Document:

Unassociated Document

Exhibit 10.5

 

 

AGREEMENT AND PLAN OF MERGER

 

 

among

 

 

TRUNITY HOLDINGS, INC.,

 

 

TRUNITY ACQUISITION CORP.

 

 

and

 

 

TRUNITY, INC.

 

 

January 24, 2011

  

  

  

TABLE OF CONTENTS

 

	 	 	 	 	
PAGE

	 
	 	 	 	 	 	 
	1.	
The Merger

	 	 	1	 
	 	1.1	
Merger

	 	 	1	 
	 	1.2	
Effective Time

	 	 	1	 
	 	1.3	
Certificate of Incorporation; Bylaws; Directors and Officers; Parent Name Change

	 	 	2	 
	 	1.4	
Assets and Liabilities

	 	 	2	 
	 	1.5	
Manner and Basis of Converting Shares

	 	 	2	 
	 	1.6	
Surrender and Exchange of Certificates

	 	 	3	 
	 	1.7	
Parent Common Stock

	 	 	3	 
	 	 	 	 	 	 
	2.	
Representations and Warranties of the Company

	 	 	4	 
	 	2.1	
Organization, Standing, Subsidiaries, Etc.

	 	 	4	 
	 	2.2	
Qualification

	 	 	4	 
	 	2.3	
Capitalization of the Company

	 	 	4	 
	 	2.4	
Company Stockholders

	 	 	4	 
	 	2.5	
Corporate Acts and Proceedings

	 	 	4	 
	 	2.6	
Compliance with Laws and Instruments

	 	 	5	 
	 	2.7	
Binding Obligations

	 	 	5	 
	 	2.8	
Broker’s and Finder’s Fees

	 	 	5	 
	 	2.9	
Financial Statements

	 	 	5	 
	 	2.10	
Absence of Undisclosed Liabilities

	 	 	6	 
	 	2.11	
Changes

	 	 	6	 
	 	2.12	
Tax Returns and Audits

	 	 	7	 
	 	2.13	
Employee Benefit Plans; ERISA

	 	 	7	 
	 	2.14	
Title to Property and Encumbrances

	 	 	7	 
	 	2.15	
Litigation

	 	 	8	 
	 	2.16	
Patents, Trademarks, Etc.

	 	 	8	 
	 	2.17	
Interested Party Transactions

	 	 	8	 
	 	2.18	
Questionable Payments

	 	 	8	 
	 	2.19	
Obligations to or by Stockholders

	 	 	8	 
	 	2.20	
Assets and Contracts

	 	 	9	 
	 	2.21	
Employees

	 	 	9	 
	 	2.22	
Disclosure

	 	 	9	 
	 	 	 	 	 	 
	3.	
Representations and Warranties of Parent and Acquisition Corp.

	 	 	10	 
	 	3.1	
Organization and Standing

	 	 	10	 
	 	3.2	
Corporate Authority

	 	 	10	 
	 	3.3	
Broker’s and Finder’s Fees

	 	 	10	 
	 	3.4	
Capitalization of Parent

	 	 	11	 
	 	3.5	
Acquisition Corp

	 	 	11	 
	 	3.6	
Validity of Shares

	 	 	11	 
	 	3.7	
SEC Reporting and Compliance

	 	 	11	 
	 	3.8	
Financial Statements

	 	 	12	 
	 	3.9	
Governmental Consents

	 	 	12	 

 

  

i

  

 

	 	3.10	
Compliance with Laws and Instruments

	 	 	13	 
	 	3.11	
No General Solicitation

	 	 	13	 
	 	3.12	
Binding Obligations

	 	 	13	 
	 	3.13	
Absence of Undisclosed Liabilities

	 	 	13	 
	 	3.14	
Changes

	 	 	14	 
	 	3.15	
Tax Returns and Audits

	 	 	14	 
	 	3.16	
Employee Benefit Plans; ERISA

	 	 	14	 
	 	3.17	
Litigation

	 	 	15	 
	 	3.18	
Interested Party Transactions

	 	 	15	 
	 	3.19	
Questionable Payments

	 	 	16	 
	 	3.20	
Obligations to or by Stockholders

	 	 	16	 
	 	3.21	
Assets and Contracts

	 	 	16	 
	 	3.22	
Employees

	 	 	17	 
	 	3.23	
Patents, Trademarks, Etc.

	 	 	17	 
	 	3.24	
Disclosure

	 	 	17	 
	 	 	 	 	 	 
	4.	
Investment Letter

	 	 	17	 
	 	 	 	 	 	 
	5.	
Conduct of Businesses Pending the Merger

	 	 	17	 
	 	5.1	
Conduct of Business by the Company Pending the Merger

	 	 	17	 
	 	5.2	
Conduct of Business by Parent and Acquisition Corp. Pending the Merger

	 	 	18	 
	 	 	 	 	 	 
	6.	
Additional Agreements

	 	 	19	 
	 	6.1	
Access and Information

	 	 	19	 
	 	6.2	
Additional Agreements

	 	 	20	 
	 	6.3	
Publicity

	 	 	20	 
	 	6.4	
[Intentionally Deleted]

	 	 	20	 
	 	6.5	
Additional Parent Actions

	 	 	20	 
	 	6.6	
Indemnity Agreements

	 	 	20	 
	 	6.7	
Post-Closing Audit and Filing Expenses

	 	 	21	 
	 	6.8	
Parent Post-Closing Capitalization Table

	 	 	21	 
	 	 	 	 	 	 
	7.	
Conditions of Parties’ Obligations

	 	 	21	 
	 	7.1	
Company Obligations

	 	 	21	 
	 	7.2	
Parent and Acquisition Corp. Obligations

	 	 	22	 
	 	 	 	 	 	 
	8.	
Survival of Representations and Warranties

	 	 	23	 
	 	 	 	 	 	 
	9.	
Amendment of Agreement

	 	 	23	 
	 	 	 	 	 	 
	10.	
Definitions

	 	 	23	 
	 	 	 	 	 	 
	11.	
Closing

	 	 	27	 
	 	 	 	 	 	 
	12.	
Termination Prior to and After Closing

	 	 	27	 
	 	12.1	
Termination of Agreement

	 	 	27	 
	 	12.2	
Termination of Obligations

	 	 	27	 
	 	 	 	 	 	 
	13.	
Miscellaneous

	 	 	28	 
	 	13.1	
Notices

	 	 	28	 
	 	13.2	
Entire Agreement

	 	 	28	 
	 	13.3	
Expenses

	 	 	28	 

 

  

ii

  

	 	13.4	
Time

	 	 	28	 
	 	13.5	
Severability

	 	 	28	 
	 	13.6	
Successors and Assigns

	 	 	28	 
	 	13.7	
No Third Parties Benefited

	 	 	28	 
	 	13.8	
Counterparts; Signature by Facsimile

	 	 	29	 
	 	13.9	
Governing Law

	 	 	29	 
	 	13.10	
Venue; Submission to Jurisdiction

	 	 	29	 

  

iii

  

LIST OF EXHIBITS AND SCHEDULES

 

Exhibits

 

	A	
Certificate of Merger

	 	 	 	 
	B	
Directors and Officers of the Surviving Corporation

	 	 	 	 
	C	
Parent Post Closing Capitalization Table

	 	 	 	 

  

iv

  

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of January 24, 2011, by and among TRUNITY HOLDINGS, INC., a Delaware corporation f/k/a Brain Tree International, Inc., a Utah corporation (“Parent”), TRUNITY ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of Parent (“Acquisition Corp.”), and TRUNITY, INC., a Delaware corporation (the “Company”).

 

W I T N E S S E T H:

WHEREAS, the Board of Directors of each of Acquisition Corp., Parent and the Company have each determined that it is fair to and in the best interests of their respective corporations and shareholders for Acquisition Corp. to be merged with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth herein;

 

WHEREAS, the Board of Directors of Acquisition Corp. and the Board of Directors of the Company have approved the Merger in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), and upon the terms and subject to the conditions set forth herein and in the Certificate of Merger (the “Certificate of Merger”) attached as Exhibit “A” hereto; and the Board of Directors of Parent has also approved this Agreement and the Certificate of Merger; and

 

WHEREAS, the requisite Stockholders (as such term is defined in Section 10 hereof) have approved, by written consent pursuant to Sections 228 and 251 of the DGCL, this Agreement and the Certificate of Merger and the transactions contemplated hereby and thereby, including, without limitation, the Merger, and Parent, as the sole stockholder of Acquisition Corp., has approved this Agreement, the Certificate of Merger and the transactions contemplated and described hereby and thereby, including, without limitation, the Merger.

 

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

 

1.          The Merger.

 

1.1        Merger. Subject to the terms and conditions of this Agreement and the Certificate of Merger, Acquisition Corp. shall be merged with and into the Company in accordance with Section 251 of the DGCL. At the Effective Time (as hereinafter defined), the separate legal existence of Acquisition Corp. shall cease, and the Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the “Surviving Corporation”) and shall continue its corporate existence under the laws of the State of Delaware under the name Trunity, Inc.

 

1.2        Effective Time. The Merger shall become effective on the date and at the time the Certificate of Merger is filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL. The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the “Effective Time.”

 

  

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1.3        Certificate of Incorporation; Bylaws, Directors and Officers; Parent Name Change.

 

(a)        The Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation from and after the Effective Time until further amended in accordance with applicable law.

 

(b)        The Bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation from and after the Effective Time until amended in accordance with applicable law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws.

 

(c)        The directors and officers listed in Exhibit “B” hereto shall be the directors and officers of the Surviving Corporation and the Parent, and each shall hold his or her respective office or offices from and after the Effective Time (except, in the case of directors, as described in Section 6.4) until his or her successor shall have been elected and shall have qualified in accordance with applicable law, or as otherwise provided in the Certificate of Incorporation or Bylaws of the Surviving Corporation.

 

1.4       Assets and Liabilities. At the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities and duties of each of Acquisition Corp. and the Company (collectively, the “Constituent Corporations”); and all the rights, privileges, powers and franchises of each of the Constituent Corporations, and all property, real, personal and mixed, and all debts due to any of the Constituent Corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of the Constituent Corporations, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectively the property of the Surviving Corporation as they were of the several and respective Constituent Corporations, and the title to any real estate vested by deed or otherwise in either of the such Constituent Corporations shall not revert or be in any way impaired by the Merger; but all rights of creditors and all liens upon any property of any of the Constituent Corporations shall be preserved unimpaired, and all debts, liabilities and duties of the Constituent Corporations shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.

 

1.5       Manner and Basis of Converting Shares.

 

(a)       At the Effective Time,

 

(i)        each share of common stock, $0.001 par value, of Acquisition Corp. that shall be outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one share of common stock, par value $0.001 per share, of the Surviving Corporation, so that at the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of the Surviving Corporation;

 

  

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(ii)        each of the 961,974 shares of Parent Common Stock owned by the Company shall be cancelled;

 

(iii)       all of the 33,231,037 shares of common stock, par value $0.001 per share, of the Company (the “Company Common Stock”) beneficially owned by its Stockholders (other than shares of Company Common Stock as to which appraisal rights are perfected pursuant to the applicable provisions of the DGCL and not withdrawn or otherwise forfeited), which shares at the Closing will constitute all of the issued and outstanding shares of capital stock of the Company, shall, by virtue of the Merger and without any action on the part of the holders thereof, be converted into one share of Parent Common Stock for each share of Company Common Stock; and

 

(iv)       all options and warrants to purchase Company common stock shall be automatically converted into options and warrants to purchase Parent common stock on the same terms.

 

(b)          After the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time.

 

1.6          Surrender and Exchange of Certificates. Promptly after the Effective Time and upon (i) surrender of a certificate or certificates representing shares of Company Common Stock that were outstanding immediately prior to the Effective Time or an affidavit and indemnification in form reasonably acceptable to counsel for the Parent stating that such Stockholder has lost its certificate or certificates or that such have been destroyed, and (ii) delivery of a Representation Letter (as described in Section 4 hereof), Parent shall issue to each record holder of the Company Common Stock surrendering such certificate or certificates and Representation Letter, a certificate or certificates registered in the name of such Stockholder representing the number of shares of Parent Common Stock that such Stockholder shall be entitled to receive as set forth in Section 1.5(a)(ii) hereof. Until the certificate, certificates or affidavit is or are surrendered together with the Representation Letter as contemplated by this Section 1.6 and Section 4 hereof, each certificate or affidavit that immediately prior to the Effective Time represented any outstanding shares of Company Common Stock shall be deemed at and after the Effective Time to represent only the right to receive upon surrender as aforesaid one share of Parent Common Stock for each share of Company Stock previously held or to perfect any rights of appraisal which such holder may have pursuant to the applicable provisions of the DGCL.

 

1.7          Parent Common Stock. Parent agrees that it will cause the Parent Common Stock into which the Company Common Stock is converted at the Effective Time pursuant to Section 1.5(a)(ii) to be available for such purpose. Parent further covenants that immediately prior to the Effective Time there will be no more than 961,974 shares of Parent Common Stock issued and outstanding, all of which 961,974 shares shall be cancelled as of the Effective Time pursuant to Section 1.5(a)(ii) above, and, except as set forth in the financial statements that have been delivered, that no other common or preferred stock or equity securities or any options, warrants, rights or other agreements or instruments convertible, exchangeable or exercisable into common or preferred stock or other equity securities shall be issued or outstanding.

 

  

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2.           Representations and Warranties of the Company. The Company hereby represents and warrants to each of Parent and Acquisition Corp. as follows:

 

2.1         Organization, Standing, Subsidiaries, Etc.

 

(a)         The Company is a corporation duly organized and existing in good standing under the laws of the State of Delaware, and has all requisite power and authority (corporate and other) to carry on its business, to own or lease its properties and assets, to enter into this Agreement and the Certificate of Merger and to carry out the terms hereof and thereof. Copies of the Certificate of Incorporation and Bylaws of the Company that have been delivered to Parent and Acquisition Corp. prior to the execution of this Agreement are true and complete and have not since been amended or repealed.

 

(b)         The Company has no subsidiaries or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business.

 

2.2        Qualification. The Company is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of the Company taken as a whole (the “Condition of the Company”).

 

2.3        Capitalization of the Company. The authorized capital stock of the Company consists of 50,000,000 shares of Company Common Stock, and the Company has no authority to issue any other capital stock. There are 33,231,037 shares of Company Common Stock issued and outstanding and such shares are duly authorized, validly issued, fully paid and nonassessable. The Company has no outstanding warrants, stock options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company, except for warrants and options to purchase 2,284,287 shares of common stock.

 

2.4        Company Stockholders. The Company has provided to the Parent a list setting forth the names of the record owners of all of the outstanding shares of Company Common Stock and other Equity Securities of the Company, together with the number and percentage (on a fully-diluted basis) of securities held. To the knowledge of the Company, there is no voting trust, agreement or arrangement among any of the beneficial holders of Company Common Stock affecting the exercise of the voting rights of Company Common Stock.

 

2.5        Corporate Acts and Proceedings. The execution, delivery and performance of this Agreement and the Certificate of Merger (together, the “Merger Documents”) have been duly authorized by the Board of Directors of the Company and have been approved by the requisite vote of the Stockholders, and all of the corporate acts and other proceedings required for the due and valid authorization, execution, delivery and performance of the Merger Documents and the consummation of the Merger have been validly and appropriately taken, except for the filing of the Certificate of Merger referred to in Section 1.2.

 

  

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2.6        Compliance with Laws and Instruments. To the knowledge of the Company, the business, products and operations of the Company have been and are being conducted in compliance in all material respects with all applicable laws, rules and regulations, except for such violations thereof for which the penalties, in the aggregate, would not have a material adverse effect on the Condition of the Company. The execution, delivery and performance by the Company of the Merger Documents and the consummation by the Company of the transactions contemplated by this Agreement: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except such as shall have been obtained prior to the Closing, (b) will not cause the Company to violate or contravene in any material respect (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of the Certificate of Incorporation or Bylaws of the Company, (c) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other contract, agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected, except as would not have a material adverse effect on the Condition of the Company, and (d) will not result in the creation or imposition of any material Lien upon any property or asset of the Company.

 

2.7        Binding Obligations. The Merger Documents constitute the legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their respective terms.

 

2.8        Broker’s and Finder’s Fees. To the knowledge of the Company, no Person has, or as a result of the transactions contemplated herein will have any right or valid claim against the Company, Parent, Acquisition Corp. or any Stockholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity.

 

2.9        Financial Statements. The Company has delivered to the Parent the Company’s (i) audited Balance Sheet, Statement of Operations, Statement of Stockholders’ Equity and Statement of Cash Flows as of and for the period from inception (July 28, 2009) through December 31, 2010; and (ii) unaudited Balance Sheet, Statement of Operations, Statement of Stockholders’ Equity and Statement of Cash Flows as of and for the nine-month period ending September 30, 2011 (the “Balance Sheet Date”).  Such financial statements (i) are in accordance with the books and records of the Company, (ii) present fairly in all material respects the financial Condition of the Company as of the dates therein specified and the results of its operations and its cash flows for the periods therein specified, and (iii) have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) applied on a basis consistent with prior accounting periods.

 

  

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2.10       Absence of Undisclosed Liabilities. The Company has no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as those that have been disclosed to the Parent, (b) to the extent set forth on or reserved against in the Balance Sheet, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since September 30, 2011, none of which (individually or in the aggregate) has had or will have a material adverse effect on the Condition of the Company and (d) by the specific terms of any written agreement, document or arrangement identified in the Schedules.

 

2.11     Changes.  Since September 30, 2011, except as disclosed to Parent, the Company has not (a) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Merger and related transactions and current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since September 30, 2011, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right, of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting the Condition of the Company, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced any change in, or condition affecting, the financial Condition of the Company other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) could reasonably be expected to have a material adverse effect on the Condition of the Company, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party, (o) suffered any material loss not reflected in the Company Balance Sheet or its statement of income for the year ended on the Company Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $5,000 in the aggregate, or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

 

  

6

  

 

2.12        Tax Returns and Audits.  All required federal, state and local Tax Returns of the Company have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have become due, except where the failure so to file or pay could not reasonably be expected to have a material adverse effect upon the Condition of the Company. The Company is not and has not been delinquent in the payment of any Tax.  The Company has not had a Tax deficiency assessed against it.  None of the Company’s federal income tax returns nor any state or local income or franchise tax returns has been audited by governmental authorities.  The reserves for Taxes reflected on the Company’s Balance Sheet are sufficient for the payment of all unpaid Taxes payable by the Company with respect to the period ended on the Company’s Balance Sheet Date.  There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Company now pending, and the Company has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.

 

2.13       Employee Benefit Plans; ERISA. The Company has provided copies to the Parent of any: (i) “employee benefit plans” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), maintained or contributed to by the Company and covering employees of the Company, including (x) any such plans that are “employee welfare benefit plans” as defined in Section 3(1) of ERISA and (y) any such plans that are “employee pension benefit plans” as defined in Section 3(2) of ERISA (collectively, the “Company Benefit Plans”); or (ii) life and health insurance, hospitalization, savings, bonus, deferred compensation, incentive compensation, holiday, vacation, severance pay, sick pay, sick leave, disability, tuition refund, service award, company car, scholarship, relocation, patent award, fringe benefit and other employee benefit plans, contracts (other than individual employment, consultancy or severance contracts), policies or practices of the Company providing employee or executive compensation or benefits to its employees, other than the Company Benefit Plans (collectively, the “Benefit Arrangements”). Each Company Benefit Plan and Benefit Arrangement has been maintained and administered in all material respects in accordance with applicable law.

 

    2.14       Title to Property and Encumbrances. The Company has good, valid and indefeasible marketable title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting leases which are in full force and effect and which are not in default) free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as do not, individually or in the aggregate, materially detract from the value of the property or assets or materially impair the use made thereof by the Company in its business. Without limiting the generality of the foregoing, the Company has good and indefeasible title to all of its properties and assets reflected in the Balance Sheet, except for property disposed of in the usual and ordinary course of business since September 30, 2011, and for property held under valid and subsisting leases which are in full force and effect and which are not in default.

 

  

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2.15       Litigation.  There is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding (other than proceedings before the United States Patent and Trademark Office or foreign counterparts thereof) pending or, to the best knowledge of the Company, threatened against or affecting the Company or its properties, assets or business, and after reasonable investigation, the Company is not aware of any incident, transaction, occurrence or circumstance that might reasonably be expected to result in or form the basis for any such action, suit, arbitration or other proceeding. The Company is not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

 

2.16       Patents, Trademarks, Etc. The Company has delivered a list of all United States patents, trademarks, trade names, and applications therefore used by the Company exclusively in and material to the conduct of its business (the “Patent and Trademark Rights”).  The Company owns or possesses adequate licenses or other valid rights to use all Patent and Trademark Rights; and to the Company’s knowledge, the conduct of its business as now being conducted does not conflict with any valid patents, trademarks, trade names or copyrights of others in any way which has a material adverse effect on the business or financial Condition of the Company or its business.

 

2.17       Interested Party Transactions. Except as disclosed on in the Company’s financial statements, no officer, director or stockholder of the Company or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any such Person or the Company has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Company or (ii) purchases from or sells or furnishes to the Company any goods or services, or (b) a beneficial interest in any contract or agreement to which the Company is a party or by which it may be bound or affected.

 

2.18       Questionable Payments. Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee or other Person associated with or acting on behalf of the Company, has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

2.19       Obligations to or by Stockholders.  Except as disclosed in the Company’s financial statements, the Company has no liability or obligation or commitment to any stockholder of the Company or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Company, nor does any stockholder of the Company or any such Affiliate or associate have any liability, obligation or commitment to the Company.

 

  

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2.20       Assets and Contracts.  The Company is not a party to any written or oral agreement not made in the ordinary course of business that is material to the Company other than contracts, copies of which have been previously provided to Parent. The Company does not own any real property. Except as has been disclosed in copies sent to Parent, the Company is not a party to or otherwise bound by any written or oral (a) agreement with any labor union, (b) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (c) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (d) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of Company or any other Person, (e) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of Company to any Lien or evidencing any Indebtedness, (f) guaranty of any Indebtedness, (g) lease or agreement under which Company is lessee of or holds or operates any property, real or personal, owned by any other Person, (h) lease or agreement under which Company is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by Company, (i) agreement granting any preemptive right, right of first refusal or similar right to any Person, (j) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of Company or any present or former officer, director or stockholder of Company, (k) agreement obligating Company to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (l) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, (m) distributor, dealer, manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) agreement to register securities under the Securities Act, (o) collective bargaining agreement, or (p) agreement or other commitment or arrangement with any Person continuing for a period of more than two months from the Closing Date that involves an expenditure or receipt by Company in excess of $1,000.  Except as disclosed in a list provided to the Parent, the Company maintains no insurance policies and insurance coverage of any kind with respect to Company, its business, premises, properties, assets, employees and agents.  The Company has shared with Parent a true and complete list and description of each bank account, savings account, other deposit relationship and safety deposit box of Company, including the name of the bank or other depository, the account number and the names of the individuals having signature or other withdrawal authority with respect thereto. Other than those disclosed by the Company to the Parent, no consent of any bank or other depository is required to maintain any bank account, other deposit relationship or safety deposit box of Company in effect following the consummation of the Merger and the transactions contemplated hereby.  Company has furnished to the Parent true and complete copies of all agreements and other documents requested by the Parent.

 

2.21       Employees. Except as disclosed by  the Company to the Parent, other than pursuant to ordinary arrangements of consulting compensation at fair market rates, the Company is not under any obligation or liability to any officer, director, employee or Affiliate of Company. The Company has no employment agreements with, or any severance payment obligations to, any of its officers or employees.

 

2.22       Disclosure.  There is no fact relating to the Company that the Company has not disclosed to Parent that materially and adversely affects or, insofar as the Company can now reasonably foresee, will materially and adversely affect the Condition of the Company.

 

  

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3.          Representations and Warranties of Parent and Acquisition Corp. Parent and Acquisition Corp. jointly and severally represent and warrant to the Company as follows:

 

3.1        Organization and Standing. Parent is a corporation duly organized and existing in good standing under the laws of the State of Delaware. Acquisition Corp. is a corporation duly organized and existing in good standing under the laws of the State of Delaware. Parent is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the Condition of the Parent (as defined below). Parent and Acquisition Corp. have heretofore delivered to the Company complete and correct copies of their respective Certificates of Incorporation and Bylaws as now in effect. Parent and Acquisition Corp. have full corporate power and authority to carry on their respective businesses as they are now being conducted and as now proposed to be conducted and to own or lease their respective properties and assets. Neither Parent nor Acquisition Corp. has any subsidiaries (except Parent as the sole stockholder of Acquisition Corp.) or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business. Parent owns all of the issued and outstanding capital stock of Acquisition Corp. free and clear of all Liens, and Acquisition Corp. has no outstanding options, warrants or rights to purchase capital stock or other equity securities of Acquisition Corp., other than the capital stock owned by Parent. Unless the context otherwise requires, all references in this Section 3 to the “Parent” shall be treated as being a reference to the Parent and Acquisition Corp. taken together as one enterprise.

 

3.2        Corporate Authority. Each of Parent and/or Acquisition Corp. (as the case may be) has full corporate power and authority to enter into the Merger Documents and the other agreements to be made pursuant to the Merger Documents and to carry out the transactions contemplated hereby and thereby. All corporate acts and proceedings required for the authorization, execution, delivery and performance of the Merger Documents and such other agreements and documents by Parent and/or Acquisition Corp. (as the case may be) have been duly and validly taken or will have been so taken prior to the Closing. Each of the Merger Documents constitutes a legal, valid and binding obligation of Parent and/or Acquisition Corp. (as the case may be), each enforceable against them in accordance with their respective terms.

 

3.3        Broker’s and Finder’s Fees. No person, firm, corporation or other entity is entitled by reason of any act or omission of Parent or Acquisition Corp. to any broker’s or finder’s fees, commission or other similar compensation with respect to the execution and delivery of this Agreement or the Certificate of Merger, or with respect to the consummation of the transactions contemplated hereby or thereby. Parent and Acquisition Corp. jointly and severally agree to defend, indemnify and hold Company harmless from and against any and all loss, claim or liability (including attorneys fees, expert fees and all costs of court, whether or not assessable under applicable law) arising out of any such claim from any other Person who claims he, she or it introduced Parent or Acquisition Corp. to, or assisted them with, the transactions contemplated by or described herein.

 

  

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3.4        Capitalization of Parent.  The authorized capital stock of Parent consists of (a) 200,000,000 shares of common stock, par value $0.0001 per share (the “Parent Common Stock”), of which not more than 1,063,289 shares will be, prior to the Effective Time, issued and outstanding. The Parent has no shares of preferred stock issued or outstanding. A complete and true list setting forth the Parent common stock holdings of the officers and directors of Parent and the holders of greater than 5% of Parent Common Stock has been shared with Company. Except as shared by Parent with the Company or in the Parent SEC Documents (as defined in Section 3.7 below), Parent has no outstanding options, warrants, rights or commitments to issue shares of Parent Common Stock or any other Equity Security of Parent or Acquisition Corp., and there are no outstanding securities convertible or exercisable into or exchangeable for shares of Parent Common Stock or any other Equity Security of Parent or Acquisition Corp. There is no voting trust, agreement or arrangement among any of the beneficial holders of Parent Common Stock affecting the nomination or election of directors or the exercise of the voting rights of Parent Common Stock. All outstanding shares of the capital stock of Parent are validly issued and outstanding, fully paid and nonassessable, and none of such shares have been issued in violation of the preemptive rights of any person or any applicable law. 

 

3.5        Acquisition Corp. Acquisition Corp. is a wholly-owned subsidiary of Parent that was formed specifically for the purpose of the Merger and that has not conducted any business or acquired any property, and will not conduct any business or acquire any property prior to the Closing Date, except in preparation for and otherwise in connection with the transactions contemplated by this Agreement, the Certificate of Merger and the other agreements to be made pursuant to or in connection with this Agreement and the Certificate of Merger.  The authorized capital stock of Acquisition Corp. consists of 1,000 shares of $0.001 par value common stock (the “Acquisition Corp. Common Stock”), of which not more than 100 shares will be, prior to the Effective Time, issued and outstanding.

 

3.6        Validity of Shares.  All of the 33,231,037 shares of Parent Common Stock to be issued at the Closing pursuant to Section 1.5(a)(iii) hereof, when issued and delivered in accordance with the terms hereof and the Certificate of Merger, shall be duly and validly issued, fully paid and nonassessable. The issuance of the Parent Common Stock upon the Merger pursuant to Section 1.5(a)(ii) will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.

 

3.7        SEC Reporting and Compliance.

 

(a)        Parent has filed with the Commission all forms, reports and documents required to be filed by companies registered pursuant to Section 12(g) of the Exchange Act (collectively, the “Parent SEC Documents”). The Parent SEC Documents (i) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (ii) did not, at the time they were filed (or at the effective date thereof in the case of registration statements), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

  

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(b)        Parent has not filed, and nothing has occurred with respect to which Parent would be required to file, any report on Form 8-K since September 30, 2011.  Prior to and until the Closing, Parent will provide to the Company copies of any and all amendments or supplements to the Parent SEC Documents filed with the Commission since September 30, 2011 and any and all subsequent statements, reports and filings filed by the Parent with the Commission or delivered to the stockholders of Parent.

 

(c)        Parent is not an investment company within the meaning of Section 3 of the Investment Company Act.

 

(d)        The shares of Parent Common Stock are quoted on the OTC Bulletin Board under the symbol “BNTE”, and Parent is in compliance in all material respects with all rules and regulations of the OTC Bulletin Board applicable to it and the Parent Stock.

 

(e)        Between the date hereof and the Closing Date, Parent shall continue to satisfy the filing requirements of the Exchange Act and all other requirements of applicable securities laws and the OTC Bulletin Board and, as of the Closing Date, the Parent Stock shall be listed on the OTC Bulletin Board.

 

(f)         To the best of its knowledge, Parent has otherwise complied in all material respects with the Securities Act, Exchange Act and all other applicable federal and state securities laws.

 

3.8       Financial Statements.  The balance sheets, and statements of operations, statements of changes in shareholders’ equity and statements of cash flows contained in the Parent SEC Documents (the “Parent Financial Statements”) (i) have been prepared in accordance with US GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) are in accordance with the books and records of the Parent, and (iii) present fairly in all material respects the financial Condition of the Parent at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified. The financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2011, are audited by, and include the related report of Madsen & Associates, CPA’s Inc., Parent’s independent registered public accounting firm. The financial information included in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, is unaudited, but reflects all adjustments (including normally recurring accounts) that Parent considers necessary for a fair presentation of such information and has been prepared in accordance with US GAAP, consistently applied, and present fairly in all material respects the financial condition of the Parent on the dates therein specified.

 

3.9       Governmental Consents.  All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of Parent or Acquisition Corp. required in connection with the consummation of the Merger shall have been obtained prior to, and be effective as of, the Closing.

 

  

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3.10      Compliance with Laws and Instruments.  The execution, delivery and performance by Parent and/or Acquisition Corp. of this Agreement, the Certificate of Merger and the other agreements to be made by Parent or Acquisition Corp. pursuant to or in connection with this Agreement or the Certificate of Merger and the consummation by Parent and/or Acquisition Corp. of the transactions contemplated by the Merger Documents will not cause Parent and/or Acquisition Corp. to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (v) any provision of their respective articles or certificate of incorporation or bylaws as amended and in effect on and as of the Closing Date and will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or contract to which Parent or Acquisition Corp. is a party or by which Parent and/or Acquisition Corp. or any of their respective properties is bound.

 

3.11      No General Solicitation.  In issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone acting on its behalf has offered to sell the Parent Common Stock by any form of general solicitation or advertising.

 

3.12      Binding Obligations. The Merger Documents constitute the legal, valid and binding obligations of Parent and Acquisition Corp., and are enforceable against Parent and Acquisition Corp., in accordance with their respective terms.

 

3.13      Absence of Undisclosed Liabilities. Neither Parent nor Acquisition Corp. has any obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or reserved against in the audited balance sheet of Parent as of June 30, 2011 (the “Parent Balance Sheet”) or the Notes to the Parent Financial Statements, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since June 30, 2011 (the “Parent Balance Sheet Date”), none of which (individually or in the aggregate) materially and adversely affects the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of the Parent or Acquisition Corp., taken as a whole (the “Condition of the Parent”), as disclosed on a Schedule attached to this Agreement, and (e) by the specific terms of any written agreement, document or arrangement attached as an exhibit to the Parent SEC Documents.

 

  

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3.14      Changes.  Since the Parent Balance Sheet Date, except as disclosed in the Parent SEC Documents and as has been disclosed by the Parent to the Company, the Parent has not (a) incurred any debts, obligations or liabilities, absolute, accrued or, to the Parent’s knowledge, contingent, whether due or to become due, except for current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Parent Balance Sheet and current liabilities incurred since the Parent Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) which could reasonably be expected to have a material adverse effect on the Condition of the Parent, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced any change in, or condition affecting, the financial Condition of the Parent other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) could reasonably be expected to have a material adverse effect on the Condition of the Parent, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party, (o) suffered any material loss not reflected in the Parent Balance Sheet or its statement of income for the year ended on the Parent Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $5,000 in the aggregate, or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

 

3.15      Tax Returns and Audits.  All required federal, state and local Tax Returns of the Parent have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have become due, except where the failure so to file or pay could not reasonably be expected to have a material adverse effect upon the Condition of the Parent. The Parent is not and has not been delinquent in the payment of any Tax. The Parent has not had a Tax deficiency assessed against it. None of the Parent’s federal income tax returns nor any state or local income or franchise tax returns has been audited by governmental authorities. The reserves for Taxes reflected on the Parent Balance Sheet are sufficient for the payment of all unpaid Taxes payable by the Parent with respect to the period ended on the Parent Balance Sheet Date. There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Parent now pending, and the Parent has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.

 

3.16      Employee Benefit Plans; ERISA.

 

(a)        Except as disclosed in the Parent SEC Documents, there are no “employee benefit plans” (within the meaning of Section 3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Parent. Any plans listed in the Parent SEC Documents are hereinafter referred to as the “Parent Employee Benefit Plans.”

 

  

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(b)        Any current and prior material documents, including all amendments thereto, with respect to each Parent Employee Benefit Plan have been given to the Company or its advisors.

 

(c)         All Parent Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Code and any other applicable state, federal or foreign law.

 

(d)         There are no pending, or to the knowledge of the Parent, threatened, claims or lawsuits which have been asserted or instituted against any Parent Employee Benefit Plan, the assets of any of the trusts or funds under the Parent Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Parent Employee Benefit Plans or against any fiduciary of a Parent Employee Benefit Plan with respect to the operation of such plan.

 

(e)         There is no pending, or to the knowledge of the Parent, threatened, investigation or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Parent Employee Benefit Plan.

 

(f)         No actual or, to the knowledge of Parent, contingent liability exists with respect to the funding of any Parent Employee Benefit Plan or for any other expense or obligation of any Parent Employee Benefit Plan, except as disclosed on the financial statements of the Parent or the Parent SEC Documents, and to the knowledge of the Parent, no contingent liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.

 

3.17      Litigation. There is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of the Parent, threatened against or affecting the Parent or Acquisition Corp. or their properties, assets or business. To the knowledge of the Parent, neither Parent nor Acquisition Corp. is in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

 

3.18      Interested Party Transactions. Except as disclosed in the Parent SEC Documents and shared by the Parent with the Company, no officer, director or stockholder of the Parent or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any such Person or the Parent has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Parent or (ii) purchases from or sells or furnishes to the Parent any goods or services, or (b) a beneficial interest in any contract or agreement to which the Parent is a party or by which it may be bound or affected.

 

  

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3.19      Questionable Payments. Neither the Parent, Acquisition Corp. nor to the knowledge of the Parent, any director, officer, agent, employee or other Person associated with or acting on behalf of the Parent or Acquisition Corp., has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

3.20      Obligations to or by Stockholders. Except as disclosed in the Parent SEC Documents, the Parent has no liability or obligation or commitment to any stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Parent, nor does any stockholder of Parent or any such Affiliate or associate have any liability, obligation or commitment to the Parent.

 

3.21      Assets and Contracts. Except as expressly set forth in a schedule to this Agreement, the Parent Balance Sheet or the notes thereto, the Parent is not a party to any written or oral agreement not made in the ordinary course of business that is material to the Parent. Parent does not own any real property. Parent is not a party to or otherwise bound by any written or oral (a) agreement with any labor union, (b) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (c) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (d) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of Parent or any other Person, (e) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of Parent to any Lien or evidencing any Indebtedness, (f) guaranty of any Indebtedness, (g) lease or agreement under which Parent is lessee of or holds or operates any property, real or personal, owned by any other Person, (h) lease or agreement under which Parent is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by Parent, (i) agreement granting any preemptive right, right of first refusal or similar right to any Person, (j) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of Parent or any present or former officer, director or stockholder of Parent, (k) agreement obligating Parent to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (1) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, (m) distributor, dealer, manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) agreement to register securities under the Securities Act, (o) collective bargaining agreement, or (p) agreement or other commitment or arrangement with any Person continuing for a period of more than two months from the Closing Date that involves an expenditure or receipt by Parent in excess of $1,000.  Except as disclosed by the Parent to the Company, the Parent maintains no insurance policies and insurance coverage of any kind with respect to Parent, its business, premises, properties, assets, employees and agents. The Parent has provided copies to the Company a true and complete list and description of each bank account, savings account, other deposit relationship and safety deposit box of Parent, including the name of the bank or other depository, the account number and the names of the individuals having signature or other withdrawal authority with respect thereto. Other than those that the Parent has disclosed to the Company, no consent of any bank or other depository is required to maintain any bank account, other deposit relationship or safety deposit box of Parent in effect following the consummation of the Merger and the transactions contemplated hereby. Parent has furnished to the Company true and complete copies of all agreements and other documents requested by the Company.

 

  

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3.22      Employees. Other than pursuant to ordinary arrangements of employment compensation, Parent is not under any obligation or liability to any officer, director, employee or Affiliate of Parent.  The Company has no employment agreements with, or any severance payment obligations to, any of its officers or employees.

 

3.23      Patents, Trademarks, Etc. The Parent SEC Documents disclose all of Parent’s Patent and Trademark rights. Except as disclosed in the Parent SEC Documents, (a) Parent owns or possesses adequate licenses or other valid rights to use all Patent and Trademark Rights; and (b) to Parent’s knowledge, the conduct of its business as now being conducted does not conflict with any valid patents, trademarks, trade names or copyrights of others in any way which has a material adverse effect on the business or financial Condition of the Parent or its business.

 

3.24      Disclosure. There is no fact relating to Parent that Parent has not disclosed to the Company in writing or disclosed in Parent SEC filings or in any schedules or exhibits attached hereto or incorporated herein that materially and adversely affects nor, insofar as Parent can now foresee, will materially and adversely affect, the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of Parent. No representation or warranty by Parent herein and no information disclosed in the schedules or exhibits hereto by Parent contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

 

4.         Investment Letter. At or prior to the Closing, Parent shall have received from each of the Company’s shareholders a Representation Letter in standard form for comparable transactions agreeing among other things that the shares of Parent Common Stock to be issued in the merger are, among other things, being acquired for investment purposes and not with a view to public resale, are being acquired for the shareholder’s own account, and that the shares of Parent Common Stock are restricted and may not be resold without registration, except in reliance on an exemption therefrom under the Securities Act.

 

5.        Conduct of Businesses Pending the Merger.

 

5.1       Conduct of Business by the Company Pending the Merger. Prior to the Effective Time, unless Parent or Acquisition Corp. shall otherwise agree in writing or as otherwise contemplated by this Agreement or disclosed in any Schedule to this Agreement:

 

(a)       the business of the Company shall be conducted only in the ordinary course;

 

  

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(b)       the Company shall not (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its Certificate of Incorporation or Bylaws; or (iii) split, combine or reclassify the outstanding Company Common Stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to any such stock;

 

(c)       the Company shall not (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire any shares of, Company Common Stock; (ii) acquire or dispose of any fixed assets or acquire or dispose of any other substantial assets other than in the ordinary course of business; (iii) incur additional Indebtedness or any other liabilities or enter into any other transaction other than in the ordinary course of business; (iv) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing; or (v) except as contemplated by this Agreement, enter into any contract, agreement, commitment or arrangement to dissolve, merge, consolidate or enter into any other material business combination;

 

(d)       the Company shall use its best efforts to preserve intact the business organization of the Company, to keep available the service of its present officers and key employees, and to preserve the good will of those having business relationships with it; and

 

(e)       the Company will not enter into any new employment agreements with any of its officers or employees or grant any increases in the compensation or benefits of its officers and employees other than increases in the ordinary course of business and consistent with past practice or amend any employee benefit plan or arrangement.

 

5.2       Conduct of Business by Parent and Acquisition Corp. Pending the Merger. Parent represents and warrants to the Company that Parent and Acquisition Corp. do not operate any business.  Prior to the Effective Time, unless the Company shall otherwise agree in writing or as otherwise contemplated by this Agreement or disclosed in any Schedule to this Agreement:

 

(a)       the business of Parent and Acquisition Corp. shall be conducted only in the ordinary course; provided, however, that Parent shall take the steps necessary to have discontinued its existing business without liability to Parent or Acquisition Corp. as of the Closing Date;

 

(b)       neither Parent nor Acquisition Corp. shall (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its articles or certificate of incorporation or bylaws; or (iii) split, combine or reclassify its capital stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to such stock;

 

(c)       neither Parent nor Acquisition Corp. shall (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire shares of, its capital stock; (ii) acquire or dispose of any assets other than in the ordinary course of business (except for dispositions in connection with Section 5.2(a) hereof); (iii) incur additional Indebtedness or any other liabilities or enter into any other transaction except in the ordinary course of business; (iv) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing, or (v) except as contemplated by this Agreement, enter into any contract, agreement, commitment or arrangement to dissolve, merge, consolidate or enter into any other material business contract or enter into any negotiations in connection therewith;

 

  

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(d)       neither Parent nor Acquisition Corp. will, nor will they authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by them to, make, solicit, encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal (as defined below for purposes of this paragraph). Parent will promptly advise the Company orally and in writing of any such inquiries or proposals (or requests for information) and the substance thereof. As used in this paragraph, “Acquisition Proposal” shall mean any proposal for a merger or other business combination involving the Parent or Acquisition Corp. or for the acquisition of a substantial equity interest in either of them or any material assets of either of them other than as contemplated by this Agreement. Parent will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any person conducted heretofore with respect to any of the foregoing; and

 

(e)       neither the Parent nor Acquisition Corp. will enter into any new employment agreements with any of their officers or employees or grant any increases in the compensation or benefits of their officers or employees.

 

6.        Additional Agreements.

 

6.1       Access and Information. The Company, Parent and Acquisition Corp. shall each afford to the other and to the other’s accountants, counsel and other representatives full access during normal business hours throughout the period prior to the Effective Time of all of its properties, books, contracts, commitments and records (including but not limited to tax returns) and during such period, each shall furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request; provided, that no investigation pursuant to this Section 6.1 shall affect any representations or warranties made herein. Each party shall hold, and shall cause its employees and agents to hold, in confidence all such information (other than such information which (i) is already in such party’s possession or (ii) becomes generally available to the public other than as a result of a disclosure by such party or its directors, officers, managers, employees, agents or advisors, or (iii) becomes available to such party on a non-confidential basis from a source other than a party hereto or its advisors, provided that such source is not known by such party to be bound by a confidentiality agreement with or other obligation of secrecy to a party hereto or another party until such time as such information is otherwise publicly available; provided, however, that (A) any such information may be disclosed to such party’s directors, officers, employees and representatives of such party’s advisors who need to know such information for the purpose of evaluating the transactions contemplated hereby (it being understood that such directors, officers, employees and representatives shall be informed by such party of the confidential nature of such information), (B) any disclosure of such information may be made as to which the party hereto furnishing such information has consented in writing, and (C) any such information may be disclosed pursuant to a judicial, administrative or governmental order or request; provided, however, that the requested party will promptly so notify the other party so that the other party may seek a protective order or appropriate remedy and/or waive compliance with this Agreement and if such protective order or other remedy is not obtained or the other party waives compliance with this provision, the requested party will furnish only that portion of such information which is legally required and will exercise its best efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded the information furnished). If this Agreement is terminated, each party will deliver to the other all documents and other materials (including copies) obtained by such party or on its behalf from the other party as a result of this Agreement or in connection herewith, whether so obtained before or after the execution hereof.

 

  

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6.2       Additional Agreements. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using its commercially reasonable efforts to satisfy the conditions precedent to the obligations of any of the parties hereto to obtain all necessary waivers, and to lift any injunction or other legal bar to the Merger (and, in such case, to proceed with the Merger as expeditiously as possible). In order to obtain any necessary governmental or regulatory action or non-action, waiver, consent, extension or approval, each of Parent, Acquisition Corp. and the Company agrees to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely governmental or regulatory approvals and to take such further action in connection therewith as may be necessary. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Parent, Acquisition Corp. and the Company shall take all such necessary action.

 

6.3       Publicity. No party shall issue any press release or public announcement pertaining to the Merger that has not been agreed upon in advance by Parent and the Company; provided, however, that this provision shall not prevent any party from making any announcement or filing any report required by it to be in compliance with any applicable federal or state securities laws.

 

6.4        [intentionally deleted]

 

6.5        Additional Parent Actions.  Prior to the Closing, Parent shall have

 

(a)        cancelled any shares of Parent Common Stock held in treasury by Parent; and

 

(b)        no outstanding contractual commitments, and shall not have outstanding payables or liabilities, except for Parent’s reasonable legal and accounting fees and expenses incurred in connection with this Agreement and the Merger, which shall be paid at Closing.

 

6.6        Indemnity Agreements.  Parent and Company acknowledge that Parent is a party to certain indemnification agreements (the “Indemnity Agreements”) in favor of Parent’s current and former officers and directors, copies of which have been provided to Company. Parent and Company agree that these Indemnity Agreements shall survive the Merger and any subsequent merger, reorganization or reincorporation of Parent, and that Parent and Company shall take no action which will deprive the beneficiaries of these Indemnification Agreements of the benefits and protections thereof, nor shall Parent or Company take any action intended to or effecting any change, limitation, termination or other modification of the rights and duties of any party under such Indemnity Agreements.

 

  

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6.7        Post-Closing Audit and Filing Expenses.  The Company agrees that it shall be responsible for all post-Closing costs and expenses incurred in connection with preparation and filing of Parent’s SEC Documents due after Closing.

 

6.8        Parent Post-Closing Capitalization Table.  Attached hereto as Exhibit “C” is a table showing the capitalization of Parent after consummation of the Merger and the transactions contemplated herein.

 

7.         Conditions of Parties’ Obligations.

 

7.1       Company Obligations. The obligations of Parent and Acquisition Corp. under this Agreement and the Certificate of Merger are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in whole or in part by Parent.

 

(a)       No Errors, etc. The representations and warranties of the Company under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.

 

(b)       Compliance with Agreement. The Company shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date.

 

(c)       No Default or Adverse Change. There shall not exist on the Closing Date any Default or Event of Default or any event or condition that, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default, and since the Balance Sheet Date, there shall have been no material adverse change in the Condition of the Company.

 

(d)       No Restraining Action. No action or proceeding before any court, governmental body or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the Certificate of Merger or the carrying out of the transactions contemplated by the Merger Documents.

 

(e)       Supporting Documents. Parent and Acquisition Corp. shall have received the following:

 

(i)       Copies of resolutions of the Board of Directors and the Stockholders of the Company authorizing and approving the execution, delivery and performance of the Merger Documents and all other documents and instruments to be delivered pursuant hereto and thereto.

 

(ii)      Evidence as of a date within 10 days of the Effective Time of the good standing and corporate existence of the Company issued by the Secretary of State of the State of Delaware.

 

  

21

  

 

(iii)     Such additional supporting documentation and other information with respect to the transactions contemplated hereby as Parent and Acquisition Corp. may reasonably request.

 

(f)        Proceedings and Documents. All corporate and other proceedings and actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions shall be reasonably satisfactory in form and substance to Parent and Acquisition Corp. The Company shall furnish to Parent and Acquisition Corp. such supporting documentation and evidence of the satisfaction of any or all of the conditions precedent specified in this Section 7.1 as Parent or its counsel may reasonably request.

 

7.2       Parent and Acquisition Corp. Obligations. The obligations of the Company under this Agreement and the Certificate of Merger are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in whole or in part by the Company:

 

(a)       No Errors, etc. The representations and warranties of Parent and Acquisition Corp. under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.

 

(b)       Compliance with Agreement. Parent and Acquisition Corp. shall have performed and complied in all material respects with all agreements and conditions required by this Agreement and the Certificate of Merger to be performed or complied with by them on or before the Closing Date.

 

(c)       No Default or Adverse Change. There shall not exist on the Closing Date any Default or Event of Default or any event or condition, that with the giving of notice or lapse of time, or both, would constitute a Default of Event of Default, and since the Parent Balance Sheet Date, there shall have been no material adverse change in the Condition of the Parent.

 

(d)       Supporting Documents. The Company shall have received the following, each in form and substance reasonably satisfactory to the Company and its counsel:

 

(i)        Copies of resolutions of Parent’s and Acquisition Corp.’s respective boards of directors and the sole shareholder of Acquisition Corp., authorizing and approving, to the extent applicable, the execution, delivery and performance of this Agreement, the Certificate of Merger and all other documents and instruments to be delivered by them pursuant hereto and thereto.

 

(ii)       Evidence as of a date within 10 days of the Effective Time of the good standing and corporate existence of Parent issued by the Secretary of State of Delaware.

 

(iii)      Evidence as of a date within 10 days of the Effective Time of the good standing and corporate existence of Acquisition Corp. issued by the Secretary of State of Delaware.

 

  

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(iv)      Such additional supporting documentation and other information with respect to the transactions contemplated hereby as the Company may reasonably request.

 

(e)       No Restraining Action. No action or proceeding before any court, governmental body or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the Certificate of Merger or the carrying out of the transactions contemplated by the Merger Documents.

 

(f)       Proceedings and Documents. All corporate and other proceedings and actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions shall be satisfactory in form and substance to the Company. Parent and Acquisition Corp. shall furnish to the Company such supporting documentation and evidence of satisfaction of any or all of the conditions specified in this Section 7.2 as the Company may reasonably request.

 

8.       Survival of Representations and Warranties. The representations and warranties of the parties made in Sections 2 and 3 of this Agreement (including the Schedules to the Agreement which are hereby incorporated by reference) shall survive for 24 months beyond the Effective Time. This Section 8 shall not limit any claim for fraud or any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time.

 

9.       Amendment of Agreement. This Agreement and the Certificate of Merger may be amended or modified at any time in all respects by an instrument in writing executed (i) in the case of this Agreement by the parties hereto and (ii) in the case of the Certificate of Merger by the parties thereto.

 

10.     Definitions. Unless the context otherwise requires, the terms defined in this Section 10 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

 

“Acquisition Corp.” means TRUNITY ACQUISITION CORP., a Delaware corporation.

 

“Acquisition Proposal” shall have the meaning assigned to such term in Section 5.2(d) hereof.

 

“Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.

 

“Agreement” shall mean this Agreement.

 

“Balance Sheet” and “Balance Sheet Date” shall have the meanings assigned to such terms in Section 2.9 hereof.

 

“Benefit Arrangements” shall have the meaning assigned to it in Section 2.12 hereof.

 

“Certificate of Merger” shall have the meaning assigned to it in the second recital of this Agreement.

 

  

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“Closing” and “Closing Date” shall have the meanings assigned to such terms in Section 11 hereof.

 

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

 

“Commission” or “SEC” shall mean the U.S. Securities and Exchange Commission.

 

“Company” shall mean Trunity, Inc., a Delaware corporation.

 

“Company Common Stock” shall have the meaning assigned to it in Section 1.5(a)(iii).

 

“Company Benefit Plans” shall have the meaning assigned to it in Section 2.13 hereof.

 

“Condition of the Company” shall have the meaning assigned to it in Section 2.2 hereof.

 

“Condition of the Parent” shall have the meaning assigned to it in Section 3.13 hereof.

 

“Constituent Corporations” shall have the meaning assigned to it in Section 1.4 hereof.

 

“Default” shall mean a default or failure in the due observance or performance of any covenant, condition or agreement on the part of the Company to be observed or performed under the terms of this Agreement or the Certificate of Merger, if such default or failure in performance shall remain unremedied for five days.

 

“DGCL” shall have the meaning assigned to it in the second recital hereof.

 

“Effective Time” shall have the meaning assigned to it in Section 1.2 hereof.

 

“Equity Security” shall mean any stock or similar security of an issuer or any security (whether stock or Indebtedness for Borrowed Money) convertible, with or without consideration, into any stock or similar equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

 

“ERISA” shall have the meaning assigned to it in Section 2.13 hereof.

 

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

 

“Event of Default” shall mean (a) the failure of the Company to pay any Indebtedness for Borrowed Money, or any interest or premium thereon, within five days after the same shall become due, whether such Indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, (b) an event of default under any agreement or instrument evidencing or securing or relating to any such Indebtedness, or (c) the failure of the Company to perform or observe any material term, covenant, agreement or condition on its part to be performed or observed under any agreement or instrument evidencing or securing or relating to any such Indebtedness when such term, covenant or agreement is required to be performed or observed.

 

  

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“Indebtedness” shall mean any obligation of the Company which under generally accepted accounting principles is required to be shown on the balance sheet of the Company as a liability. Any obligation secured by a Lien on, or payable out of the proceeds of production from, property of the Company shall be deemed to be Indebtedness even though such obligation is not assumed by the Company.

 

“Indebtedness for Borrowed Money” shall mean (a) all Indebtedness in respect of money borrowed including, without limitation, Indebtedness which represents the unpaid amount of the purchase price of any property and is incurred in lieu of borrowing money or using available funds to pay such amounts and not constituting an account payable or expense accrual incurred or assumed in the ordinary course of business of the Company, (b) all Indebtedness evidenced by a promissory note, bond or similar written obligation to pay money, or (c) all such Indebtedness guaranteed by the Company or for which the Company is otherwise contingently liable.

 

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended.

 

“Knowledge” and “know” means, when referring to any person or entity, the actual knowledge of such person or entity of a particular matter or fact, and what that person or entity would have reasonably known after reasonable inquiry. An entity will be deemed to have “knowledge” of a particular fact or other matter if any individual who is serving, or who has served, as an executive officer of such entity has actual “knowledge” of such fact or other matter, or had actual “knowledge” during the time of such service of such fact or other matter, or would have had “knowledge” of such particular fact or matter after reasonable inquiry.

 

 “Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law.

 

“Merger” shall have the meaning assigned to it in the first recital hereof.

 

“Merger Documents” shall have the meaning assigned to it in Section 2.5 hereof.

 

“Parent” shall mean Trunity Holdings, Inc., a Delaware corporation.

 

“Parent Balance Sheet” and “Parent Balance Sheet Date” shall have the meanings assigned to them in Section 3.13 hereof.

 

“Parent Common Stock” shall have the meaning assigned to it in Section 3.4 hereof.

 

“Parent Employee Benefit Plans” shall have the meaning assigned to it in Section 3.16 hereof.

 

“Parent Financial Statements” shall have the meaning assigned to it in Section 3.8 hereof.

 

  

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 “Parent SEC Documents” shall have the meaning assigned to it in Section 3.7(a) hereof.

 

“Patent and Trademark Rights” shall have the meaning assigned to it in Section 2.16 hereof.

 

“Permitted Liens” shall mean (a) Liens for taxes and assessments or governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings; and (c) Liens incidental to the conduct of the business of the Company that were not incurred in connection with the borrowing of money or the obtaining of advances or credits and which do not in the aggregate materially detract from the value of its property or materially impair the use made thereof by the Company in its business.

 

“Person” shall include all natural persons, corporations, business trusts, associations, limited liability companies, partnerships, joint ventures and other entities and governments and agencies and political subdivisions.

 

“Representation Letter” shall have the meaning assigned to it in Section 4 hereof.

 

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

 

“Stockholder” shall mean a stockholder of the Company.

 

“Stockholders” shall mean all of the stockholders of the Company.

 

 “Surviving Corporation” shall have the meaning assigned to it in Section 1.1 hereof.

 

“Tax” or “Taxes” shall mean (a) any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including, but not limited to, taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp), together with any interest thereon, penalties, fines, damages costs, fees, additions to tax or additional amounts with respect thereto, imposed by the United States (federal, state or local) or other applicable jurisdiction; (b) any liability for the payment of any amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability, including, without limitation, by reason of Regulation section 1.1502-6; and (c) any liability for the payments of any amounts as a result of being a party to any Tax Sharing Agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (a) or (b).

 

  

26

  

 

“Tax Return” shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065)) required to be supplied to a Tax authority relating to Taxes.

 

“US GAAP” shall have the meaning assigned to it in Section 2.9 hereof.

 

11.        Closing. The closing of the Merger (the “Closing”) shall occur concurrently with the Effective Time (the “Closing Date”). The Closing shall occur at the offices of Carlton Fields, P.A., 100 SE 2nd Street, Suite 4200, Miami, Florida 33131. Promptly after the Closing, Parent shall present for delivery to each Stockholder the certificate representing the Parent Common Stock to be issued pursuant to Section 1.5(a)(iii) hereof to them pursuant to Sections 1.6 and 4 hereof. Such presentment for delivery shall be against delivery to Parent and Acquisition Corp. of the certificates, agreements and other instruments referred to in Section 7.1 hereof, and the certificates representing all of the Company Common Stock issued and outstanding immediately prior to the Effective Time. Parent will deliver at such Closing to the Company the officers’ certificate referred to in Section 7.2 hereof. All of the other documents, certificates and agreements referenced in Section 7 will also be executed as described therein. At the Effective Time, all actions to be taken at the Closing shall be deemed to be taken simultaneously.

 

12.        Termination Prior to and After Closing.

 

12.1       Termination of Agreement. This Agreement may be terminated at any time prior to the Closing:

 

(a)         By the mutual written consent of the Company, Acquisition Corp. and Parent;

 

(b)         By the Company, if Parent or Acquisition Corp. (i) fails to perform in any material respect any of its agreements contained herein required to be performed by it on or prior to the Closing Date, (ii) materially breaches any of its representations, warranties or covenants contained herein;

 

(c)         By either the Company, on the one hand, or Parent and Acquisition Corp., on the other hand, if there shall be any order, writ, injunction or decree of any court or governmental or regulatory agency binding on Parent, Acquisition Corp. or the Company, which prohibits or materially restrains any of them from consummating the transactions contemplated hereby; or

 

(d)         By either the Company, on the one hand, or Parent and Acquisition Corp., on the other hand, if the Closing has not occurred on or prior to January 31, 2012, for any reason other then a breach by the terminating party.

 

12.2       Termination of Obligations. Termination of this Agreement pursuant to this Section 12 shall terminate all obligations of the parties hereunder, except for the obligations under Sections 6.1, 13.3 and 13.9; provided, however, that termination pursuant to paragraphs (b) or (c) of Section 12.1 shall not relieve the defaulting or breaching party or parties from any liability to the other parties hereto.

 

  

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13.        Miscellaneous.

 

13.1       Notices. All notices, consents, waivers and other communications required or permitted under this Agreement must be in writing and will be deemed to have been given by a party (a) when delivered by hand; (b) one day after deposit with a nationally recognized overnight courier service ; (c) five days after deposit in the United States mail, if sent by certified mail, return receipt requested; or (d) when sent by facsimile with confirmation of transmission by the transmitting equipment (a confirming copy of the notice shall also be delivered by the method specified in (b)  above); in each case costs prepaid and to the following addresses or facsimile numbers and marked to the attention of the person (by name or title) designated below (or to such other address, facsimile number, or person as a party may designate by notice to the other parties)

 

	
If to Parent,

	  
	
Acquisition Corp.

	  
	
or the Company:

	
 Trunity Holdings, Inc.

	  	
 15 Green Street

	  	
 Newburyport, Mass 01950

	  	
 Attention: Terry Anderton

	  	  
	
With a copy to:

	
 Robert B. Macaulay, Esq.

	  	
 Carlton Fields, P.A.

	  	
 100 SE 2nd Street, Suite 4200

	  	
 Miami, Florida 33131

 

13.2       Entire Agreement. This Agreement, including the schedules and exhibits attached hereto and other documents referred to herein, contains the entire understanding of the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and undertakings between the parties with respect to such subject matter.

 

13.3       Expenses. Each party shall bear and pay all of the legal, accounting and other expenses incurred by it in connection with the transactions contemplated by this Agreement.

 

13.4       Time. Time is of the essence in the performance of the parties’ respective obligations herein contained.

 

13.5       Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

13.6       Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and heirs.

 

13.7       No Third Parties Benefited. This Agreement is made and entered into for the sole protection and benefit of the parties hereto, their successors, assigns and heirs, and no other Person shall have any right or action under this Agreement. 

 

  

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13.8       Counterparts; Signature by Facsimile. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, when taken together, shall be deemed to constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by PDF file shall be deemed to be their original signatures for all purposes.

 

13.9       Governing Law. The laws of the state of Delaware (without giving effect to its conflicts of laws principles) govern all matters arising out of or relating to this Agreement and all of the transactions it contemplates including without limitation, its validity, interpretation, construction, performance, and enforcement.

 

13.10     Venue; Submission to Jurisdiction.  Any action or proceeding arising out of or relating to this Agreement or arising out of or in any manner relating to the relationship between the parties shall only be brought in the state or federal courts in Miami-Dade County, Florida, and each of the parties hereto submits to the personal jurisdiction of such courts (and of the appropriate appellate courts wherever located) in any such action or proceeding, and selects the courts in Miami-Dade County, Florida, for proper venue in any such action or proceeding.  In the event of a dispute arising under this Agreement, whether or not a lawsuit or other proceeding is filed, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and costs, including attorneys’ fees and costs incurred in litigating entitlement to attorneys’ fees and costs, as well as in determining or quantifying the amount of recoverable attorneys’ fees and costs. The reasonable costs to which the prevailing party is entitled shall include costs that are taxable under any applicable statute, rule, or guideline, as well as non-taxable costs, including, but not limited to, costs of investigation, copying costs, electronic discovery costs, telephone charges, mailing and delivery charges, information technology support charges, consultant and expert witness fees, travel expenses, court reporter fees, and mediator fees, regardless of whether such costs are otherwise taxable.

 

[Signature Page Follows.]

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding and effective as of the day and year first above written.

 

 

	 	PARENT:	 
	 	 	 	 
	
 

	TRUNITY HOLDINGS, INC., 

a Delaware corporation
	 	 	 	 
	
 

	By:	
/s/ Terry B. Anderton

	 
	 	Name: Terry B. Anderton	 
	 	Its: President   	 
	 	 	 	 
	 	ACQUISITION CORP.:	 
	 	 	 	 
	 	TRUNITY ACQUISITION CORP., 

a Delaware corporation	 
	 	 	 	 
	 	By:	/s/ Terry B. Anderton	 
	 	Name: Terry B. Anderton 

Its: President  
	 	 	 
	 	COMPANY:	 
	 	 	 	 
	 	TRUNITY, INC., 

a Delaware corporation	 
	 	 	
 

	 
	
 

	
By:

	/s/ Terry B. Anderton	 
	 	Name: Terry B. Anderton 

Its: President  	 

                         

 

  

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EXHIBIT “A”

CERTIFICATE OF MERGER OF

DOMESTIC CORPORATIONS

Pursuant to Title 8, Section 251(c) of the Delaware General Corporation Law, the undersigned corporation executed the following Certificate of Merger:

 

FIRST: The name of the surviving Delaware corporation is Trunity, Inc., and the name of the Delaware corporation being merged into this surviving corporation is Trunity Acquisition Corp.

 

SECOND: The Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations.

 

THIRD: The name of the surviving Delaware corporation is Trunity, Inc.

 

FOURTH: The Certificate of Incorporation of Trunity, Inc. shall remain as the Certificate of Incorporation.

 

FIFTH: The merger is to become effective immediately upon filing of this Certificate of Merger.

 

SIXTH: The Agreement and Plan of Merger is on file at 15 Green Street, Newburyport, Massachusetts 01950, the place of business of the surviving corporation.

SEVENTH: A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation on request, without cost, to any stockholder of the constituent corporations.

 

IN WITNESS WHEREOF, said surviving corporation has caused this certificate to be signed by an authorized officer, the 24th day of January, 2011.

 

 

	 	TRUNITY, INC., 

a Delaware corporation
	 	 	
 

	 	By:	/s/ Terry B. Anderton
	 	Name: Terry B. Anderton 

Its: President  

                         

  

  

  

EXHIBIT “B”

POST-CLOSING PARENT AND SURVIVING CORPORATION

OFFICERS AND DIRECTORS

PARENT CORPORATION

 

	
Name

	 	
Position(s)

	  	 	  
	
Terry B. Anderton

	 	
Chief Executive Officer, President, Chief Financial Officer, Treasurer, Director

	  	 	  
	
Dr. Joakim Lindblom

	 	
Executive Vice President, Chief Technology Officer, Secretary, Director

 

SURVIVING CORPORATION

 

	
Name

	 	
Position(s)

	  	 	  
	
Terry B. Anderton

	 	
President, Treasurer, Director

	  	 	  
	
Dr. Joakim Lindblom

	 	
Vice President, Secretary, Director

 

  

  

  

EXHIBIT “C”

PARENT POST-CLOSING CAPITALIZATION TABLE

 

 

	
Group

	 	
No. of Shares

	 	 	
Percent

	 
	 	 	 	 	 	 	 	 	 
	
Former Trunity, Inc. Shareholders

	 	 	33,231,037	1	 	 	99.7	%
	  	 	 	 	 	 	 	 	 
	
Former Brain Tree International, Inc. Shareholders

	 	 	105,039	 	 	 	.3	%
	 	 	 	33,336,076	2	 	 	100	%

 ___________________________ 

1 Includes 325,000 shares issued to the three former principal shareholder of Brain Tree International, Inc. (“BTI”), who received 325,000 shares of Trunity, Inc. common stock plus $325,000 in exchange of their 90.1% interest in BTI acquired by Trunity, Inc.

2 Excludes options and warrants to purchase 2,284,287 shares of common stock at exercise prices ranging from $.25 to $3.00 and expiring between February 2013 and January 2022.paceth_8k-ex1001.htm

EXHIBIT 10.1

    

KINERGY MARKETING LLC

400 Capitol Mall, Suite 2060

Sacramento, California 95814

    

as of December 31, 2011

Wells Fargo Capital Finance, LLC,

as Agent for and on behalf of the

Lenders as referred to below

245 S. Los Robles Avenue, 7th Floor

Pasadena, California 91101-3638

Re:  Amendment No. 9 to Loan and Security Agreement

Ladies and Gentlemen:

Wells Fargo Capital Finance, LLC, successor by merger to Wachovia Capital Finance Corporation (Western) (“Wells Fargo”), in its capacity as agent (“Agent”) for the Lenders from time to time party to the Loan Agreement referred to below, the Lenders and Kinergy Marketing LLC, an Oregon limited liability company (“Borrower”), have entered into certain financing arrangements pursuant to the Loan and Security Agreement, dated as of July 28, 2008, by and among Agent, Lenders and Borrower, as amended by the Letter re: Amendment and Forbearance Agreement, dated February 13, 2009, the Amendment No. 1 to Letter re: Amendment and Forbearance Agreement, dated as of February 26, 2009, the Amendment No. 2 to Letter re: Amendment and Forbearance Agreement, dated as of March 27, 2009, the Letter re: Amendment and Waiver Agreement, dated May 17, 2009, the Letter re: Amendment No. 2 to Loan and Security Agreement, Consent and Waiver, dated November 5, 2009, the Letter re: Amendment No. 3 to Loan and Security Agreement, dated September 22, 2010, the Letter re: Amendment No. 4 to Loan and Security Agreement, dated October 27, 2010, the Letter re: Amendment No. 5 to Loan and Security Agreement, dated December 15, 2010, the Letter re: Amendment No. 6 to Loan and Security Agreement, dated as of April 8, 2011, the Letter re: Amendment No. 7 to Loan and Security Agreement, dated as of May 12, 2011, the Letter re: Amendment No. 9 to Loan and Security Agreement, dated as of June 10, 2011. and this Letter re: Amendment No. 9 to Loan and Security Agreement (this “Amendment No. 9”) (as the same may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced the “Loan Agreement”), and the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”).  Wells Fargo is currently both the Agent and the sole Lender under the Loan Agreement and is hereinafter referred to in this Amendment No. 9 in both such capacities, as “Wells Fargo”.

 

Borrower and Pacific Ethanol, Inc., a Delaware corporation, as Guarantor (“Parent”), have requested that Wells Fargo make certain amendments to the Loan Agreement and other Financing Agreements as set forth herein, which Wells Fargo is willing to do subject to the terms and conditions set forth in this Amendment No. 9.

    

  

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

 

1.   Interpretation. All capitalized terms used in this Amendment No. 9 shall have the meanings assigned thereto in the Loan Agreement and the other Financing Agreements, unless otherwise defined herein.

 

2.   Amendments to Loan Agreement.

 

(a)   Additional Definition.  As used herein, the following term shall have the meaning given to it below, and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definition:

 

“Amendment No. 9 to Loan Agreement” shall mean the Letter re: Amendment No. 9 to Loan and Security Agreement, dated as of December 31, 2011, by and among Borrower, Parent, Agent and the Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(b)   EBITDA.  Section 9.17(a) of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

“(a)           EBITDA.  As of the end of each fiscal quarter, Borrower shall maintain EBITDA of not less than (i) commencing with the fiscal quarter ending June 30, 2011 through and including the fiscal quarter ending September 30, 2011, (A) calculated for each respective fiscal quarter, $350,000 and (B) calculated for the two (2) fiscal quarters then ended, $900,000, (ii) for the fiscal quarter ending December 31, 2011, calculated for the two (2) fiscal quarters then ended, $800,000, (iii) for the fiscal quarter ending March 31, 2012, $450,000, and (iv) for the fiscal quarter ending June 30, 2012 and for each fiscal quarter thereafter, (A) for each respective fiscal quarter, $450,000 and (B) for the two (2) fiscal quarters then ended, $1,100,000.”

3.   Representations, Warranties and Covenants.  Borrower and Parent hereby represent, warrant and covenant to Wells Fargo the following (which shall survive the execution and delivery of this Amendment No. 9), the truth and accuracy of which are continuing conditions of the making of Loans to Borrower:

 

(a)   this Amendment No. 9 and each other agreement or instrument to be executed and/or delivered in connection herewith (collectively, together with this Amendment No. 9, the “Amendment Documents”) have been duly authorized, executed and delivered by all necessary action on the part of Borrower and Parent and, if necessary, their respective stockholders and/or members, as the case may be, and the agreements and obligations of Borrower and Parent contained herein and therein constitute the legal, valid and binding obligations of Borrower and Parent, enforceable against them in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought;

   

  

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(b)   the execution, delivery and performance of the Amendment Documents (a) are all within Borrower’s and Parent’s corporate or limited liability company powers (as applicable), (b) are not in contravention of law or the terms of Borrower’s or Parent’s certificate or articles of organization or formation, operating agreement, by-laws or other organizational documentation, or any indenture, agreement or undertaking to which Borrower or Parent is a party or by which Borrower, Parent or its or their property is bound and (c) shall not result in the creation or imposition of any lien, claim, charge or encumbrance upon any of the Collateral, except in favor of Wells Fargo pursuant to the Loan Agreement and the Financing Agreements as amended hereby;

 

(c)   all of the representations and warranties set forth in the Loan Agreement and the other Financing Agreements, each as amended hereby, are true and correct in all material respects on and as of the date hereof, as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date;

 

(d)   after giving effect to this Amendment No. 9, no Default or Event of Default exists as of the date of this Amendment No. 9; and

 

(e)   no action of, or filing with, or consent of any governmental or public body or authority, including, without limitation, any filing with the U.S. Patent and Trademark Office, and no approval or consent of any other party, is required to authorize, or is otherwise required in connection with, the execution, delivery and performance of this Amendment No. 9.

 

4.   Conditions Precedent.  This Amendment No. 9 shall not become effective unless all of the following conditions precedent have been satisfied in full, as determined by Wells Fargo:

 

(a)   the receipt by Wells Fargo of an original (or faxed or electronic copy) of this Amendment No. 9, duly authorized, executed and delivered by Borrower and Parent;

 

(b)   the receipt by Wells Fargo of the Amendment Fee set forth in Section 6 hereof; and

 

(c)   immediately prior, and immediately after giving affect to the amendments and agreements set forth herein, there shall exist no Default or Event of Default.

 

5.   Amendment Fee.  In addition to all other fees, charges, interest and expenses payable by Borrower to Wells Fargo under the Loan Agreement and the other Financing Agreements, Borrower shall pay to Wells Fargo an amendment fee in the amount of $25,000 (the “Amendment Fee”), which Amendment Fee shall be fully earned as of, and payable in advance on, the date hereof, and may be charged to any loan account of Borrower maintained by Wells Fargo.

 

6.   Effect of this Amendment No. 9.  Except as modified pursuant hereto, no other changes or modifications to the Loan Agreement and the other Financing Agreements are intended or implied and in all other respects the Loan Agreement and the other Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof.  To the extent of any conflict between the terms of this Amendment No. 9 and the Loan Agreement or any of the other Financing Agreements, the terms of this Amendment No. 9 shall control.  The Loan Agreement and this Amendment No. 9 shall be read and construed as one agreement.

   

  

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7.   Further Assurances.  At Wells Fargo’s request, Borrower and Parent shall execute and deliver such additional documents and take such additional actions as Wells Fargo requests to effectuate the provisions and purposes of this Amendment No. 9 and to protect and/or maintain perfection of Wells Fargo’s security interests in and liens upon the Collateral.

 

8.   Governing Law.  The validity, interpretation and enforcement of this Amendment No. 9 in any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise shall be governed by the internal laws of the State of California (without giving effect to principles of conflicts of law).

 

9.   Binding Effect. This Amendment No. 9 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

 

10.   Counterparts.  This Amendment No. 9 may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement.  In making proof of this Amendment No. 9, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.  Delivery of an executed counterpart of this Amendment No. 9 by telecopier or other method of electronic communication shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 9.  Any party delivering an executed counterpart of this Amendment No. 9 by telecopier or other method of electronic communication also shall deliver an original executed counterpart of this Amendment No. 9, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment No. 9 as to such party or any other party.

 

[SIGNATURE PAGE FOLLOWS]

    

  

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IN WITNESS hereof, the parties have executed and delivered this Amendment No. 9 as of the day and year first above written.

    

	  	
Very truly yours,

	  	  
	
 

	
KINERGY MARKETING LLC,

  as Borrower

 

By: /s/ Bryon McGregor

Name:  Bryon McGregor

Title:  CFO

	  	  
	  	
PACIFIC ETHANOL, INC,

  as Parent

 

By: /s/ Bryon McGregor

Name:  Bryon McGregor

Title:  CFO

	  	  
	
AGREED TO:

	  
	  	  
	
WELLS FARGO CAPITAL FINANCE, LLC,

successor by merger to Wachovia Capital Finance Corporation (Western),

  as Agent and sole Lender

 

By:_________________________________

Name:_______________________________

Title:________________________________

	  

[Signature Page to Amendment No. 9 to Loan and Security Agreement]

 

 

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