------------------------------------------
CUSIP NUMBER)
Alan N. Forman, Brown Rudnick Berlack Israels LLP,
120 West 45th Street, New York, NY 10036
212-704-0100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS)
April 17, 2002
--------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
___.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Page 1 of 5 Pages)
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CUSIP NO. 433528205 PAGE 2 OF 5 PAGES
1 NAME OF REPORTING PERSON: BEN Y. JAMIL
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)__
(b)__
3 SEC USE ONLY
4 SOURCE OF FUNDS
SC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
(2)(d) OR (e) __
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER 11,900,000*
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 11,900,000*
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,900,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES __
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
72%
14 TYPE OF REPORTING PERSON
IN
*Does not include 3,500,000 shares of Series A Preferred Stock which may become
convertible into 3,500,000 shares of common stock of the Issuer upon the
satisfaction by the Issuer of certain financial thresholds. Each share of
Series A Preferred Stock entitles the holder thereof to fifteen (15) votes per
share.
(Page 2 of 5 Pages)
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ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, $.0001 par value per share ("Common Stock"), of Security Intelligence Technologies, Inc. (formerly known as HipStyle.com, Inc.), a Florida corporation (the "Issuer" or "SIT"). The Issuer's principal executive offices are presently located at 145 Huguenot Street, New Rochelle, NY 10801.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is filed by Ben Y. Jamil.
(b) The business address of Ben Y. Jamil is 145 Huguenot Street, New Rochelle, NY 10801.
(c) Mr. Jamil is the Chairman of the Board, President and Chief Executive Officer of each the Issuer and CCS International, Ltd., a Delaware corporation and wholly owned subsidiary of Issuer ("CCS"). Issuer is engaged in the development, marketing and sale of surveillance, counter-surveillance, counter-measure and personal and home security products. Issuer and CCS are located at the address set forth in 1(b) above.
(d) Mr. Jamil has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) Mr. Jamil has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in Mr. Jamil being subject to a judgment, decree or a final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws.
(f) Mr. Jamil is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As of February 28, 2002, the Issuer, CCS, and CCS Acquisition Co., a Delaware
corporation ("MergerSub"), entered into an Agreement and Plan of Merger, as
amended (the "Merger Agreement"), pursuant to which on April 17, 2002
(the
"Effective Date"), MergerSub was merged with and into CCS (the "Merger")
and
CCS became a wholly owned subsidiary of the Issuer.
On the Effective Date, the holders of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Common Stock of CCS received one share of the Issuer's Series A Convertible Stock, Series B Convertible Preferred Stock and Common Stock, for each outstanding share of such security of CCS held thereby. Additionally, the 1,805,000 options and 400,000 common stock purchase warrants issued by CCS were exchanged for options and warrants of the Issuer.
The holder of each share of Series A Preferred Stock shall have the right to fifteen (15) votes for each share of Common Stock into which such Series A Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock.
As a founder of CCS, Mr. Jamil owned 11,900,000 shares of Common Stock and 3,500,000 shares of Series A Preferred Stock immediately prior to the Merger. By virtue of the Merger, Mr. Jamil received 11,900,000 shares of Common Stock and 3,500,000 shares of Series A Preferred Stock.
ITEM 4. PURPOSE OF TRANSACTION.
The Merger was consummated so that the Issuer will have on a consolidated basis an operating entity, and CCS will have the opportunities available to public companies. See Item 3 above.
Upon consummation of the Merger, Ben Jamil and his four nominees each, of whom are officers of CCS, joined the Issuer's Board of Directors and Mr. Jamil became the Issuer's President, Chief Executive Officer, and Chairman of the Board.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Mr. Jamil beneficially owns 11,900,000 shares of the Issuer's Common Stock and 3,500,000 shares of the Issuer's Series A Preferred Stock, or 72% of the shares of Common Stock outstanding immediately following the Merger. Mr. Jamil has the sole dispositive power with respect to the 11,900,000 shares of Common Stock and 3,500,000 shares of Series A Preferred Stock beneficially owned by him. Mr. Jamil does not share the power to direct the disposition of the 11,900,000 shares of Common Stock beneficially owned by him. Mr. Jamil has the sole voting power and with respect to 11,900,000 shares of the Issuer's Common Stock and the 3,500,000 shares of Series A Preferred Stock (which entitles Mr. Jamil to 52,500,000 votes).
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
As of April 17, 2002, the Issuer entered into a three (3) year employment agreement with Ben Jamil, pursuant to which Mr. Jamil agreed to serve as the Issuer's President, Chief Executive Officer and Chairman of the Board. Pursuant to the agreement, Mr. Jamil received options to purchase 1,000,000 shares of the Common Stock of the Issuer (the "Options"). The Options (i) shall vest quarterly over one year from the date of grant commencing on June 30, 2002 and (ii) shall be exercisable after vesting at an exercise price equal to $1.80 per share for the five year period following the date of grant, provided, however, that if Mr. Jamil ceases to be either an employee or director of the Company, the exercise period shall be shortened in accordance with the Issuer's 2002 Stock Option Plan.
1. Agreement and Plan of Merger, dated as of February 28, 2002, by and among, Issuer, CCS International, Ltd. and CCS Acquisition Co.
2. Employment Agreement, dated as of April 17, 2002, by and between Issuer and Ben Jamil.
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
April 26, 2002
/s/ Ben Y. Jamil
----------------------------
Ben Y. Jamil
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER 4
SECTION 1.1. The Merger 4
SECTION 1.2. Closing 4
SECTION 1.3. Effective Time. 5
SECTION 1.4. Effects of the Merger 5
SECTION 1.5. Certificate of Incorporation and By-laws of the
Surviving Corporation 5
SECTION 1.6. Boards, Committees and Officers 5
SECTION 1.7. Name of the Surviving Corporation 5
SECTION 1.8. Reservation of Right to Revise Transaction 5
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK 6
SECTION 2.1. Effect on Capital Stock 6
(a) Cancellation of Stock 6
(b) Conversion of CCS Capital Stock 6
(c) CCS Options; Warrants and Convertible Securities 6
SECTION 2.2. HipStyle to Deliver Certificates 6
SECTION 2.3. No Fractional Securities 7
SECTION 2.4 Closing of CCS Transfer Books 7
SECTION 2.5. Tax Treatment 7
SECTION 2.6. Restricted Securities 7
ARTICLE III REPRESENTATIONS AND WARRANTIES 7
SECTION 3.1. Representations and Warranties of CCS 7
(a) Organization, Standing and Corporate Power 7
(b) Subsidiaries 8
(c) Capital Structure 8
(d) Authority; Noncontravention 8
(e) Undisclosed Liabilities 10
(f) Information Supplied. 10
(g) Taxes10 (j) Financial Statements. 10
(g) Absence of Certain Changes or Events10 (n) Intellectual Property. 11
SECTION 3.2. Representations and Warranties of HipStyle 11
(a) Organization, Standing and Corporate Power 11
(b) Subsidiaries 11
(c) Capital Structure 11
(d) Authority; Noncontravention 12
(e) SEC Documents; Undisclosed Liabilities; Financial Statements 13
(f) Information Supplied 14
(g) Absence of Certain Changes or Events 14
(h) Compliance with Applicable Laws; Litigation 15
(i) Absence of Changes in Benefit Plans 15
(j) ERISA Compliance 15
(k) Taxes 15
(l) Voting Requirements 16
(m) State Takeover Statutes; Certificate of Incorporation 16
(n) Intellectual Property. 16
(p) Certain Contracts 16
SECTION 3.3. Representations and Warranties of MergerSub 17
(a) Organization, Standing and Corporate Power 17
(b) Subsidiaries 17
(c) Capital Structure 17
(d) Authority; Noncontravention 17
(e) Undisclosed Liabilities 18
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 18
SECTION 4.1. Conduct of Business 18
(a) Conduct of Business by CCS 18
(b) Conduct of Business by HipStyle and Subsidiaries 19
(c) Other Actions 20
(d) Advice of Changes 20
SECTION 4.2. No Solicitation by HipStyle 20
ARTICLE V ADDITIONAL AGREEMENTS 22
SECTION 5.1. Certificate of Designation for Preferred Stock 22
SECTION 5.2. Access to Information; Confidentiality 22
SECTION 5.3. Best Efforts 23
SECTION 5.4. Schedule 14f-1 Information Statement 23
SECTION 5.5 Fees and Expenses 23
SECTION 5.6. Public Announcements 23
SECTION 5.8. Bulletin Board Listing 24
SECTION 5.8 HipStyle Liabilities 24
SECTION 5.9. Tax Treatment 24
SECTION 5.10. Company Officers; Employment Contracts; Equity Awards 24
SECTION 5.11. Post-Merger Operations 24
SECTION 5.12. Conveyance Taxes 24
ARTICLE VI CONDITIONS PRECEDENT 25
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger 25
(a) Stockholder Approvals. 25
ii
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(b) Governmental and Regulatory Approvals 25 (c) No Injunctions or Restraints 25 SECTION 6.2. Conditions to Obligations of HipStyle 25 (a) Representations and Warranties 25 (b) Performance of Obligations of CCS 25 (c) No Material Adverse Change 25 (d) Legal Opinion 26 (e) Financial Statements 26 SECTION 6.3 Conditions to Obligations of CCS 26 (a) Representations and Warranties 26 (b) Performance of Obligations of HipStyle 26 (c) No Material Adverse Change 26 (d) Quotation on Bulletin Board 26 (e) HipStyle Liabilities 26 (f) Amendment of HipStyle Articles of Incorporation Stock Option Plan 26 SECTION 6.4. Frustration of Closing Conditions 27 ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 27 SECTION 7.1. Termination 28 SECTION 7.2. Effect of Termination 28 SECTION 7.3. Amendment 29 SECTION 7.4. Extension; Waiver 29 SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver 29 ARTICLE VIII Indemnification 29 SECTION 8.1. Survival of Representations and Warranties. 29 SECTION 8.2. Indemnification 29 SECTION 8.3. Method of Asserting Claims 30 ARTICLE IX GENERAL PROVISIONS. 31 SECTION 9.1. Survival of Representations and Warranties. 31 SECTION 9.2. Notices 31 SECTION 9.3. Definitions 32 SECTION 9.4. Interpretation. 33 SECTION 9.5. Counterparts 33 SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries 33 SECTION 9.7. Governing Law 33 SECTION 9.8 Assignment 33 SECTION 9.9. Headings 34 SECTION 9.10. Severability 34 SECTION 9.11. Brokers and Finders 34 |
WHEREAS, the respective Boards of Directors of HipStyle, MergerSub and CCS have each approved the merger of MergerSub with and into CCS (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding share of common stock, par value $.0001 per share, of CCS ("CCS Common Stock"), will be converted into the right to receive shares of HipStyle common stock, par value $.0001 per share ("HipStyle Common Stock"), and each issued and outstanding share of preferred stock, par value $.0001 per share, of CCS ("CSS Preferred Stock"), will be converted into the right to receive shares of HipStyle preferred stock, par value $.0001 per share ("HipStyle Preferred Stock").
WHEREAS, the respective Boards of Directors of HipStyle, MergerSub and CCS have each determined that the Merger and the other transactions contemplated hereby are consistent with, and in furtherance of, their respective business strategies and goals and are in the best interests of their respective stockholders;
WHEREAS, HipStyle, MergerSub and CCS intend that the merger of MergerSub with and into CCS will quality as a tax-free reorganization pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, HipStyle, MergerSub and CCS desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties agree as follows:
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), MergerSub shall be merged with and into CCS at the Effective Time (as defined in Section 1.3). Following the Effective Time, CCS shall be the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all the rights and obligations of MergerSub in accordance with the DGCL.
SECTION 1.2. Closing. The closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date to be specified by the parties (the "Closing Date"), which shall be no later than the second business day after satisfaction or waiver of the conditions set forth in Article VI, unless another time or date is agreed to by the parties hereto. The Closing will be held at such location as is agreed to by the parties hereto.
SECTION 1.3. Effective Time. Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall cause the Merger to be consummated by filing a certificate of merger or other appropriate documents (in any such case, the "Certificate of Merger") executed in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of Delaware, or at such subsequent date or time as HipStyle and CCS shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being hereinafter referred to as the "Effective Time").
SECTION 1.4. Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL.
SECTION 1.5. Certificate of Incorporation and By-laws of the Surviving Corporation. The Certificate of Incorporation of CCS, as amended and in effect prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation (the "Surviving Certificate of Incorporation"). The By-laws of CCS, in effect prior to the Effective Time, shall be the By-laws of the Surviving Corporation (the "Surviving By-laws").
SECTION 1.6. Boards, Committees and Officers. Prior to the Effective Time, HipStyle shall adopt resolutions in form and substance reasonably acceptable to CCS, establishing, among other things that, the Board of Directors and Officers of HipStyle and CCS from and after the Effective Time shall be comprised solely of the nominees of CCS.
SECTION 1.7. Name of the Surviving Corporation. The name of the Surviving Corporation shall be "CCS International, Ltd."
SECTION 1.8. Reservation of Right to Revise Transaction. If each of CCS, MergerSub and HipStyle agree, the parties hereto may change the method of effecting the business combination between MergerSub and CCS, and each party shall cooperate in such efforts, including to provide for (a) a merger of CCS with and into MergerSub, or (b) a merger of CCS with and into HipStyle; provided, however, that no such change shall alter or change the amount or kind of consideration to be issued to holders of CCS Capital Stock as provided for in this Agreement (the "Merger Consideration") and no such change shall alter or change the tax free nature of the Merger.
SECTION 2.1. Effect on Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of CCS Common Stock:
(a) Cancellation of Stock. Each share of capital stock of HipStyle that is owned by CCS, and each share of capital stock of CCS owned by HipStyle, shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(b) Conversion of CCS Capital Stock. Each issued and outstanding share of (i) CCS Common Stock shall be converted into the right to receive one (1) validly issued, fully paid and nonassessable shares of HipStyle Common Stock, (ii) Series A Convertible Preferred Stock of CCS, par value $.0001 per share, shall be entitled to receive one (1) share of Series A Convertible Preferred Stock of HipStyle, par value $.0001 per share (the "HipStyle Series A Preferred Stock"), and (iii) each issued and outstanding share of Series B Convertible Preferred Stock of CCS, par value $.0001 per share, shall be entitled to receive one (1) share of Series B Convertible Preferred Stock of HipStyle, par value $.0001 per share (the "HipStyle Series B Preferred Stock). As of the Effective Time, (i) all shares of MergerSub common stock outstanding shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and (ii) each holder of a certificate representing any shares of CCS Common Stock, CCS Series A Preferred Stock or CCS Series B Preferred Stock (collectively, the "CCS Capital Stock") shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration and shall be surrendered at the Closing.
(c) CCS Options, Warrants and Convertible Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each outstanding option and warrant to purchase shares of CCS Common Stock and each outstanding security convertible into the capital stock of CCS (the "Derivative Securities"), shall remain outstanding, unchanged by reason of the Merger, except that, in accordance with the adjustment provisions thereof, each Derivative Security shall no longer be exercisable for CCS Capital Stock, but shall thereafter be exercisable for that whole number of shares of HipStyle capital stock as the holder thereof would have been entitled to receive pursuant to the Merger had such holder exercised such Derivative Security in full immediately prior to the Effective Time, at the same exercise price per share. HipStyle shall comply with the terms and provisions of all such Derivative Securities.
SECTION 2.2. HipStyle to Deliver Certificates. At the Closing, HipStyle shall deliver to the CCS Stockholders, stock certificates representing the Merger Consideration. HipStyle Capital Stock into which CCS Capital Stock shall be converted in the Merger shall be deemed to have been
issued at the Effective Time. In the event that any CCS Stockholder's certificates have been lost, stolen or destroyed, such CCS Stockholder will be entitled to receive the Merger Consideration only after providing an affidavit of loss and indemnity bond, in form reasonably satisfactory to HipStyle.
SECTION 2.3. No Fractional Securities. Notwithstanding any other provision of this Agreement, no certificates or scrip for shares of capital stock representing less than one share of HipStyle Common Stock shall be issued upon the surrender for exchange of CCS certificates.
SECTION 2.5. Tax Treatment. The Merger is intended to constitute a reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and HipStyle and the CCS shall not report the transaction on any tax return in a manner or take any action inconsistent therewith.
SECTION 2.6. Restricted Securities. The shares of the HipStyle Common Stock, HipStyle Series A Preferred Stock and HipStyle Series B Preferred Stock to be issued in connection with the Merger shall be deemed "restricted securities" as defined by Rule 144(a)(3) under the Securities Act of 1933, as amended (the "Securities Act"). The certificates evidencing such shares shall bear the following restrictive legend:
The shares evidenced by this certificate have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be sold or otherwise transferred unless registered under the Securities Act or there is an opinion from counsel to the Company that such sale or other transfer may be made pursuant to an exemption from the registration requirement of the Securities Act.
SECTION 3.1. Representations and Warranties of CCS. Except as set forth on the Disclosure Schedule delivered by CCS to HipStyle prior to the execution of this Agreement (the "CCS Disclosure Schedule") and making reference to the particular subsection of this Agreement to which exception is being taken, CCS represents and warrants to HipStyle and MergerSub as follows:
(a) Organization, Standing and Corporate Power. (i) CCS is a corporation duly organized, validly existing and in good standing (with respect to jurisdictions which recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power and authority to carry on its business as now being conducted, except, for those jurisdictions where the failure to be so organized, existing or in good standing individually or in the aggregate would not have a material adverse effect (as defined in Section 9.3) on CCS. CCS is duly qualified or licensed to do business and is in good standing (with
(ii) CCS has delivered to HipStyle prior to the execution of this Agreement complete and correct copies of its Certificate of Incorporation and By-Laws, as amended to date.
(b) Subsidiaries. Except as set forth in Section 3.1(b) of the CCS Disclosure Schedule, CCS does not beneficially own any subsidiaries nor does it own any capital stock or other proprietary interest, directly, indirectly in any corporation, trust, partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of CCS consists of 50,000,000 shares of CCS Common Stock and 10,000,000 shares of preferred stock, par value $.0001 per share ("CCS Preferred Stock"). At the close of business on the date hereof: (i) 11,900,000 shares of CCS Common Stock were issued and outstanding; (ii) no shares of CCS Common Stock were held by CCS in its treasury; (iii) 3,500,000 shares of CCS Series A Preferred Stock were issued and outstanding, (iv) 1,500,000 shares of CCS Series B Preferred Stock were issued and outstanding; (v) 2,000,000 shares of CCS Common Stock were reserved for issuance upon exercise of stock options issuable under the 2002 Stock Option Plan; and (vi) 400,000 shares of Common Stock were reserved for issuance upon the exercise of a Common Stock Purchase Warrant. All outstanding shares of capital stock of CCS are, and all shares which may be issued will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. Except as set forth in this Section 3.1(c) or Section 3.1(c) of the CCS Disclosure Schedule, (x) there are not issued, reserved for issuance or outstanding (A) any shares of capital stock or other voting securities of CCS, (B) any securities of CCS or any CCS subsidiary convertible into or exchangeable or exercisable for shares of capital stock or voting securities of CCS, (C) any warrants, calls, options or other rights to acquire from CCS or any CCS subsidiary, and any obligation of CCS or any CCS subsidiary to issue, any capital stock, voting securities or securities convertible into or exchangeable or exercisable for capital stock or voting securities of CCS, and (y) there are no outstanding obligations of CCS or any CCS subsidiary to repurchase, redeem or otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. There are no outstanding (A) securities of CCS or any CCS subsidiary convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or ownership interests in any CCS subsidiary, (B) warrants, calls, options or other rights to acquire from CCS or any CCS subsidiary, and any obligation of CCS or any CCS subsidiary to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable or exercisable for any capital stock, voting securities or ownership interests in, any CCS subsidiary or (C) obligations of CCS or any CCS subsidiary to repurchase, redeem or otherwise acquire any such outstanding securities of CCS subsidiaries or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities.
(d) Authority; Noncontravention. CCS has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by CCS and the consummation by CCS of the transactions contemplated by this
Except as set forth in Section 3.1(d) of the CCS Disclosure Schedule, to the knowledge of CCS neither CCS, nor any of its Subsidiaries, are in material violation of, or in material default under, (i) any term or provision of its Certificate of Incorporation or By-Laws; or (ii) any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over it or any of its properties or business. CCS owns, possesses or has obtained all material governmental and other licenses, permits, certifications, registration, approvals or consents and other authorizations necessary to own or lease, as the case may be, and to operate its properties and to conduct its business or operations as presently conducted and all such governmental and other licenses, permits, certifications, registrations, approvals, consents and other authorizations are outstanding and in good standing
(e) Undisclosed Liabilities. To CCS' knowledge, except (i) as reflected in the CCS Financial Statements (as defined in Section 3.1(h)) or in the notes thereto, (ii) for liabilities incurred in connection with this Agreement or the transactions contemplated hereby, or (iii) liabilities incurred in the ordinary cause of CCS's business since June 30, 2001, neither CCS nor any of its subsidiaries has any liabilities or obligations of any nature which, individually or in the aggregate, would have a material adverse effect on CCS.
(f) Information Supplied. None of the information supplied or to be supplied by CCS specifically for inclusion or incorporation by reference any reports, notices, schedules or filings to be filed with the SEC by HipStyle in connection with the transactions contemplated hereby will to CCS' knowledge contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
(g) Taxes. (i) To CCS' knowledge, each of CCS and its subsidiaries has filed all material tax returns and reports required to be filed by it and all such returns and reports are complete and correct in all material respects, or requests for extensions to file such returns or reports have been timely filed, granted and have not expired, except to the extent that such failures to file, to be complete or correct or to have extensions granted that remain in effect individually or in the aggregate would not have a material adverse effect on CCS. CCS and each of its subsidiaries has paid (or CCS has paid on its behalf) all taxes (as defined herein) shown as due on such returns.
(ii) As used in this Agreement, "taxes" shall include all (x) federal, state, local or foreign income, property, sales, excise and other taxes or similar governmental charges, including any interest, penalties or additions with respect thereto, (y) liability for the payment of any amounts of the type described in (x) as a result of being a member of an affiliated, consolidated, combined or unitary group, and (z) liability for the payment of any amounts as a result of being 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 (x) or (y).
(h) Financial Statements. CCS has heretofore delivered to HipStyle financial statements, which are accountants compilations, relating to the period ending June 30, 2001 (the "Financial Statements"). To CCS' knowledge, the Financial Statements fairly present the financial position and results of operations of the CCS for the periods presented.
(i) Absence of Certain Changes or Events. Except for liabilities incurred in connection with this Agreement or the transactions contemplated hereby, and except as set forth on Schedule 3.1, since June 30, 2001, CCS and its subsidiaries have conducted their business only in the ordinary course and there to CCS' knowledge has not been any material adverse change in CCS.
SECTION 3.2. Representations and Warranties of HipStyle. Except as set forth on the Disclosure Schedule delivered by HipStyle to CCS prior to the execution of this Agreement (the "HipStyle Disclosure Schedule") and making reference to the particular subsection of this Agreement to which exception is being taken, HipStyle represents and warrants to CCS as follows:
(a) Organization, Standing and Corporate Power. (i) HipStyle is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions which recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to carry on its business as now being conducted, except, as to subsidiaries, for those jurisdictions where the failure to be so organized, existing or in good standing individually or in the aggregate would not have a material adverse effect on HipStyle. Each of HipStyle and its subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified or licensed or to be in good standing individually or in the aggregate would not have a material adverse effect on HipStyle.
(ii) HipStyle has delivered to CCS prior to the execution of this Agreement complete and correct copies of its Certificate of Incorporation and By-Laws, as amended to date.
(b) Subsidiaries. MergerSub is the only subsidiary of HipStyle. All the outstanding shares of capital stock of MergerSub have been validly issued and are fully paid and nonassessable and are owned directly or indirectly by HipStyle, free and clear of all Liens and free of any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests).
(c) Capital Structure. The authorized capital stock of HipStyle consists of 100,000,000 shares of HipStyle Common Stock, $.0001 par value per share, and 10,000,000 shares of HipStyle Preferred Stock, par value $.0001 per share. At the close of business on the date hereof (i) 4,600,000 shares of HipStyle Common Stock were issued and outstanding (including shares of restricted HipStyle Common Stock); (ii) no shares of HipStyle Common Stock were held by HipStyle in its treasury; and (iii) no shares of preferred stock (of any Class)
(d) Authority; Noncontravention. HipStyle has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by HipStyle and the consummation by HipStyle of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of HipStyle. This Agreement has been duly executed and delivered by HipStyle and, assuming the due authorization, execution and delivery by CCS, constitutes the legal, valid and binding obligations of HipStyle, enforceable against HipStyle in accordance with its terms. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under, or result in the creation of any Lien upon any of the properties or assets of HipStyle or any of its subsidiaries under, (i) the certificate of incorporation or By-Laws of HipStyle or the comparable organizational documents of any of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license or similar authorization applicable to HipStyle or any of its subsidiaries or their respective
Except as set forth in Section 3.2(d) of the HipStyle Disclosure Schedule , neither HipStyle, nor any of its Subsidiaries, are in material violation of, or in default under, (i) any term or provision of its Certificate of Incorporation or By-Laws; or (ii) any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over it or any of its properties or business. HipStyle owns, possesses or has obtained all material governmental and other licenses, permits, certifications, registration, approvals or consents and other authorizations necessary to own or lease, as the case may be, and to operate its properties and to conduct its business or operations as presently conducted and all such governmental and other licenses, permits, certifications, registrations, approvals, consents and other authorizations are outstanding and in good standing and there are no existing actions, seeking to cancel, terminate or limit such licenses, permits, certifications, registrations, approvals or consents or authorizations.
(e) SEC Documents; Undisclosed Liabilities; Financial Statements. (i) HipStyle has filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated therein) with the SEC since October 17, 2000, (the "HipStyle SEC Documents"). As of their respective dates, the HipStyle SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such HipStyle SEC Documents, and none of the HipStyle SEC Documents when filed contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of HipStyle included in the HipStyle SEC Documents comply as to form, as of their respective dates of filing with the SEC, in all material respects
(ii) The unaudited consolidated financial statements of HipStyle for the six months ended December 31, 2001 (the "HipStyle Financial Statements"), which are included in the HipStyle SEC Documents, have previously been made available to the Company. The Parent Financial Statements comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto; and fairly present, in all material respects, on a consolidated basis, the financial position of HipStyle at, and the results of its operations for, each of the periods then ended and were prepared in conformity with GAAP applied on a consistent basis, except as otherwise disclosed therein and, subject to normal year-end adjustments, the absence of footnote disclosures, and any other adjustments described therein.
(iii) Except as reflected in the HipStyle Financial Statements, to the knowledge of HipStyle, HipStyle has no Liabilities (as hereinafter defined) or obligations of any nature.
(f) Information Supplied. None of the information supplied or to be supplied by HipStyle specifically for inclusion or incorporation by reference in any registration statements, prospectuses, reports, schedules or other documents to be filed with the SEC or any other governmental entity, shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. All SEC Filings will comply as to form and substance in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by HipStyle with respect to statements made or incorporated by reference therein based on information supplied by CCS specifically for inclusion or incorporation by reference in any subsequent SEC Filing.
(g) Absence of Certain Changes or Events. Except for liabilities incurred in connection with this Agreement or the transactions contemplated hereby since December 31, 2001, HipStyle and its subsidiaries have conducted their business only in the ordinary course since such date and prior to the date hereof, and there has not been (i) any material adverse change in HipStyle, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of HipStyle's capital stock, (iii) any split, combination or reclassification of any of HipStyle's capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of HipStyle's capital stock, (iv)(A) any granting by HipStyle or any of its subsidiaries to any current or former director, executive officer or other key employee of HipStyle or its subsidiaries of any increase in compensation, bonus or other benefit, (B) any granting by HipStyle or any of its subsidiaries to any such current or former director, executive officer or key employee of any increase in severance or termination pay, or (C) any entry by
(h) Compliance with Applicable Laws; Litigation. (i) To the knowledge of HipStyle, HipStyle, its subsidiaries and employees hold all permits, licenses, variances, exemptions, orders, registrations and approvals of all Governmental Entities which are required for the operation of the businesses of HipStyle and its subsidiaries (the "HipStyle Permits") except where the failure to have any such HipStyle Permits individually or in the aggregate would not have a material adverse effect on HipStyle. HipStyle and its subsidiaries are in compliance with the terms of the HipStyle Permits and all applicable statutes, laws, ordinances, rules and regulations, except where the failure so to comply individually or in the aggregate would not have a material adverse effect on HipStyle. As of the date of this Agreement, no action, demand, requirement or investigation by any Governmental Entity and no suit, action or proceeding by any person, in each case with respect to HipStyle or any of its subsidiaries or any of their respective properties, is pending or, to the knowledge of HipStyle, threatened.
(ii) Neither HipStyle nor any HipStyle subsidiary is subject to any outstanding order, injunction or decree which has had or, insofar as can be reasonably foreseen, individually or in the aggregate will have a material adverse effect on HipStyle.
(i) Absence of Benefit Plans. HipStyle has no severance, or employment agreements or policies, bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding providing benefits to any current or former employee, officer or director of HipStyle or any of its wholly owned subsidiaries.
(j) ERISA Compliance. HipStyle and its affiliates have never had any employee, medical or pension benefit plans.
(k) Taxes. (i) Each of HipStyle and its subsidiaries has filed all material tax returns and reports required to be filed by it and all such returns and reports are complete and correct in all material respects, or requests for extensions to file such returns or reports have been timely filed, granted and have not expired, except to the extent that such failures to file, to be complete or correct or to have extensions granted that remain in effect individually or in the aggregate would not have a material adverse effect on HipStyle. HipStyle and each of its
(l) Voting Requirements. The affirmative vote of the holders of a majority of all outstanding voting shares of MergerSub is the only vote of the holders of any class or series of capital stock necessary to approve and adopt this Agreement and the transactions contemplated hereby, including the Merger, and the issuance of the Merger Consideration pursuant to the Merger.
(m) State Takeover Statutes; Certificate of Incorporation. The Board of Directors of HipStyle (including the disinterested Directors thereof) has unanimously approved this Agreement and the transactions contemplated hereby and such approval constitutes approval of the Merger and the other transactions contemplated hereby by the HipStyle Board of Directors under the applicable provisions of the Florida Business Corporation Act ("FBCA") and constitutes approval of the Merger the issuance of HipStyle Common Stock in connection therewith and the other transactions contemplated hereby.
(n) Intellectual Property. To the knowledge of HipStyle, HipStyle and its subsidiaries own or have a valid license to use all trademarks, service marks, trade names, patents and copyrights (including any registrations or applications for registration of any of the foregoing) (collectively, the "HipStyle Intellectual Property") necessary to carry on its business substantially as currently conducted, except for such HipStyle Intellectual Property the failure of which to own or validly license individually or in the aggregate would not have a material adverse effect on HipStyle. Neither HipStyle nor any such subsidiary has received any notice of infringement of or conflict with, and, to HipStyle's knowledge, there are no infringements of or conflicts (i) with the rights of others with respect to the use of, or (ii) by others with respect to, any HipStyle Intellectual Property that individually or in the aggregate, in either such case, would have a material adverse effect on HipStyle.
(o) Certain Contracts. Except as set forth in the HipStyle SEC Documents, neither HipStyle nor any of its subsidiaries is a party to or bound by (i) any "material contract" (as such term is defined in item 601(b)(10) of Regulation S-K of the SEC), (ii) any non-competition agreement or any other agreement or obligation which purports to limit in any material respect the manner in which, or the localities in which, all or any material portion of the business of HipStyle and its subsidiaries (including CCS and its subsidiaries, assuming the Merger had taken place), taken as a whole, is or would be conducted, or (iii) any contract or other agreement which would prohibit or materially delay the consummation of the Merger or any of the transactions contemplated by this Agreement (all contracts of the type described in clauses (i) and (ii) being referred to herein as "HipStyle Material Contracts"). Each HipStyle Material Contract is valid and binding on HipStyle (or, to the extent a HipStyle subsidiary is a party, such subsidiary) and is in full force and effect, and HipStyle and each HipStyle subsidiary have in all material respects performed all obligations required to be performed by them to date under each HipStyle Material Contract, except where such noncompliance, individually or in the
SECTION 3.3. Representations and Warranties of MergerSub. Except as set forth on the Disclosure Schedule delivered by MergerSub to CCS prior to the execution of this Agreement (the "MergerSub Disclosure Schedule") and making reference to the particular subsection of this Agreement to which exception is being taken, HipStyle and MergerSub represents and warrants to CCS as follows:
(a) Organization, Standing and Corporate Power. (i) MergerSub is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions which recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power and authority to carry on its business as now being conducted, except, for those jurisdictions where the failure to be so organized, existing or in good standing individually or in the aggregate would not have a material adverse effect (as defined in Section 8.3) on MergerSub.
(ii) MergerSub has delivered to HipStyle prior to the execution of this Agreement complete and correct copies of its Certificate of Incorporation and By-Laws, as amended to date.
(b) Subsidiaries. MergerSub does not beneficially own any shares of capital stock.
(c) Capital Structure. The authorized capital stock of MergerSub consists of 1,000 shares of MergerSub Common Stock and no shares of preferred stock. At the close of business on the date hereof: (i) 1,000 shares of MergerSub Common Stock were issued and outstanding; and (ii) no shares of MergerSub Common Stock were held by MergerSub in its treasury. All outstanding shares of capital stock of MergerSub are, and all shares which may be issued will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no issued, reserved for issuance or outstanding securities of MergerSub or any MergerSub subsidiary convertible into or exchangeable or exercisable for shares of capital stock or voting securities of MergerSub, or any warrants, calls, options or other rights to acquire from MergerSub or any MergerSub subsidiary.
(d) Authority; Noncontravention. MergerSub has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by MergerSub and the consummation by MergerSub of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of MergerSub, subject, in the case of the Merger, to the MergerSub Stockholder Approval. This Agreement has been duly executed and delivered by MergerSub and, assuming the due authorization, execution and delivery by HipStyle and MergerSub constitutes the legal, valid and binding obligation of MergerSub, enforceable against MergerSub in accordance with its terms. The execution and delivery of this
(e) Undisclosed Liabilities. Except for liabilities incurred in connection with this Agreement or the transactions contemplated hereby, neither MergerSub nor any of its subsidiaries has any liabilities or obligations of any nature which, individually or in the aggregate, would have a material adverse effect on MergerSub.
SECTION 4.1. Conduct of Business.
(a) Conduct of Business by CCS. Except as set forth in Section 4.1(a) of the CCS Disclosure Schedule, and as otherwise expressly contemplated by this Agreement or as consented to by HipStyle in writing, such consent not to be unreasonably withheld or delayed,
(b) Conduct of Business by HipStyle and Subsidiaries. Except as set forth in Section 4.1(b) of the HipStyle Disclosure Schedule, as otherwise expressly contemplated by this Agreement or as consented to by CCS in writing, such consent not to be unreasonably withheld or delayed, during the period from the date of this Agreement to the Effective Time, HipStyle shall, and shall cause its subsidiaries to, carry on their respective businesses in the ordinary course consistent with past practice and in compliance in all material respects with all applicable laws and regulations and, to the extent consistent therewith, use all reasonable efforts to preserve intact their current business organizations, use reasonable efforts to keep available the services of their current officers and other key employees and preserve their relationships with those persons having business dealings with them to the end that their goodwill and ongoing businesses shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing (but subject to the above exceptions), except as otherwise contemplated by this Agreement and the Merger, during the period from the date of this Agreement to the Effective Time, HipStyle shall not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, make any other distributions in respect of, or enter into any agreement with respect to the voting of, any of its capital stock, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities;
(iii) except as contemplated hereby, amend its certificate of incorporation, By-Laws or other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any person;
(v) sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets (including securitization);
(vii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for the obligations of any person for borrowed money; or
(viii) authorize, or commit or agree to take, any of the foregoing actions.
(c) Other Actions. Except as required by law, CCS and HipStyle shall not, and shall not permit any of their respective subsidiaries to, voluntarily take any action that would, or that could reasonably be expected to, result in any of the representations and warranties of such party set forth in this Agreement that are qualified as to materiality becoming untrue at the Effective Time.
(d) Advice of Changes. CCS and HipStyle shall promptly advise the other party orally and in writing to the extent it has knowledge of (i) any representation or warranty made by it contained in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becoming untrue or inaccurate in any material respect, (ii) the failure by it to comply in any material respect with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement and (iii) any change or event having, or which, insofar as can reasonably be foreseen, could reasonably be expected to have a material adverse effect on such party or on the truth of their respective representations and warranties or the ability of the conditions set forth in Article VI to be satisfied; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties (or remedies with respect thereto) or the conditions to the obligations of the parties under this Agreement.
SECTION 4.2. No Solicitation by HipStyle. (a) HipStyle shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any of
its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes any HipStyle Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any HipStyle Takeover
Proposal; provided, however, that if the Board of Directors of HipStyle
determines in good faith, based on the advice of outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to HipStyle's stockholders under applicable law, HipStyle may, in
response to a HipStyle Superior Proposal (as defined in Section 4.2(b)) which
was not solicited by it, which did not otherwise result from a breach of this
Section 4.2(a) and subject to providing prior written notice of its decision
to take such action to CCS and compliance with Section 4.2(c) (x) furnish
information with respect to HipStyle and its subsidiaries to any person making a
HipStyle Superior Proposal pursuant to a customary confidentiality agreement (as
determined by HipStyle based on the advice of its outside counsel, the terms of
which are no more favorable to such person than the Confidentiality Agreement)
(b) Except as expressly permitted by this Section 4.2, neither the Board of Directors of HipStyle nor any committee thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to CCS, the approval or recommendation by such Board of Directors or such committee of the Merger, this Agreement or the issuance of HipStyle Capital Stock in connection with the Merger, (ii) approve or recommend, or propose publicly to approve or recommend, any HipStyle Takeover Proposal, or (iii) cause HipStyle to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "HipStyle Acquisition Agreement") related to any HipStyle Takeover Proposal. Notwithstanding the foregoing, at any time prior to the obtaining of the HipStyle Stockholder Approval, the Board of Directors of HipStyle, to the extent that it determines in good faith, based upon the advice of outside counsel, that it is necessary to do so in order to act in a manner consistent with its fiduciary duties to HipStyle's stockholders under applicable law, may (subject to this and the following sentences) terminate this Agreement solely in order to concurrently enter into any HipStyle Acquisition Agreement with respect to any HipStyle Superior Proposal, but only at a time that is after the fifth business day following HipStyle's receipt of written notice advising CCS that the Board of Directors of HipStyle is prepared to accept a HipStyle Superior Proposal, specifying the material terms and conditions of such HipStyle Superior Proposal and identifying the person making such HipStyle Superior Proposal. For purposes of this Agreement, a "HipStyle Superior Proposal" means any proposal made by a third party to acquire, directly or indirectly, including pursuant to a tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the shares of HipStyle Common Stock then outstanding or all or substantially all the assets of HipStyle and otherwise on terms which the Board of Directors of HipStyle determines in its good faith judgment (based on the advice of a financial advisor of nationally recognized reputation) to be more favorable to HipStyle's stockholders than the Merger and for which financing, to the extent required, is then committed or which, in the good faith judgment of the Board of Directors of HipStyle based on the advice of its financial advisor, is reasonably capable of being obtained by such third party.
(c) In addition to the obligations of HipStyle set forth in paragraphs
(a) and (b) of this Section 4.2, HipStyle shall immediately advise CCS
orally and in writing of any request for information or of any HipStyle Takeover
Proposal, the material terms and conditions of such request or
(d) Nothing contained in this Section 4.2 shall prohibit HipStyle from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to HipStyle's stockholders if, in the good faith judgment of the Board of Directors of HipStyle, after consultation with outside counsel, failure so to disclose would be inconsistent with its obligations under applicable law; provided, however, that neither HipStyle nor its Board of Directors nor any committee thereof shall withdraw or modify, or propose publicly to withdraw or modify, its position with respect to this Agreement, the Merger, the issuance of HipStyle Common Stock in connection with the Merger, or approve or recommend, or propose publicly to approve or recommend, a HipStyle Takeover Proposal.
SECTION 5.1. Certificate of Designation for Preferred Stock. HipStyle represents and warrants to CCS that on February 22, 2002, the stockholders of HipStyle lawfully approved (i) an amendment and restatement of the HipStyle Articles of Incorporation (the "Amended Articles") and (ii) the adoption of the HipStyle 2002 Stock Option (the "2002 Stock Option Plan"), each of which of have previously been provided to CCS. HipStyle agrees to prepare and file a Certificate of Designation with respect to the rights, limitations and preferences for the HipStyle Preferred Stock, in form and substance reasonably acceptable to CCS, with the Secretary of State of the State of Florida in accordance with all applicable rules and regulations of the FBCA.
SECTION 5.2. Access to Information; Confidentiality. Each of CCS and HipStyle
shall, and shall cause each of its respective subsidiaries to, afford to the
other party and to the officers, employees, accountants, counsel, financial
advisors and other representatives of such other party, reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, each of CCS and HipStyle shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as such other party may reasonably request. No review pursuant to this
Section 5.2 shall affect any representation or warranty given by the other
party hereto. Each of CCS and HipStyle will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement.
(b) In connection with and without limiting the foregoing, CCS and HipStyle shall (i) take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to the Merger, this Agreement, or any of the other transactions contemplated by this Agreement and (ii) if any state takeover statute or similar statute or regulation becomes applicable to the Merger, this Agreement, or any other transaction contemplated by this Agreement, take all action necessary to ensure that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger and the other transactions contemplated by this Agreement.
SECTION 5.4. Schedule 14f-1 Information Statement. Promptly following the execution and delivery of this Agreement, HipStyle shall prepare and file with the Commission an Information Statement on Schedule 14f-1 with respect to the transactions contemplated by this Agreement in accordance with all applicable rules and regulations of the Securities Exchange Act of 1934, as amended (the "1934 Act"). Not less than five (5) days prior to the filing with the Securities and Exchange Commission ("Commission"), HipStyle shall permit CCS and its legal counsel to review the filing and make suggested revisions thereto. HipStyle shall mail the Information Statement on Schedule 14f-1 to each HipStyle shareholder in accordance with all applicable rules and regulations of the 1934 Act and the FBCA.
SECTION 5.5. Fees and Expenses. All fees and expenses incurred in connection with the Merger, this Agreement, and the transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Merger is consummated.
SECTION 5.6. Public Announcements. HipStyle and CCS will consult with each other before issuing, and provide each other the opportunity to review, comment upon and concur with and use reasonable efforts to agree on, any press release or other public statements with respect to the
SECTION 5.7. Bulletin Board Listing. HipStyle shall use its best efforts to maintain the listing of its shares of Common Stock on the NASD OTC Bulletin Board.
SECTION 5.8 HipStyle Liabilities. HipStyle shall terminate and extinguish all direct, indirect, short term, long term, choate, unchoate, contingent, unmatured, matured, known and unknown liabilities (collectively, "Liabilities") and all other obligations of HipStyle in form and substance satisfactory to CCS.
SECTION 5.9. Tax Treatment. It is the intent of the parties that the transactions contemplated hereby will be effected pursuant to Section 368 of the Internal Revenue Code of 1986, as amended. No representation or warranty is being made by any party to any other regarding the treatment of this transaction for federal or state income taxation. Each party has relied exclusively on its own legal, accounting and other tax adviser regarding the treatment of the transaction for federal and state income taxes and on no representation, warranty, or assurance from any other party or such other party's legal, accounting, or other adviser.
SECTION 5.10. Company Officers; Employment Contracts; Equity Awards. At or prior to the Effective Time, HipStyle agrees to enter into an employment agreement with Ben Jamil in form and substance reasonably acceptable to CCS and as summarized in that certain letter of intent dated as of January 25, 2002 between HipStyle and CCS.
SECTION 5.11. Post-Merger Operations. Following the Effective Time, the combined company shall maintain its principal corporate office in New Rochelle, NY and all bank accounts of HipStyle shall be amended so that two nominees of CCS shall be only signatories with authority to engage in transactions for such accounts.
SECTION 5.12. Conveyance Taxes. HipStyle and CCS shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer and stamp taxes, any transfer, recording, registration and other fees or any similar taxes which become payable in connection with the transactions contemplated by this Agreement that are required or permitted to be filed on or before the Effective Time. HipStyle shall pay, and CCS shall pay, without deduction or withholding from any amount payable to the holders of CCS Common Stock, any such taxes or fees imposed by any Governmental Entity (and any penalties and interest with respect to such taxes and fees), which become payable in connection with the transactions contemplated by this Agreement, on behalf of their respective stockholders.
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:
(a) Stockholder Approvals. Each of the CCS Stockholder Approval and the approval of the stockholders of MergerSub shall have been obtained.
(b) Governmental and Regulatory Approvals. Other than the filing provided for under Section 1.3, all consents, approvals and actions of, filings with and notices to any Governmental Entity required of CCS, HipStyle or any of their subsidiaries to consummate the Merger and the other transactions contemplated hereby, the failure of which to be obtained or taken (i) is reasonably expected to have a material adverse effect on the Surviving Corporation and its prospective subsidiaries, taken as a whole, or (ii) will result in a violation of any laws, shall have been obtained, all in form and substance reasonably satisfactory to CCS and HipStyle.
(c) No Injunctions or Restraints. No judgment, order, decree, statute, law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued by any court or other Governmental Entity of competent jurisdiction or other legal restraint or prohibition (collectively, "Restraints") shall be in effect (i) preventing the consummation of the Merger, or (ii) which otherwise is reasonably likely to have a material adverse effect on CCS or HipStyle, as applicable; provided, however, that each of the parties shall have used its best efforts to prevent the entry of any such Restraints and to appeal as promptly as possible any such Restraints that may be entered.
SECTION 6.2. Conditions to Obligations of HipStyle. The obligation of HipStyle to effect the Merger is further subject to satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties of CCS set forth herein shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) does not have, and is not likely to have, individually or in the aggregate, a material adverse effect on CCS.
(b) Performance of Obligations of CCS. CCS shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.
(c) No Material Adverse Change. At any time after the date of this Agreement there shall not have occurred any material adverse change relating to CCS.
(e) Financial Statements. CCS will deliver to HipStyle (i) audited financial statements for the year ended June 30, 2001 (the "Audited Financial Statements") and (ii) unaudited financial statements for the three months ending September 30, 2001 and the six months ending December 31, 2001 (the "Unaudited Financial Statements"). The Audited Financial Statements and the Unaudited Financial Statements will be prepared accordance with the books and records of CCS and will present fairly in all material respects the financial position and results of operations of CCS as of the times and for the periods referred to therein, in each case in accordance with generally accepted accounting principled under current United States accounting rules and regulations, consistently applied.
(f) Segregation of Funds. At or prior to closing, CCS and HipStyle will agree to segregate monies to fund the payment and/or defense of unpaid taxes and pending litigation matters.
SECTION 6.3. Conditions to Obligations of CCS. The obligation of CCS to effect the Merger is further subject to satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties of HipStyle and MergerSub set forth herein shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality," or "material adverse effect" set forth therein) does not have, and is not likely to have, individually or in the aggregate, a material adverse effect on HipStyle.
(b) Performance of Obligations of HipStyle. HipStyle shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.
(c) No Material Adverse Change. At any time after the date of this Agreement there shall not have occurred any material adverse change relating to HipStyle.
(d) Quotation on Bulletin Board. The shares of the HipStyle common stock shall be quoted for trading on the NASD OTC Bulletin Board without restriction or qualification.
(e) HipStyle Liabilities. All HipStyle Liabilities shall have been terminated and extinguished in form and substance satisfactory to CCS.
(f) Amendment of HipStyle Articles of Incorporation; Stock Option Plan. HipStyle shall have amended its Articles of Incorporation and adopted a Stock Option Plan in form and substance reasonably satisfactory to CCS.
(h) Books and Records. HipStyle shall have delivered to CCS all corporate books and records for CCS.
(i) Officer and Directors. HipStyle shall have (i) accepted the resignations of all existing officers of HipStyle; (ii) expanded the HipStyle Board of Directors to five (5) members; (iii) appointed Ben Jamil and his nominees to fill the vacancies on the Board of Directors of HipStyle to fill the newly created Board seat, and (iv) appointed Ben Jamil as the President and Chief Executive Officer of HipStyle.
(j) Employment Agreement. HipStyle shall have entered into an employment agreement with Ben Jamil in form and substance satisfactory to CCS and as summarized in that certain letter of intent dated as of January 25, 2002 between HipStyle and CCS.
(k) Legal Opinion. CCS shall receive a legal opinion from HipStyle's counsel in form and substance satisfactory to CCS.
(l) SEC Reports. All SEC Filings shall have been submitted to the SEC in accordance with the requirements of the Exchange Act (and the rules, regulations and guidance promulgated thereunder), in form and substance satisfactory to CCS, and all applicable waiting periods shall have been expired or waived by CCS.
(m) Delivery of the Merger Consideration. The stockholders of CCS shall receive the Merger Consideration of Closing.
(n) Closing Conditions. Documentation or other information shall have been received in a form reasonably satisfactory to CCS and HipStyle which evidences that the conditions set forth in this Section 6.3 have been satisfied.
SECTION 6.4. Frustration of Closing Conditions. Neither HipStyle nor CCS may rely on the failure of any condition set forth in Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by such party's failure to use best efforts to consummate the Merger and the other transactions contemplated by this Agreement, as required by and subject to Section 5.5.
(a) by mutual written consent of HipStyle, MergerSub and CCS;
(b) by either HipStyle or CCS:
(i) if the Merger shall not have been consummated by May 1, 2002, provided, however, that the right to terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be available to any party whose failure to perform any of its obligations under this Agreement results in the failure of the Merger to be consummated by such time; provided, however, that this Agreement may be extended not more than 30 days by either party by written notice to the other party if the Merger shall not have been consummated as a direct result of HipStyle or CCS having failed to receive all regulatory approvals required to be obtained with respect to the Merger.
(ii) if any restraint having any of the effects set forth in Section 6.1(c) shall be in effect and shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement pursuant to this Section 7.1(b)(iv) shall have used best efforts to prevent the entry of and to remove such Restraint;
(c) by HipStyle, if CCS shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in
Section 6.2(a) or
(b), and (B) is incapable of being cured by CCS or is not cured within 60 days
of written notice thereof;
(d) by HipStyle in accordance with Section 4.2; provided that, in order for the termination of this Agreement pursuant to this paragraph (d) to be deemed effective, HipStyle shall have complied with all provisions contained in Section 4.2, including the notice provisions therein, and with applicable requirements, including the payment of the Termination Fee; or
(e) by CCS, if HipStyle shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in
Section 6.3(a) or
(b), and (B) is incapable of being cured by HipStyle or is not cured within 60
days of written notice thereof.
SECTION 7.2. Effect of Termination. In the event of termination of this
Agreement by either CCS or HipStyle as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of HipStyle or CCS, other than the provisions of this
Section 7.2 and Article VIII, which provisions survive such termination, and
except to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective Time, a party may (a) extend the time for the performance of any of the obligations or other acts of the other parties, or (b) waive any inaccuracies in the representations and warranties of the other parties contained in this Agreement or in any document delivered pursuant to this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver. A termination of this Agreement pursuant to Section 7.1, an amendment of this Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section 7.4 shall, in order to be effective, require, in the case of HipStyle or CCS, action by its Board of Directors or, with respect to any amendment to this Agreement, the duly authorized committee of its Board of Directors to the extent permitted by law.
SECTION 8.1. Survival of Representations and Warranties. The representations and warranties of HipStyle and CCS shall survive the execution and delivery hereof and the Closing hereunder. SECTION 8.2. Indemnification.
(a) Michael Farkas ("Farkas") agrees to indemnify, defend and hold harmless CCS and HipStyle and their respective directors, officers, employees, shareholders and any Affiliates of the foregoing, and their successors and assigns (collectively, the "CCS Group") from and against any and all losses, liabilities (including punitive or exemplary damages and fines or penalties and any interest thereon), expenses (including reasonable fees and disbursements of counsel and expenses of investigation and defense), claims, Liens or other obligations of any nature whatsoever (hereinafter individually, a "Loss" and collectively, "Losses") suffered or incurred by the CCS Group which, directly or indirectly, arise out of, result from or relate to, (i) any inaccuracy in or any breach of any representation or warranty of HipStyle or (ii) any breach of any covenant or agreement of HipStyle contained in this Agreement or in any Company Document.
(b) CCS agrees to indemnify, defend and hold harmless Rebecca Farkas, Michelle Brock and Farkas and their successors and assigns (the "Stockholder Group") from and against any and all Losses suffered or incurred by the Stockholder Group which, directly or indirectly, arise out of, result from or relate to (i) any inaccuracy in or any breach of any representation or warranty of CCS contained in this Agreement, or (ii) any breach of any covenant or agreement of CCS contained in this Agreement.
(a) In the event that any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party hereunder is asserted against or sought to be collected from such Indemnified Party by a third party, said Indemnified Party shall within fifteen (15) days notify in writing the Indemnifying Party of such claim or demand, specifying the nature of the specific basis for such claim or demand, and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such claim and demand; any such notice, being the "Claim Notice"); provided, however, that any failure to give such Claim Notice will not be deemed a waiver of any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced or harmed. The Indemnifying Party may elect to assume the defense of any such claim or demand by delivering written notice to the Indemnified Party of such election; provided that any Indemnified Party is hereby authorized prior to the date on which it receives written notice from the Indemnifying Party assuming such defense, to retain counsel, whose reasonable fees and expenses shall be at the expense of the Indemnifying Party, to file any motion, answer or other pleading and take such other action which it reasonably shall deem necessary to protect its interests or those of the Indemnifying Party until the date on which the Indemnified Party receives such notice from the Indemnifying Party. After the Indemnifying Party shall assume such defense, the Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the named parties of any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Indemnifying Party shall not, in connection with any proceedings or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one such firm for the Indemnified Party (except to the extent the Indemnified Party retained counsel to protect its (or the Indemnifying Party's) rights prior to the selection of counsel by the Indemnifying Party). The Indemnified Party agrees to cooperate reasonably with the Indemnifying Party and its counsel in contesting any claim or demand which the Indemnifying Party defends. No claim or demand may be settled by an Indemnifying Party or, where permitted pursuant to this Agreement, by an Indemnified Party without the consent of the Indemnified Party in the first case or the consent of the Indemnifying Party in the second case, which consent shall not be unreasonably withheld, unless such settlement shall be accompanied by a complete release of the Indemnified Party in the first case or the Indemnifying Party in the second case.
(b) In the event any Indemnified Party shall have a claim against any Indemnifying Party hereunder which does not involve a claim or demand being asserted against or sought to be collected from it by a third party, the Indemnified Party shall send a Claim Notice with respect to such claim to the Indemnifying Party. If the Indemnifying Party does not dispute such claim within thirty (30) days of receipt of the Claim Notice the amount of such claim shall be paid to the Indemnified Party within forty-five (45) days of receipt of the Claim Notice.
(d) To the extent a Loss occurs under Section 8.2(a), Farkas may elect to meet such obligation by delivery for cancellation of a number of shares of HipStyle Common Stock. Any stock delivered pursuant to this Section 8.3(d) shall be valued at the lower of (i) a price equal to the fair market value on the date of delivery and (ii) and a price equal to the fair market value on the Closing Date (the "Fair Market Value"). To the extent a Loss occurs under Section 8.2(b), CCS may elect to make such payment (i) in cash, or (ii) in a number of shares of HipStyle Common Stock having a Fair Market Value equal to such payment amount.
SECTION 9.1. Survival of Representations and Warranties. The representations and warranties in this Agreement shall survive the Effective Time.
SECTION 9.2. Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
(a) if to HipStyle or MergerSub, to
HipStyle.Com, Inc.
1221 Brickell Avenue Miami, Florida 33131 Attention:
Rebecca Farkas
with a copy to:
(b) if to CCS, to
CCS International, Ltd.
with a copy to:
Brown Rudnick Berlack Israels LLP 120 West 45th Street New York, NY 10036
Attention: Alan N. Forman
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) except for purposes of Section 5.11, an "affiliate" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person, where "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise;
(b) "material adverse change" or "material adverse effect" means, when used in connection with CCS or HipStyle, any change, effect, event, occurrence or state of facts that is, or would reasonably be expected to be, materially adverse to the business, financial condition or results of operations of such party and its subsidiaries taken as a whole; and the terms "material" and "materially" have correlative meanings;
(c) "person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person; provided however, that with respect to HipStyle, such term shall not include CCS; and
(f) "termination fee" shall mean the payment by HipStyle to CCS of an amount equal to (i) CCS out-of-pocket expenditures plus (ii) $75,000.
SECTION 9.4. Interpretation. When a reference is made in this Agreement to an Article, Section or Exhibit, such reference shall be to an Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns.
SECTION 9.5. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II, Section 5.6 and
Section 5.8, are not intended to confer upon any person other than the
parties any rights or remedies.
SECTION 9.7. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof.
SECTION 9.8. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by either of the parties hereto without the prior written consent of the other party. Any assignment in violation of the preceding
SECTION 9.9. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 9.10. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.11. Brokers and Finders. The parties have not employed any broker, financial advisor or finder or incurred any liability for any broker, financial advisory or finder's fee in connection with the Agreement and Merger.
By: /s/ Rebecca Farkas
---------------------------------
Name: Rebecca Farkas
Title: President
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By: /s/ Rebecca Farkas
---------------------------------
Name: Rebecca Farkas
Title: President
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By: /s/ Ben Jamil
---------------------------------
Name: Ben Jamil
Title: President
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With respect to the obligations
under Article VIII only:
/s/ Michael Farkas
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Michael Farkas
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EMPLOYMENT AGREEMENT, dated as of April 17, 2002, by and between SECURITY INTELLIGENCE TECHNOLOGIES, INC., a Florida corporation with offices at 145 Hugenot Street, New Rochelle, NY 10801 (the "Corporation"), and Ben Y. Jamil ("Executive").
WHEREAS, subject to the terms and considerations hereinafter set forth, the Corporation wishes to employ Executive in the positions set forth herein and Executive wishes to accept such employment.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereby agree as follows:
Section 1. EMPLOYMENT. The Corporation hereby employs Executive and Executive hereby accepts such employment, as an executive of the Corporation, subject to the terms and conditions set forth in this Agreement.
Section 2. DUTIES. Executive shall serve as Chief Executive Officer and Chairman of the Corporation's Board of Directors (the "Board of Directors") and shall properly perform such duties as may be assigned to him from time to time by the Board of Directors. If requested by the Board of Directors), Executive shall serve on any committee of the Board of Directors without additional compensation. During the Term of this Agreement, Executive shall devote substantially all of his business time and efforts to the performance of his duties hereunder unless otherwise authorized by the Board of Directors. Executive shall not engage in any other significant business activity that would detract from his ability to perform services to the Corporation.
Section 3. TERM OF EMPLOYMENT. The term of Executive's employment, unless sooner terminated as provided herein, shall be for a period of three (3) years co