.13.
“Plan
of Exchange”—as
defined in Section 2.2.
“Purchase
Price”—shall
mean Two Million Dollars ($2,000,000.00) in cash payments pursuant to a
Promissory Note made by Buyer; and Three Million (3,000,000) shares of Buyer’s
common stock, of which 1,5000,000 shall be subject to meeting financial
performance goals for the Company as described herein.
“Proceeding”—any
action, arbitration, audit, hearing, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental
Body
or arbitrator.
“Related
Person”—with
respect to a particular individual:
(a)
Each
other member of such individual’s Family;
4
(b)
Any
Person that is directly or indirectly controlled by such individual or one
or
more members of such individual’s Family;
(c)
Any
Person in which such individual or members of such individual’s Family hold
(individually or in the aggregate) a Material Interest; and
(d)
Any
Person with respect to which such individual or one or more members of such
individual’s Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity).
With
respect to a specified Person other than an individual:
(a)
Any
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person;
(b)
Any
Person that holds a Material Interest in such specified Person;
(c)
Each
Person that serves as a director, officer, partner, executor, or trustee of
such
specified Person (or in a similar capacity);
(d)
Any
Person in which such specified Person holds a Material Interest;
(e)
Any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and
(f)
Any
Related Person of any individual described in clause (b) or (c).
For
purposes of this definition, (a) the “Family” of an individual includes (i) the
individual, (ii) the individual’s spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual’s spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) “Material Interest” means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting
securities or other voting interests representing at least 5% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 5% of the outstanding equity securities or equity
interests in a Person.
“Representative”—with
respect to a particular Person, any director, officer, employee, agent,
consultant, advisor, or other representative of such Person, including legal
counsel, accountants, and financial advisors.
“Securities
Act”—the
Securities Act of 1933, as amended, or any successor law, and regulations and
rules issued pursuant to thereto.
“Subsidiary”—with
respect to any Person (the “Owner”), any corporation or other Person of which
securities or other interests having the power to elect a majority of that
corporation’s or other Person’s board of directors or similar governing body, or
otherwise having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred)
are
held by the Owner or one or more of its Subsidiaries; when used without
reference to a particular Person, “Subsidiary” means a Subsidiary of the
Company.
“Tax
Return”—any
return (including any information return), report, statement, schedule, notice,
form, or other document or information filed with or submitted to, or required
to be filed with or submitted to, any Governmental Body in connection with
the
determination, assessment, collection, or payment of any Tax or in connection
with the administration, implementation, or enforcement of or compliance with
any Legal Requirement relating to any Tax.
5
“Threatened”—a
claim,
Proceeding, dispute, action, or other matter will be deemed to have been
“Threatened” if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person
to
conclude that such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the
future.
SECTION
2. ISSUANCE
OF BUYER’S STOCK AND PROMISSORY NOTE; ISSUANCE OF UNITS;
CLOSING
2.1
ISSUANCE
(a)
Subject to the terms and conditions of this Agreement, at the Closing, the
Buyer
shall issue and deliver to the Company:
(i)
Certificates representing Three Million (3,000,000) authorized and newly issued
Buyer’s Shares as set forth in herein;
(ii)
a
Promissory Note for the payment of Two Million Dollars ($2,000,000) to Company
on the schedule set forth in therein;
(b)
Subject to the terms and conditions of this Agreement, at the Closing, the
Company shall issue and deliver to Buyer a certificate representing 11,868
authorized and newly issued Units (“Purchased Units”), as further described
herein.
2.2
PLAN
OF EXCHANGE
The
parties hereby adopt as of the date of this Agreement a plan of exchange, a
copy
of which is attached hereto as Exhibit “2.2” (the “Plan of
Exchange”).
2.3
CLOSING
The
issuance and exchange (the “Closing”) provided for in this Agreement will take
place at the offices of Company at 15858 West Dodge Road, Omaha, Nebraska68118,
at 9:00 a.m. (local time) January19, 2006 or at such other time and place as
the
parties may agree. Subject to the provisions of Section 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and
at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.4
CLOSING
OBLIGATIONS
At
the
Closing:
(a)
The
Company will deliver to Buyer:
6
(i)
A
copy of
a consent in lieu of a special meeting of the majority member(s) of the Company
approving this Agreement and the transactions contemplated hereunder, approved
by a majority of the percentage interests of the members and the
manager;
(ii)
An
employment agreement executed by the Company’s Manager in such form as may be
mutually satisfactory to the respective parties thereto (collectively,
“Employment Agreement”).
(i)
A
duly executed Voting Proxy enabling Mr. Steven Campisi to vote the Purchased
Units as described in such Voting Proxy;
(ii)
A
copy of a Consent in Lieu of a Special Meeting of the Buyer’s Board of Directors
approving this Agreement and the transactions contemplated hereunder, certified
by the Buyer’s President; and
(iii)
The
Employment Agreement, executed by Buyer.
SECTION
3. REPRESENTATIONS
AND WARRANTIES OF
COMPANY
The
Company represents and warrants to Buyer as follows:
(a)
The
Company is a limited liability company duly organized, validly existing, and
in
good standing under the laws of the State of Nebraska, with full power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all
its
obligations under Applicable Contracts.
(b)
The
Company has delivered to Buyer copies of the Organizational Documents of the
Company, as currently in effect.
(a)
This
Agreement constitutes the legal, valid, and binding obligation of Company,
enforceable against Company in accordance with its terms. Upon the execution
and
delivery by the Company of the Employment Agreements signed by each respective
employee described in Part 2.4 (a) (ii), the Plan of Exchange and the certified
Resolution (collectively, the “Company’s Closing Documents”), the Company’s
Closing Documents will constitute the legal, valid, and binding obligations
of
Company, enforceable against Company in accordance with their respective terms.
Company has the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and the Company’s Closing Documents and to
perform their obligations under this Agreement and the Company’s Closing
Documents.
(b)
To
the knowledge of the Company, neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse
of
time):
7
(i)
contravene,
conflict with, or result in a violation of (A) any provision of the
Organizational Documents of the Company, or (B) any resolution adopted by
the board of directors of the Company;
(ii)
contravene, conflict with, or result in a violation of, or give any Governmental
Body or other Person the right to challenge any of the Contemplated Transactions
or to exercise any remedy or obtain any relief under, any Legal Requirement
or
any Order to which the Company, or any of the assets owned or used by the
Company, may be subject;
(iii)
contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any Governmental Authorization that
is
held by the Company or that otherwise relates to the business of, or any of
the
assets owned or used by, the Company;
(iv)
contravene, conflict with, or result in a violation or breach of any provision
of, or give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable Contract; or
(v)
Result in the imposition or creation of any Encumbrance upon or with respect
to
any of the assets owned or used by the Company.
(c)
To
the knowledge of the Company, the Company is not or will not be required to
give
any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance
of
any of the Contemplated Transactions.
8
3.3
CAPITALIZATION
The
issued equity securities of the Company consist of 11,867 Units of Membership
Interests, comprised of (a) 8,788 Class “A” Units, (b) 746 Class “B” Units and
(c) 2,333 Class “C” Units. To the Company’s Knowledge, the Members are the
record and beneficial owners and holders of the Units as set forth at Schedule
“A” hereto. All of the outstanding equity securities of the Company have been
duly authorized and validly issued and are fully paid and nonassessable.
Except
as disclosed to Buyer in the case of the holder of Class “C” Membership Interest
Units and that certain Memorandum of Understanding, dated May 23, 2005 between
Richard Quaknine and the Company, there are no Contracts, warrants, options,
rights, subscriptions or similar agreements relating to the issuance, sale,
or
transfer of any equity securities or other securities of the
Company.
To the
knowledge of the Company, None of the outstanding equity securities or other
securities of the Company was issued in violation of the Securities Act or
any
other Legal Requirement. The Company does not own, or have any Contract to
acquire, any equity securities or other securities of any Person (other than
Company) or any direct or indirect equity or ownership interest in any other
business.
3.4
FINANCIAL
STATEMENTS
Company
has delivered to Buyer: (a) balance sheets of the Company as at December
31 2004 (“Balance Sheet”), and (b) an unaudited balance sheet of the
Company as at December 31, 2005 (the “Interim Balance Sheet”) and the related
unaudited statements of income, changes in members’ equity, and cash flow for
the twelve (12) months then ended, including in each case the notes thereto.
Such financial statements and notes fairly present the financial condition
and
the results of operations, changes in members’ equity, and cash flow of the
Company as at the respective dates of and for the periods referred to in such
financial statements, subject, in the case of interim financial statements,
to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those included
in
the Balance Sheet).
3.5
BOOKS
AND RECORDS
To
the
knowledge of the Company, the books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Buyer, are complete and correct and have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of the
Exchange Act (regardless of whether or not the Company is subject to that
Section), including the maintenance of an adequate system of internal controls.
The minute books of the Company contain accurate and complete records of all
meetings held of, and action taken by, the members, the Board of Directors,
and
committees of the Board of Directors of the Company, and no meeting of any
such
members, Board of Directors, or committee has been held for which minutes have
not been prepared and are not contained in such minute books. At the Closing,
all of those books and records will be in the possession of the
Company.
3.6
INVENTORY
(a)
To
the knowledge of the Company, all inventory of the Company, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which
have
been written off or written down to net realizable value in the Balance Sheet
or
the Interim Balance Sheet or on the accounting records of the Company as of
the
Closing Date, as the case may be. All inventories not written off have been
priced at cost. The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in
the
present circumstances of the Company.
9
3.7
NO
UNDISCLOSED LIABILITIES
To
the
knowledge of the Company, the Company has no material liabilities or obligations
of any nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheet or the Interim Balance Sheet and current
liabilities incurred in the Ordinary Course of Business since the respective
dates thereof.
3.8
TAXES
(a)
The
Company has filed or caused to be filed (on a timely basis since December 31,2004) all Tax Returns that are or were required to be filed by the Company
pursuant to applicable Legal Requirements. The Company has paid, or made
provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by Company, except such Taxes, if any, that are being contested in
good
faith and as to which adequate reserves have been provided in the Balance Sheet
and the Interim Balance Sheet.
(b)
To
the knowledge of the Company, the United States federal and state income Tax
Returns of the Company subject to such Taxes have not been audited by the IRS
or
relevant state tax authorities. To the knowledge of the Company, the Company
has
not given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute
of
limitations relating to the payment of Taxes of the Company or for which the
Company may be liable.
(c)
The
charges, accruals, and reserves with respect to Taxes on the respective books
of
the Company are adequate and are at least equal to the Company’s liability for
Taxes. To the knowledge of the Company, there exists no proposed tax assessment
against the Company. No consent to the application of Section 341(f)(2) of
the IRC has been filed with respect to any property or assets held, acquired,
or
to be acquired by the Company. All Taxes that the Company is or was required
by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body
or
other Person.
(d)
To
the knowledge of the Company, all Tax Returns filed by the Company are true,
correct, and complete. There is no tax sharing agreement that will require
any
payment by the Company after the date of this Agreement. The Company is not,
or
within the five-year period preceding the Closing Date has been, an “S”
corporation. During the consistency period (as defined in Section 338(h)(4)
of the IRC with respect to the sale of the Units to Buyer), neither the Company
nor any target affiliate (as defined in Section 338(h)(6) of the IRC with
respect to the sale of the Units to Buyer) has sold or will sell any property
or
assets to Buyer or to any member of the affiliated group (as defined in
Section 338(h)(5) of the IRC) that includes Buyer.
10
3.9
NO
MATERIAL ADVERSE CHANGE
To
the
knowledge of the Company, since the date of the Balance Sheet, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse
change.
3.10
COMPLIANCE
WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(i)
the
Company is, and at all times since December 31, 2004 has been, in full
compliance with each material Legal Requirement that is or was applicable to
it
or to the conduct or operation of its business or the ownership or use of any
of
its assets, including, but not limited to, the Health Insurance Portability
and
Accountability Act of 1996, as amended, and any other material Legal Requirement
regarding the privacy of medical records or health-related
information;
(ii)
no
event has occurred or circumstance exists that (with or without notice or lapse
of time) (A) may constitute or result in a material violation by the Company
of,
or a failure on the part of the Company to comply with, any material Legal
Requirement, or (B) may give rise to any material obligation on the part of
the
Company to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii)
The
Company has not received, at any time since December 31, 2004, any notice or
other communication (whether oral or written) from any Governmental Body or
any
other Person regarding (A) any actual, alleged, possible, or potential violation
of, or failure to comply with, any material Legal Requirement, or (B) any
actual, alleged, possible, or potential obligation on the part of the Company
to
undertake, or to bear all or any portion of the cost of, any remedial action
of
any nature.
3.11
LEGAL
PROCEEDINGS; ORDERS
(a)
To
the knowledge of the Company, there is no pending Proceeding:
(i)
that
has been commenced by or against the Company or that otherwise relates to or
may
affect the business of, or any of the assets owned or used by, the Company;
or
(ii)
That
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated
Transactions.
(b)
To
the Knowledge of Company, (1) no such Proceeding has been Threatened, and (2)
no
event has occurred or circumstance exists that may give rise to or serve as
a
basis for the commencement of any such Proceeding.
(i)
there
is no Order to which the Company, or any of the assets owned or used by the
Company, is subject;
(ii)
no
Member is subject to any Order that relates to the business of, or any of the
assets owned or used by, the Company; and
(iii)
no
officer, director, agent, or employee of the Company is subject to any Order
that prohibits such officer, director, agent, or employee from engaging in
or
continuing any conduct, activity, or practice relating to the business of the
Company.
11
3.12
ABSENCE
OF CERTAIN CHANGES AND EVENTS
Except
as
set forth above, to the knowledge of the Company, since the date of the Balance
Sheet, the Company has conducted their businesses only in the Ordinary Course
of
Business and there has not been any:
(a)
change in the Company’s authorized or issued securities; grant of any Units
option or right to purchase Units of membership interest of the Company;
issuance of any security convertible into such Units; grant of any registration
rights; purchase, redemption, retirement, or other acquisition by the Company
of
any Units of any such membership interests; or declaration or payment of any
dividend or other distribution or payment in respect of Units of membership
interests;
(b)
adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any employees of the
Company;
(c)
damage to or destruction or loss of any asset or property of the Company,
whether or not covered by insurance, materially and adversely affecting the
properties, assets, business, financial condition, or prospects of the Company,
taken as a whole;
(d)
entry
into, termination of, or receipt of notice of termination of any license,
distributorship, dealer, sales representative, joint venture, credit, or similar
agreement;
(e)
cancellation or waiver of any claims or rights with a value to the Company
in
excess of $5,000;
(f)
material change in the accounting methods used by the Company; or
(g)
agreement, whether oral or written, by the Company to do any of the foregoing.
(i)
each
Applicable Contract that involves performance of services or delivery of goods
or materials by one or more Company;
(ii)
each
Applicable Contract that involves performance of services or delivery of goods
or materials to one or more Company of an amount or value in excess of
$5,000;
(iii)
each Applicable Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of one or more Company
in
excess of $5,000;
(iv)
each
lease, rental or occupancy agreement, license, installment and conditional
sale
agreement, and other Applicable Contract affecting the ownership of, leasing
of,
title to, use of, or any leasehold or other interest in, any real or personal
property;
(v)
each
licensing agreement or other Applicable Contract with respect to patents,
trademarks, copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property
Assets;
(vi)
each
joint venture, partnership, and other Applicable Contract (however named)
involving a sharing of profits, losses, costs, or liabilities by the Company
with any other Person;
(vii)
each Applicable Contract containing covenants that in any way purport to
restrict the business activity of the Company or any Affiliate of the Company
or
limit the freedom of the Company or any Affiliate of the Company to engage
in
any line of business or to compete with any Person;
12
(viii)
each Applicable Contract providing for payments to or by any Person based on
sales, purchases, or profits, other than direct payments for goods;
(ix)
each
power of attorney that is currently effective and outstanding;
(x)
each
Applicable Contract entered into other than in the Ordinary Course of Business
that contains or provides for an express undertaking by the Company to be
responsible for consequential damages;
(xi)
each
Applicable Contract for capital expenditures in excess of $5,000;
(xii)
each written warranty, guaranty, and or other similar undertaking with respect
to contractual performance extended by the Company other than in the Ordinary
Course of Business; and
(xiii)
each amendment, supplement, and modification (whether oral or written) in
respect of any of the foregoing.
(b)
To
the knowledge of the Company, each Contract identified or required to be made
available to Buyer in Part 3.13(a) above is in full force and effect and is
valid and enforceable in accordance with its terms.
(c)
There
are no renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any material amounts paid or payable to the Company under current
or
completed Contracts with any Person and, to the Knowledge of Company and the
Company, no such Person has made written demand for such
renegotiation.
3.14
INSURANCE
(a)
Company has delivered to Buyer:
(i)
true
and complete copies of all policies of insurance to which the Company is a
party
or under which the Company, or any director of the Company, is or has been
covered at any time within the three (3) years preceding the date of this
Agreement;
(ii)
true
and complete copies of all pending applications for policies of insurance;
and
(iii)
any
statement by the auditor of the Company’s financial statements with regard to
the adequacy of such entity’s coverage or of the reserves for
claims.
(b)
The
Company has not received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is no longer
in
full force or effect or will not be renewed or that the issuer of any policy
is
not willing or able to perform its obligations thereunder.
(c)
The
Company has paid all premiums due, and has otherwise performed all of their
respective obligations, under each policy to which the Company is a party or
that provides coverage to the Company or director thereof.
(d)
The
Company has given notice to the insurer of all claims that may be insured
thereby.
3.15
EMPLOYEES
To
the
knowledge of the Company, no employee or director of the Company is a party
to,
or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person (“Proprietary Rights Agreement”) that
in any way adversely affects or will affect (i) the performance of his duties
as
an employee or director of the Company, or (ii) the ability of the Company
to
conduct its business, including any Proprietary Rights Agreement with the
Company by any such employee or director.
13
3.16
INTELLECTUAL
PROPERTY
(a)
For
purposes of this Agreement "Intellectual
Property"
means
(i) patents and all registrations and applications therefore, (ii) trademarks,
service marks, trade names and all registrations and applications therefore,
(iii) copyright works of authorship and all registrations and applications
therefore, (iv) trade secrets, proprietary information and databases.
Exhibit
B
sets
forth a list of the material items described in subsections (i) through (iv)
which the Company owns, in which the Company owns a license and/or that are
used
in connection with the foregoing to conduct the business of the Company as
presently conducted and as presently proposed to be conducted.
(b)
To
the best of its knowledge, the Company owns and possesses sufficient legal
rights to the Intellectual Property to conduct its business as presently
conducted and as presently proposed to be conducted without any infringement
of
the rights of others. Except as expressly indicated in Exhibit
B,
the
Intellectual Property is free and clear of liens, claims or encumbrances, and
is
not subject to any license, option or agreement of any kind.
(c)
The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as presently proposed, would violate
any
of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity, nor is the
Company aware of any basis therefor.
(d)
The
Company is not aware that any of its employees are obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company’s business as proposed to be conducted. All employees
of the Company shall have entered into a Confidentiality, Intellectual Property
and Nondisclosure Agreement (the Confidentiality Agreement”) in the form
attached to this Agreement as Exhibit
C.
3.17
CERTAIN
PAYMENTS
To
the
knowledge of the Company, since its organization, neither the Company nor any
director, officer, agent, or employee of the Company, or to Company’s Knowledge
any other Person associated with or acting for or on behalf of the Company,
has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company or any Affiliate
of the Company, or (iv) in violation of any Legal Requirement, (b) established
or maintained any fund or asset that has not been recorded in the books and
records of the Company.
3.18
DISCLOSURE
No
representation or warranty of Company in this Agreement omits to state a
material fact necessary to make the statements herein or therein, in light
of
the circumstances in which they were made, not misleading.
14
SECTION
4. REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Company as follows:
4.1
ORGANIZATION
AND GOOD STANDING
Buyer
is
a corporation duly organized, validly existing, and in good standing under
the
laws of the State of Delaware.
4.2
AUTHORITY;
NO CONFLICT
(a)
This
Agreement and the Employment Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Employment Agreements and to perform its
obligations under this Agreement and the Employment Agreements.
(b)
To
Buyer’s knowledge, neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated Transactions
by
Buyer will give any Person the right to prevent, delay, or otherwise interfere
with any of the Contemplated Transactions pursuant to:
(i)
any
provision of Buyer’s Organizational Documents;
(ii)
any
resolution adopted by the board of directors or the stockholders of
Buyer;
(iii)
any
Legal Requirement or Order to which Buyer may be subject; or
(iv)
any
Contract to which Buyer is a party or by which Buyer may be bound.
(c)
To
Buyer’s knowledge, Buyer is not and will not be required to obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated
Transactions.
4.3
CAPITALIZATION
The
authorized securities of the Buyer consist of 60,000,000 shares of common stock,
par value $0.001 per share, and 10,000,000 shares of preferred stock, par value
$0.001 per share. The Buyer currently has outstanding 25,516,971 shares
of
common stock and no shares of its preferred stock. All such outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable.
4.4
INVESTMENT
INTENT
Buyer
is
acquiring the Units for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities
Act.
4.5
CERTAIN
PROCEEDINGS
There
is
no pending Proceeding that has been commenced against Buyer and that challenges,
or may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To Buyer’s Knowledge, no
such Proceeding has been Threatened.
15
4.6
BROKERS
OR FINDERS
Buyer
and
its officers and agents have incurred no obligation or liability, contingent
or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement and will indemnify and hold
Company harmless from any such payment alleged to be due by or through Buyer
as
a result of the action of Buyer or its officers or agents.
4.7
REPORTING
REQUIREMENTS OF THE BUYER
The
Buyer
is subject to the reporting and filing requirements of the Exchange Act
including (1) the periodic reporting requirements and (2) the Proxy Rules set
forth thereunder. The Buyer and its officers, directors, and beneficial owners
are subject to the provisions of Section 16 of the Exchange Act relating to
short-swing profit recapture, reports of beneficial ownership and short sale
prohibitions and the Buyer and its officers, directors, and beneficial owners
have timely complied in all respects with the filing requirements of the
Exchange Act.
4.8
SEC
DOCUMENTS
Buyer
has
furnished or made available to the Company and each of the Members a true and
complete copy of each report, schedule, registration statement and proxy
statement filed by Buyer with the SEC since its recapitalization and reverse
merger with Princeton Video Image Inc. in July, 2004 (as such documents have
since the time of their filing been amended, the “SEC Documents”), a list of
which is available on the SEC web site. Buyer has timely filed with the SEC
all
documents required to have been filed pursuant to the Securities Act and the
Exchange Act. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act, or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading.
4.9
QUOTATION
ON THE OTC BULLETIN BOARD
The
Buyer’s Common Stock is quoted on the OTC Bulletin Board under the symbol
“GWLK.” The Buyer will take all necessary action to maintain its eligibility for
such quotation on the OTC Bulletin Board. The Buyer will use its Best Efforts
to
cause not less than three (3) firms to make a market for the Buyer’s Common
Stock.
4.10
APPROVAL
OF THE EXCHANGE BY THE BUYER’S STOCKHOLDERS
The
transactions contemplated by this Agreement do not require the approval of
the
Buyer’s stockholders and the Buyer is not required to file a Schedule 14A or 14C
with the SEC as a result of the transactions contemplated herein.
SECTION
5. GENERAL
PROVISIONS
5.1
EXPENSES
16
Except
as
otherwise expressly provided in this Agreement, each party to this Agreement
will bear its respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the Contemplated Transactions,
including all fees and expenses of agents, representatives, counsel, and
accountants. In the event of termination of this Agreement, the obligation
of
each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
5.2
PUBLIC
ANNOUNCEMENTS
Any
public announcement or similar publicity with respect to this Agreement or
the
Contemplated Transactions will be issued, if at all, at such time and in such
manner as Buyer determines. Unless consented to by Buyer in advance or required
by Legal Requirements, prior to the Closing Company shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to
any
Person other than Company’s advisors. Company and Buyer will consult with each
other concerning the means by which the Company’s employees, customers, and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for
any
such communication.
17
5.3
NOTICES
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered
by
hand (with written confirmation of receipt), (b) sent by telecopier (i.e.
facsimile machine) (with written confirmation of receipt), provided that a
copy
is mailed by registered mail, return receipt requested, or (c) when received
by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers
as a
party may designate by notice to the other parties):
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in
the
courts of the State of Nebraska, County of Douglas, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Nebraska,
and each of the parties consents to the jurisdiction of such courts (and of
the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred
to
in the preceding sentence may be served on any party anywhere in the
world.
5.5
FURTHER
ASSURANCES
The
parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents,
and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
5.6
WAIVER
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to
in
this Agreement will operate as a waiver of such right, power, or privilege,
and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or
the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged
by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may
be given by a party will be applicable except in the specific instance for
which
it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this
Agreement.
19
5.7
ENTIRE
AGREEMENT AND MODIFICATION
This
Agreement supersedes all prior agreements between the parties with respect
to
its subject matter (including the Term Sheet between Buyer and Company dated
December 8, 2005) and constitutes (along with the documents referred to in
this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may
not
be amended except by a written agreement executed by the party to be charged
with the amendment.
5.8
ASSIGNMENTS,
SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, which will not be unreasonably withheld, except
that Buyer may assign any of its rights under this Agreement to any Subsidiary
of Buyer. Subject to the preceding sentence, this Agreement will apply to,
be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all
of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
5.9
SEVERABILITY
If
any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
5.10
SECTION
HEADINGS, CONSTRUCTION
The
headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word “including” does not limit the preceding words or terms.
5.11
TIME
OF ESSENCE
With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.
5.12
GOVERNING
LAW
This
Agreement will be governed by the laws of the State of Nebraska without regard
to conflicts of laws principles.
20
5.13
COUNTERPARTS
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
In
witness whereof,
the
parties have executed and delivered this Agreement as of the date first written
above.
GABRIEL
TECHNOLOGIES
CORPORATION
/s/
Keith Feilmeier
Keith
Feilmeier
President
and CEO
RESILENT
LLC
/s/
Steven E. Campisi
Steven
E. Campisi
Manager
21
Exhibit
B
PLAN
OF EXCHANGE
THIS
PLAN OF EXCHANGE is
made
and entered into as of January 19, 2006 (this “Plan of Exchange”) by and between
Gabriel Technologies Corporation, a Delaware corporation (the “Buyer”), and
Resilent LLC, a Nebraska limited liability company (the “Company”). Buyer and
the Company are collectively referred to as the “Parties.”
WHEREAS,
the Parties hereto desire to enter into a plan of exchange pursuant to which
the
Buyer shall acquire a majority of the issued and outstanding membership interest
units of the Company in exchange for shares of its capital stock and cash (the
“Exchange”) and further pursuant to that certain Securities Exchange Agreement
between the parties dated the same date as this Plan of Exchange.
WHEREAS,
the Board of Directors of the Company has adopted resolutions authorizing the
Company to enter into this Plan of Exchange, approved by a majority of the
percentage interests of the members and the manager.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other valuable consideration, the receipt and adequacy of which
are
hereby acknowledged, the parties do hereby covenant and agree as
follows:
1.0DEFINITIONS
“Securities
Act”means
the
Securities Act of 1933, as amended, or any successor law, and regulations and
rules issued pursuant to thereto.
“Registration
Statement”
means a
registration statement of the Buyer under the Securities Act.
“Units”
means
units of membership Interest as such term is defined in the Company’s Operating
Agreement dated February 15, 2005 (“Operating Agreement”), which is attached
hereto as Exhibit “A” and incorporated herein by this reference. The Company’s
authorized capitalization consists of 25,000 Class A Units, 1,000 Class B Units,
and 10,000 Class C Units with each class having the rights as described in
the
Operating Agreement. As of the date of this Plan of Exchange, the Company’s
authorized, issued and outstanding Units consist of 11,867 Units comprised
of
8,788Class A Units, 746 Class B Units and 2,333 Class C Units.
Other
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement between
the
Parties.
1
2.0THE
EXCHANGE
2.1Exhange
for Units.
At the
Effective Time of the Exchange (as such term is hereinafter defined), in
accordance with the provisions of applicable law and the terms of this Plan
of
Exchange, 11,868 Class A Membership Interest Units issued and outstanding
immediately prior thereto (“Purchased Units”) shall be exchanged for (a)
3,000,000 shares of Buyer’s common stock, par value $0.001 (“Buyer’s Shares”);
and (b) Buyer’s fully executed Promissory Note in the aggregate amount of
$2,000,000.00 cash to be paid to the Company on the schedule stated therein,
the
form of which is attached hereto as Exhibit “B” (the “Promissory
Note”).
Buyer’s
Shares, Warrants and Promissory Note are hereinafter collectively referred
to as
“Consideration”.
2.2Buyer’s
Share Value.
For
purposes of valuation of the transaction contemplated herein, the value of
Buyer’s Shares shall be the per share price for Buyer’s common stock at the
close of trading for the Over The Counter (OTC) market on the day prior to
the
effective date of the exchange.
2.3No
Other Consideration Buyer
hereby represents and warrants that the Buyer’s Consideration is the only
consideration it will issue in exchange for the Company’s Units and Buyer shall
not issue further stock or any options, warrants, subscriptions or any other
rights to its stock in exchange for any Units of the Company.
2.4Effective
Time of the Exchange.
The
Exchange shall not become effective until, subject to the terms and conditions
of this Plan of Exchange, 5:00 o’clock p.m. Central Standard Time on the day on
which the following actions shall have in all respects been
completed:
a. This
Plan
of Exchange shall have been approved by the respective board of directors of
each of the Parties in accordance with the requirements of the laws of the
states under which each Party is organized;
b. This
Plan
of Exchange shall have been approved by the members of the Company in accordance
with the Company’s Operating Agreement and the Nebraska Limited Liability
Company Act.
The
date
and time when the Exchange shall become effective as aforesaid is herein
referred to as “Effective Time of the Exchange.”
3.0DIRECTORS
Two
members of the Board of Directors of the Company shall be designated by Buyer
and appointed to the Company’s Board of Directors to hold his or her respective
offices from and after the Effective Time of the Exchange until his or her
successor shall have been elected and qualified or as otherwise provided in
the
Operating Agreement of the Company. One member of the Board of Directors of
the
Buyer shall be designated by the Company and appointed to the Buyer’s Board of
Directors to hold his or her respective office from and after the Effective
Time
of the Exchange until his or her successor shall have been elected and qualified
or as otherwise provided in the By-Laws of the Buyer. Unless otherwise approved
by the members of the Company, the Company’s Board of Directors shall consist of
five members. Unless otherwise approved by the shareholders of the Buyer,
Buyer’s Board of Directors shall consist of five directors.
From
and
after the Effective Time of the Exchange, the Company shall be operated as
a
subsidiary of the Buyer and the Buyer shall perform the accounting functions
for
the Company.
5.0CERTIFICATES
AND DOCUMENTS REQUIRED AT THE EXCHANGE
5.1Buyer’s
Stock Certificates. At
the
Exchange, Buyer shall issue and deliver to the Company two certificates each
of
which represents 1,500,000 shares of Buyer’s common stock (collectively referred
to as “Buyer’s Stock Certificates).
a. Buyer’s
Stock Certificates will be inscribed with substantially the following
legend:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT THEN IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULES 144 AND 145 OF SUCH ACT.”
b. The
Company hereby acknowledges that it has been advised that the Buyer’s Shares
have not been registered under the Securities Act of 1933, as amended, or any
state securities act in reliance on exemptions therefrom.
5.3Buyer’s
Promissory Note.
At the
Exchange, Buyer shall deliver the Promissory Note to the Company.
a. The
Promissory Note shall provide for payments to the Company on the schedule stated
therein.
b. The
Company hereby acknowledges receipt of the initial payment due under the
Promissory Note in the amount of $200,000.00, plus an additional payment in
the
amount of $45,000.00.
5.4Voting
Proxy.
At the
Exchange, the Buyer shall deliver to the Company a fully executed Irrevocable
Voting Proxy, the form of which is attached hereto as Exhibit “C”.
3
5.5The
Purchased Units Certificate.
At the
Exchange, the Company shall issue and deliver to Buyer two certificates
representing the Purchased Units, bearing the same or similar legend as
described in Section 5.1 (a) above: one certificate representing 7,091 Units
and
one certificate representing 4,727 Units. In addition, said certificates shall
bear the following legend:
“THE
MEMBERSHIP INTEREST UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
IRREVOCABLE PROXY GRANTED TO MR. STEVEN E. CAMPISI, A COPY OF WHICH IS ATTACHED
HERETO”
6.0
FURTHER
BUYER REPRESENTATIONS AND WARRANTIES
6.1Requisite
Power and Authority.
Buyer
hereby represents and warrants that it has been duly formed and is validly
existing and in good standing under the laws of the State of Delaware, with
full
power and authority to enter into the transactions contemplated in this Plan
of
Exchange.
6.2Investment
Representations.
Buyer
understands that the Purchased Units have not been registered under the
Securities Act. Buyer further represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.
7.0
FURTHER
COMPANY REPRESENTATIONS AND
WARRANTIES
7.1Requisite
Power and Authority.
Company
hereby represents and warrants that it has been duly formed and is validly
existing and in good standing under the laws of the State of Nebraska, with
full
power and authority to enter into the transactions contemplated in this Plan
of
Exchange.
7.2Investment
Representations.
Company
understands that the Buyer’s Shares have not been registered under the
Securities Act. Company further represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.
7.3Buyer’s
SEC Filings. The
Company hereby acknowledges that it has been provided with and has examined
each
of the following documents filed by Buyer with the Securities and Exchange
Commission (“Buyer’s SEC Filings”):
a.
Buyer’s
annual report under Form 10-KSB for the period ending June 30,2005;
b.
Buyer’s
quarterly report under Form 10-QSB for the period ending September30,2005.
7.4Additional
Representations. The
Company hereby also represents and warrants that:
a. The
Company’s Units are free and clear of all encumbrances.
b. In
order
to effect this Plan of Exchange, the Company’s Manager, with the consent of the
majority of the Percentage Interests (as such term is defined in the Operating
Agreement) of the members, duly authorized the issuance of 5,000 additional
Class A Units over and above the 20,000 Class A Units authorized in the
Operating Agreement.
4
c. No
governmental consents are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Plan of Exchange by the Company and its acquisition of the
Buyer’s Shares.
8.0REGISTRATION
RIGHTS.
8.1“Piggyback”
Registration.
If
within 120 days after the Effective Date of Exchange (“Filing Period”), the
Buyer proposes to file with the Securities and Exchange Commission (the “SEC”) a
Registration Statement on Form S-4, S-8, or other appropriate form, with respect
to any of its securities, Buyer shall, at that time give Company at least thirty
(30) days prior written notice of its intention. The Registration Statement
filed hereunder, to the extent allowable under the Securities Act and the Rules
promulgated there-under (including Rule 416), shall state that such Registration
Statement also covers Buyer’s Shares. In the event such Registration Statement
is not filed within 120 days after the Effective Date of Exchange, the Buyer
shall separately file a Registration Statement for Buyer’s Shares within 60 days
after the Filing Period. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to the Company and their counsel prior to its filing or other
submission
8.2Exchanging
Shareholder Cooperation. The
Company shall use its best efforts to provide the Buyer with information
necessary to complete the Registration Statement in a timely
manner.
9.0RIGHT
OF FIRST REFUSAL TO REPURCHASE UNITS
Buyer
shall not sell the Units, or any part thereof, to any third party purchaser,
unless the Buyer shall have first made the offer to sell such Units back to
the
Company, and such offer shall not have been accepted, pursuant to the following
terms and provisions:
9.1
Offer
of Sale.
Prior to
acceptance of any subscription or agreement to acquire the Units, the Buyer
shall offer to sell the Units to the Company upon the same terms and conditions.
The Buyer shall make such an offer in writing to the Company, which offer shall
set forth (a) the name and address of the proposed third party purchaser; (b)
the number of Units, the purchase price, terms of payment and proposed closing
date in connection with such purchase; (c) evidence of the proposed purchaser’s
contractual commitment and financial ability to purchase the securities under
the applicable terms, and (d) such other documents and instruments as have
been
provided by the Buyer to the potential purchaser or received by the Buyer from
the potential purchaser, including but not limited to any applicable
subscription agreement (“Notice of Offer”).
9.2
Acceptance
of Offer.
Within
fifteen (15) days after receipt of a Notice of Offer, (“Acceptance Period”) the
Company may, at its option, elect to re-purchase all, but not less than all,
of
the Units proposed by the Buyer to be sold pursuant to the terms and provisions
of the Notice of Offer; provided,
however,
that
closing of such transaction may, at the election of the Company, be postponed
for a period not to exceed ten (10) days from the closing date set forth in
the
Notice of Offer. The Company shall exercise the foregoing right of first refusal
by written notice to the Buyer prior to expiration of the Acceptance Period
(“Notice of Acceptance”).
5
9.3
Rejection
of Offer.
In the
event the Company shall fail to deliver a Notice of Acceptance to Buyer prior
to
expiration of the Acceptance Period, the Buyer may proceed to sell the Units
to
the proposed purchaser in accordance with the terms of the Notice of Offer;
provided, however, that in the event that such transaction is not closed within
thirty (30) days following expiration of the Acceptance Period, such transaction
shall again become subject to the terms and provisions of this Section
9.
10.0
SHARES
SUBJECT TO “CLAW-BACK”
1,500,000
Buyer’s Shares exchanged for Units under this Plan of Exchange shall be
conditional upon the Company meeting or exceeding, on an audited basis, the
following pre-tax income target (“Target”) projected for the twelve (12)
calendar months period following its initial shipment of products (“Performance
Period”):
$1,000,000.00
Subject
to the provision in the Promissory Note for curing a default, in the event
the
Company’s actual pre-tax net income for the Performance Period is less than the
Target, the Company shall forfeit one half of one (0.5) Buyer’s Share for each
dollar the Company’s pre-tax net income for fiscal 2006 was less than the 2006
Target up to a maximum of 1,500,000 Buyer’s Shares and Buyer shall have the
right to cancel the stock certificate for 1,500,000 Buyer’s Shares issued to the
Company hereunder and replace the same for a substitute certificate representing
the number of Buyer’s Shares adjusted in accordance with this provision of the
Plan of Exchange.
11.0UNITS
SUBJECT TO RETURN UPON DEFAULT
4,747
Units exchanged for Buyer’s Shares under this Plan of Exchange shall be
conditional upon the Buyer meeting each and every payment date set forth in
the
Promissory Note (“Collateral Units”). Subject to the provision in the Promissory
Note for curing a default, in the event any single payment as set forth therein
is not made in full by its due date, the Buyer shall forfeit the same percentage
of Collateral Units as the unpaid balance remaining on the Promissory Note
is a
percentage of $2,000,000.00. The Company shall have the right to cancel the
Units certificate for the Collateral Units and replace the same for a substitute
certificate representing the number of Collateral Units less the number of
Units
forfeited by the Buyer in accordance with this provision of the Plan of
Exchange. The Buyer hereby appoints the Manager of the Company as Buyer’s
limited attorney-in-fact for the purpose of executing and delivering any
documentation required to cancel said Collateral Units in the event that Buyer
shall fail, refuse or neglect to execute and deliver same. In the event that
the
Buyer should fail, refuse or neglect to execute and delivery any of such
documents, notwithstanding the Company’s right to receive said Collateral Units
as provided herein, the Company may, at its election, cancel the Units
certificate for the Collateral Units in absentia and reissue a new certificate
representing the number of Collateral Units less the number of Units forfeited
by the Buyer in accordance with the terms of this Plan of Exchange without
further agreement or consent of the Buyer being required.
6
IN
WITNESS WHEREOF, each of the Parties has caused this Plan of Exchange to be
executed as of the date first written above.
GABRIEL
TECHNOLOGIES
CORPORATION
/s/
Keith Feilmeier
Keith
Feilmeier
President
and CEO
RESILENT
LLC
/s/
Steven E. Campisi
Steven
E. Campisi
Manager
7
Dates Referenced Herein and Documents Incorporated by Reference
