EX-10.38 8 hf_ex1038.htm SHARE EXCHANGE AGREEMENT
Exhibit 10.38
SHARE EXCHANGE AGREEMENT
among
SINGAPORE EDEVELOPMENT LTD.,
GLOBAL BIOMEDICAL PTE LTD.,
DOCUMENT SECURITY SYSTEMS, INC.
and
DSS BIOHEALTH SECURITY INC.
dated as of
April 21, 2020
TABLE OF CONTENTS

ARTICLE I DEFINITIONS | 1
ARTICLE II PURCHASE AND SALE | 10
Section 2.01 Purchase and Sale. | 10
Section 2.02 Purchase Price. | 10
Section 2.03 Transactions to be Effected at the Closing. | 10
Section 2.04 Purchase Price Adjustment. | 11
Section 2.05 Closing. | 11
Section 2.06 Withholding Tax. | 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND SED | 12
Section 3.01 Organization and Authority of Seller. | 12
Section 3.02 Organization, Authority and Qualification of the Company and Subsidiaries. | 12
Section 3.03 Capitalization. | 12
Section 3.04 No Subsidiaries. | 13
Section 3.05 No Conflicts; Consents. | 13
Section 3.06 SED Stockholder Approval. | 14
Section 3.07 Financial Statements; Accounting. | 14
Section 3.08 Undisclosed Liabilities. | 14
Section 3.09 Absence of Certain Changes, Events and Conditions. | 15
Section 3.10 Material Contracts. | 17
Section 3.11 Title to Assets; Real Property. | 18
Section 3.12 Condition and Sufficiency of Assets. | 19
Section 3.13 Intellectual Property. | 19
Section 3.14 Privacy and Data Security. | 21
Section 3.15 Inventory. | 23
Section 3.16 Accounts Receivable. | 23
Section 3.17 Customers and Suppliers. | 23
Section 3.18 Insurance. | 23
Section 3.19 Legal Proceedings; Governmental Orders. | 24
Section 3.20 Compliance with Laws; Permits. | 24
Section 3.21 Environmental Matters. | 25
Section 3.22 Employment Matters. | 27
Section 3.23 Benefit Matters. | 27
Section 3.24 Taxes. | 28
Section 3.25 Money Laundering Laws. | 30
Section 3.26 Foreign Corrupt Practices. | 30
Section 3.27 No Disagreements with Accountants and Lawyers. | 30
Section 3.28 Books and Records. | 31
Section 3.29 Brokers. | 31
Section 3.30 Investment Representations. | 31
Section 3.31 Proxy Information. | 33
Section 3.32 Full Disclosure. | 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND DSS | 33
Section 4.01 Organization and Authority. | 33
Section 4.02 DSS Stockholder Approval. | 34
Section 4.03 No Conflicts; Consents. | 34
Section 4.04 Investment Purpose. | 34
Section 4.05 Brokers. | 34
Section 4.06 Legal Proceedings. | 34
Section 4.07 DSS Shares. | 35
Section 4.08 SEC Reports. | 35
Section 4.09 Proxy Information. | 35

ARTICLE V COVENANTS | 36
Section 5.01 Conduct of Business Prior to the Closing. | 36
Section 5.02 Access to Information. | 36
Section 5.03 No Solicitation of Other Bids. | 37
Section 5.04 Notice of Certain Events. | 37
Section 5.05 Confidentiality. | 38
Section 5.06 Non-Competition; Non-Solicitation. | 38
Section 5.07 Governmental Approvals and Consents. | 39
Section 5.08 Books and Records. | 41
Section 5.09 Closing Conditions. | 41
Section 5.10 DSS Stockholder Approval. | 41
Section 5.11 DSS Proxy Statement. | 42
Section 5.12 SED Stockholder Approval. | 42
Section 5.13 SED Meeting Circular. | 42
Section 5.14 Public Announcements. | 43
Section 5.15 Further Assurances. | 43
ARTICLE VI TAX MATTERS | 43
Section 6.01 Tax Covenants. | 43
Section 6.02 Termination of Existing Tax Sharing Agreements. | 44
Section 6.03 Tax Indemnification. | 44
Section 6.04 Straddle Period. | 45
Section 6.05 Section 338(h)(10) Election. | 45
Section 6.06 Contests. | 45
Section 6.07 Cooperation and Exchange of Information. | 46
Section 6.08 Tax Treatment of Indemnification Payments. | 46
Section 6.09 Survival. | 46
Section 6.10 Overlap. | 46
ARTICLE VII CONDITIONS TO CLOSING | 46
Section 7.01 Conditions to Obligations of All Parties. | 46
Section 7.02 Conditions to Obligations of Buyer. | 47
Section 7.03 Conditions to Obligations of Seller. | 49
ARTICLE VIII INDEMNIFICATION | 50
Section 8.01 Survival. | 50
Section 8.02 Indemnification by Seller. | 50
Section 8.03 Indemnification by Buyer. | 51
Section 8.04 Certain Limitations. | 51
Section 8.05 Indemnification Procedures. | 52
Section 8.06 Payments. | 54
Section 8.07 Tax Treatment of Indemnification Payments. | 54
Section 8.08 Effect of Investigation. | 54
Section 8.09 Exclusive Remedies. | 54
ARTICLE IX TERMINATION | 54
Section 9.01 Termination. | 54
Section 9.02 Effect of Termination. | 55

ARTICLE X MISCELLANEOUS | 56
Section 10.01 Expenses. | 56
Section 10.02 Notices. | 56
Section 10.03 Interpretation. | 57
Section 10.04 Headings. | 57
Section 10.05 Severability. | 57
Section 10.06 Entire Agreement. | 57
Section 10.07 Successors and Assigns. | 57
Section 10.08 No Third-party Beneficiaries. | 57
Section 10.09 Amendment and Modification; Waiver. | 57
Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. | 58
Section 10.11 Specific Performance. | 58
Section 10.12 Counterparts. | 59

EXHIBITS
Exhibit A Form of Certificate of Designations
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (this “Agreement”), dated as of April 21, 2020, is entered into among Singapore eDevelopment Ltd., a Singapore corporation, company no. 200916763W having its office at 7 Temasek Boulevard #29-01B, Suntec Tower One, Singapore 038987 (“SED”), Global BioMedical Pte Ltd., a Singapore corporation, company no. 201707501G having its office at 7 Temasek Boulevard #29-01B, Suntec Tower One, Singapore 038987 (the “Seller”), Document Security Systems, Inc., a New York corporation, having its office at 200 Canal View Blvd, Suite 300, Rochester, NY 14623 (“DSS”) and DSS BioHealth Security Inc., a Nevada corporation, having its office at 200 Canal View Blvd, Suite 300, Rochester, NY 14623 (the “Buyer”). Each of SED, Seller, DSS and Buyer is referred to herein as a “Party” and they are referred to collectively as the “Parties.”
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of common stock, par value $0.001 per share (the “Impact Shares”), of Impact BioMedical Inc., a Nevada corporation, having its office at 4800 Montgomery Lane Suite 210 Bethesda, MD 20814 (the “Company”); and
WHEREAS, SED owns all of the issued and outstanding shares of Seller; and
WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Impact Shares, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms have the meanings specified or referred to in this ARTICLE I:
“Acquisition Proposal” has the meaning set forth in Section 5.03(a).
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreed Value” has the meaning set forth in Section 2.02(a)
“Agreement” has the meaning set forth in the preamble.
“Allocation Schedule” has the meaning set forth in Section 6.05(b).
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“Ancillary Documents” means the Certificate of Designations.
“Annual Financial Statements” has the meaning set forth in Section 3.07(a).
“Balance Sheet” has the meaning set forth in Section 3.07(a).
“Balance Sheet Date” has the meaning set forth in Section 3.07(a).
“Basket” has the meaning set forth in Section 8.04(a).
“Benefit Plan” has the meaning set forth in Section 3.22(a).
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York, are authorized or required by Law to be closed for business.
“Business Privacy and Data Security Policies” means all of Seller’s past or present, internal or public-facing policies, notices, and statements concerning the privacy, security, or Processing of Personal Information in the conduct of the Business.
“Buyer” has the meaning set forth in the preamble.
“Buyer Indemnitees” has the meaning set forth in Section 8.02.
“Buyer’s Accountants” means Freed Maxick CPAs, P.C.
“Cap” has the meaning set forth in Section 8.04(a).
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.
“Certificate of Designations” has the meaning set forth in Section 2.02(b)(ii).
“Closing” has the meaning set forth in Section 2.05.
“Closing Date” has the meaning set forth in Section 2.05.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” has the meaning set forth in Section 3.03(a).
“Company” has the meaning set forth in the recitals.
“Company Group” means the Company and each Subsidiary.
“Company Intellectual Property” means all Intellectual Property that is owned by the Company Group.
“Company IP Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, whether written or oral, relating to Intellectual Property to which a member of the Company Group is a party, beneficiary or otherwise bound.
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“Company IP Registrations” means all Company Intellectual Property that is subject to any issuance, registration or application by or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing.
“Company IT Systems” means all computer software, computer hardware, servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology (IT) networks and systems (including telecommunications networks and systems for voice, data and video) owned, leased, licensed, or used (including through cloud-based or other third-party service providers) by the Company Group.
“Company Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), assets or prospects of the Company Group taken as a whole, or (b) the ability of Seller and SED to consummate the transactions contemplated hereby on a timely basis.
“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.
“Current Liabilities” means accounts payable, accrued Taxes and accrued expenses, but excluding payables to any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, deferred Tax liabilities, Transaction Expenses and the current portion of any Indebtedness of the Company, determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Annual Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.
“Direct Claim” has the meaning set forth in Section 8.05(c).
“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and SED and by Buyer and DSS concurrently with the execution and delivery of this Agreement.
“Dollars or $” means the lawful currency of the United States of America.
“DSS” has the meaning set forth in the preamble.
“DSS Common Shares” has the meaning set forth in Section 2.02(b)(i).
“DSS Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), assets or prospects of DSS and its subsidiaries taken as a whole, or (b) the ability of Buyer and DSS to consummate the transactions contemplated hereby on a timely basis.
“DSS Preferred Shares” has the meaning set forth in Section 2.02(b)(ii).
“DSS Proxy Filing Date” means the date on which DSS first files with the SEC the preliminary DSS Proxy Statement.
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“DSS Proxy Statement” means the notice of meeting and proxy statement, together with any supplements and other disclosure documents related thereto, to be drafted by DSS and its counsel and sent to holders of DSS common stock in connection with the DSS Stockholders’ Meeting.
“DSS Shares” has the meaning set forth in Section 2.02(b)(ii).
“DSS Stockholders’ Meeting” means the meeting of the holders of DSS common stock to consider and vote on the transactions contemplated by this Agreement, and any postponement or adjournment thereof.
“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“Environmental Attributes” means any emissions and renewable energy credits, energy conservation credits, benefits, offsets and allowances, emission reduction credits or words of similar import or regulatory effect (including emissions reduction credits or allowances under all applicable emission trading, compliance or budget programs, or any other federal, state or regional emission, renewable energy or energy conservation trading or budget program) that have been held, allocated to or acquired for the development, construction, ownership, lease, operation, use or maintenance of any member of the Company Group as of: (i) the date of this Agreement; and (ii) future years for which allocations have been established and are in effect as of the date of this Agreement.
“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.
“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.
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“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.
“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“ERISA Affiliate” means all employers (whether or not incorporated) that would be treated together with the Company or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code or Section 4001 of ERISA.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“FDA” has the meaning set forth in Section 3.19(c)
“Financial Statements” has the meaning set forth in Section 3.07(a).
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Government Contracts” has the meaning set forth in Section 3.10(a)(viii).
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction, or any securities exchange on which the securities of the relevant Party are listed or traded.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.
“Health Care Laws” has the meaning set forth in Section 3.19(c).
“Impact Shares” has the meaning set forth in the recitals.
“Impact Value” has the meaning set forth in Section 7.02(c).
“Indebtedness” means, without duplication and with respect to the Company Group, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services, (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; (g) guarantees made by a member of the Company Group on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g).
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“Indemnified Party” has the meaning set forth in Section 8.05.
“Indemnifying Party” has the meaning set forth in Section 8.05.
“Independent Accountant” has the meaning set forth in Section 6.01(c).
“Insurance Policies” has the meaning set forth in Section 3.17.
“Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (d) internet domain names and social media account or user names (including “handles”), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media sites and pages, and all content and data thereon or relating thereto, whether or not Copyrights; (e) mask works, and all registrations, applications for registration, and renewals thereof; (f) industrial designs, and all Patents, registrations, applications for registration, and renewals thereof; (g) trade secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein (“Trade Secrets”); (h) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; (i) rights of publicity; and (j) all other intellectual or industrial property and proprietary rights.
“Interim Balance Sheet” has the meaning set forth in Section 3.07(a).
“Interim Balance Sheet Date” has the meaning set forth in Section 3.07(a).
“Interim Financial Statements” has the meaning set forth in Section 3.07(a).
“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means the actual or constructive knowledge of any director or officer of SED, Seller or the Company, after due inquiry.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.
“Liabilities” has the meaning set forth in Section 3.08.
“Licensed Intellectual Property” means all Intellectual Property in which a member of the Company Group holds any rights or interests granted by other Persons, including Seller or any of its Affiliates.
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“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive damages, except to the extent actually awarded to a Governmental Authority or other third party.
“Material Contracts” has the meaning set forth in Section 3.10(a).
“Money Laundering Laws” has the meaning set forth in Section 3.24.
“Party” has the meaning set forth in the preamble.
“PCAOB” means the United States Public Company Accounting Oversight Board.
“Permits” means all permits, licenses, franchises, approvals, authorizations, consents, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.
“Permitted Encumbrances” has the meaning set forth in Section 3.11(a).
“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
“Personal Information” means any information that identifies or, alone or in combination with any other information, could reasonably be used to identify, locate, or contact a natural Person, including name, street address, telephone number, email address, identification number issued by a Governmental Authority, credit card number, bank information, customer or account number, online identifier, device identifier, IP address, browsing history, search history, or other website, application, or online activity or usage data, location data, biometric data, medical or health information, or any other information that is considered “personally identifiable information,” “personal information,” or “personal data” under applicable Law, and all data associated with any of the foregoing that are or could reasonably be used to develop a profile or record of the activities of a natural Person across multiple websites or online services, to predict or infer the preferences, interests, or other characteristics of a natural Person, or to target advertisements or other content to a natural Person.
“Platform Agreements” has the meaning set forth in Section 3.12(h).
“Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.
“Post-Closing Taxes” means Taxes of the Company Group for any Post-Closing Tax Period.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
“Pre-Closing Taxes” means Taxes of the Company Group for any Pre-Closing Tax Period.
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“Privacy Laws” means all applicable Laws, Governmental Orders, and binding guidance issued by any Governmental Authority concerning the privacy, security, or Processing of Personal Information (including Laws of jurisdictions where Personal Information was collected), including, as applicable, data breach notification Laws, consumer protection Laws, Laws concerning requirements for website and mobile application privacy policies and practices, Social Security number protection Laws, data security Laws, and Laws concerning email, text message, or telephone communications. Without limiting the foregoing, Privacy Laws include: the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, the Children’s Online Privacy Protection Act, the California Consumer Privacy Act of 2018, the Computer Fraud and Abuse Act, the Electronic Communications Privacy Act, the Fair Credit Reporting Act, the Fair and Accurate Credit Transaction Act, the Health Insurance Portability and Accountability Act of 1996, as amended and supplemented by the Health Information Technology for Economic and Clinical Health Act of the American Recovery and Reinvestment Act of 2009, the Gramm-Leach-Bliley Act, the Family Educational Rights and Privacy Act, the GDPR, and all other similar international, federal, state, provincial, and local Laws.
“Processing” means any operation performed on Personal Information, including the collection, creation, receipt, access, use, handling, compilation, analysis, monitoring, maintenance, storage, transmission, transfer, protection, disclosure, destruction, or disposal of Personal Information.
“Purchase Price” has the meaning set forth in Section 2.02.
“Real Property” means the real property owned, leased or subleased by the Company Group, together with all buildings, structures and facilities located thereon.
“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).
“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Restricted Business” means biomedical sciences research and development for licensing and distribution, in the areas of healthcare and consumer products.
“Restricted Period” has the meaning set forth in Section 5.06(a).
“SEC” means the United States Securities and Exchange Commission.
“SEC Reports” has the meaning set forth in Section 4.08(a).
“Securities Act” means the U.S. Securities Act of 1933, as amended
“SED” has the meaning set forth in the preamble.
“SED Meeting Circular” means the notice of meeting and circular, together with any supplements and other disclosure documents related thereto, to be drafted by SED and its counsel and sent to holders of SED stock in connection with the SED Stockholders’ Meeting.
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“SED Circular Filing Date” means the date on which SED first files with the Singapore Exchange the SED Meeting Circular.
“SED Stockholders’ Meeting” means the extraordinary general meeting of the holders of SED stock to consider and vote on the transactions contemplated by this Agreement, and any postponement or adjournment thereof.
“Section 338(h)(10) Election” has the meaning set forth in Section 6.05(a).
“Seller” has the meaning set forth in the preamble.
“Seller Indemnitees” has the meaning set forth in Section 8.03.
“Seller’s Accountants” means Turner, Stone & Company, LLP.
“Straddle Period” has the meaning set forth in Section 6.04.
“Subsidiary” has the meaning set forth in Section 3.04.
“Subsidiary Equity Interests” has the meaning set forth in Section 3.04.
“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
“Tax Claim” has the meaning set forth in Section 6.06.
“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Territory” means the United States of America and its Territories and Possessions.
“Third Party Claim” has the meaning set forth in Section 8.05(a).
“Transaction Expenses” means all fees and expenses incurred by the Company, Seller or SED at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and the Ancillary Documents, and the performance and consummation of the transactions contemplated hereby and thereby.
“Transfer” means, with respect to any DSS Share and the associated interest in DSS, a transaction by which Seller assigns such DSS Share to another Person who is or becomes a shareholder of DSS, and includes a sale, assignment, gift, exchange or any other disposition by Law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.
“Union” has the meaning set forth in Section 3.09(t).
“Valuation Report” has the meaning set forth in Section 7.02(c).
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.
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ARTICLE II
PURCHASE AND SALE
Section 2.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Impact Shares, free and clear of all Encumbrances, for the consideration specified in Section 2.02.
Section 2.02 Purchase Price.
(a) The aggregate purchase price for the Impact Shares shall be the equivalent of $50,000,000.00 (the “Agreed Value”), payable as provided in paragraph (b) below, and subject to adjustment pursuant to Section 2.04 below (the “Purchase Price”). In the event that a Section 338(h)(10) election is made, the Parties agree to allocate the Purchase Price for tax purposes as provided in Section 6.05(b).
(b) The Purchase Price shall be paid in the following form:
(i) 14,500,000 newly issued shares of the common stock, $0.02 par value per share, of DSS (the “DSS Common Shares”), nominally valued at $3,132,000, or $0.216 per share; and
(ii) 46,868 (as adjusted pursuant to Section 2.04(a) hereof, if applicable) newly issued shares of a new series of perpetual convertible preferred stock of DSS with a stated value of $46,868,000, or $1,000 per share, convertible into shares of DSS common stock (the “DSS Preferred Shares”), having the designations, preferences and rights set forth in the Certificate of Designations in the form attached hereto as Exhibit A (the “Certificate of Designations”). (The DSS Preferred Shares and the DSS Common Shares, and the additional shares of DSS Common stock issued or issuable upon conversion of the DSS Preferred Shares, are referred to as the “DSS Shares.”)
Section 2.03 Transactions to be Effected at the Closing.
(a) At the Closing, Buyer shall:
(i) deliver to Seller:
(A) a duly executed and authenticated certificate or certificates representing the DSS Common Shares, free and clear of all Encumbrances, registered in the name of the Seller;
(B) a duly executed and authenticated certificate or certificates representing the DSS Preferred Shares, free and clear of all Encumbrances, registered in the name of the Seller; and
(C) the Ancillary Documents and all other agreements, documents, instruments or certificates required to be delivered by Buyer at or prior to the Closing pursuant to Section 7.03 of this Agreement.
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(b) At the Closing, Seller shall deliver to Buyer:
(i) stock certificates evidencing the Impact Shares, free and clear of all Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto; and
(ii) the Ancillary Documents and all other agreements, documents, instruments or certificates required to be delivered by Seller at or prior to the Closing pursuant to Section 7.02 of this Agreement.
Section 2.04 Purchase Price Adjustment.
(a) Closing Adjustment. At the Closing, the Purchase Price shall be adjusted in the following manner:
If the Impact Value is less than the Agreed Value, then the number of DSS Preferred Shares to be delivered to the Seller at Closing shall be adjusted downwards in accordance with the formula below.
Number of DSS Preferred Shares to be delivered to the Seller at Closing = ($46,868,000 – (Agreed Value – Impact Value))/0.216).
The number of DSS Common Shares to be delivered to the Seller at Closing will not change.
(b) Indemnification Adjustment. At Buyer’s sole option, by notification in writing to Seller, any amounts payable to Buyer or any Buyer Indemnified Party under ARTICLE VI or ARTICLE VIII hereof may be satisfied, in whole or in part, by reducing the aggregate and per share stated value of the DSS Preferred Shares by a dollar amount equal to such amounts so payable, as further provided in the Certificate of Designations.
Section 2.05 Closing. Subject to the terms and conditions of this Agreement, the purchase and sale of the Impact Shares contemplated hereby shall take place at a closing (the “Closing”) to be held at 10:00 a.m., New York time, no later than two Business Days after the last of the conditions to Closing set forth in ARTICLE VII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), at the offices of Sichenzia Ross Ference LLP, 1185 Avenue of the Americas, 37th Floor, New York, NY 10036, or remotely by exchange of documents and signatures (or their electronic counterparts), or at such other time or on such other date or at such other place as Seller and Buyer may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”).
Section 2.06 Withholding Tax. Buyer and the Company shall be entitled to deduct and withhold from the Purchase Price all Taxes that Buyer and the Company may be required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered to Seller hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SED
Except as set forth in the correspondingly numbered Section of the Disclosure Schedules (which will be delivered to Buyer and DSS on or before the DSS Proxy Filing Date and shall be attached to and become a part of this Agreement as of the DSS Proxy Filing Date), each of SED and Seller, jointly and severally, represents and warrants to each of Buyer and DSS that the statements contained in this ARTICLE III will be true and correct as of the DSS Proxy Filing Date.
Section 3.01 Organization and Authority of Seller. Each of SED and Seller is a corporation duly organized, validly existing and in good standing under the Laws of Singapore. Each of SED and Seller has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of SED and Seller of this Agreement and the Ancillary Documents to which it is a party, the performance by each of SED and Seller of its obligations hereunder and thereunder, and the consummation by each of SED and Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of SED or Seller, as the case may be. This Agreement has been duly executed and delivered by each of SED and Seller, and (assuming due authorization, execution and delivery by the other Parties hereto) this Agreement constitutes a legal, valid and binding obligation of each of SED and Seller enforceable against it in accordance with its terms. When each other Ancillary Documents to which each of SED and Seller is a party has been duly executed and delivered by it (assuming due authorization, execution and delivery by each other Party thereto), such Ancillary Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms.
Section 3.02 Organization, Authority and Qualification of the Company and Subsidiaries. The Company and each Subsidiary is a corporation, limited liability company or other business entity duly organized, validly existing and in good standing under the Laws of the state of is formation and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section 3.02 of the Disclosure Schedules sets forth each jurisdiction in which the Company and each Subsidiary is licensed or qualified to do business, and the Company and each Subsidiary is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary. The execution and delivery by the Company of any Ancillary Document to which the Company is a party, the performance by the Company of its obligations hereunder and thereunder, and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Company. When each other Ancillary Document to which the Company is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of the Company enforceable against it in accordance with its terms. All corporate actions to be taken by the Company in connection with this Agreement and the Ancillary Documents will be duly authorized on or prior to the Closing.
Section 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000 shares of common stock, par value $0.001 (“Common Stock”), of which 13,897,069 shares are issued and outstanding and constitute the Impact Shares. All of the Impact Shares have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by Seller, free and clear of all Encumbrances. Upon consummation of the transactions contemplated by this Agreement, Buyer shall own all of the Impact Shares, free and clear of all Encumbrances.
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(b) All of the Impact Shares were issued in compliance with applicable Laws. None of the Impact Shares were issued in violation of any agreement, arrangement or commitment to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.
(c) There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Company or obligating Seller or the Company to issue or sell any shares of capital stock of, or any other interest in, the Company. The Company does not have outstanding or authorized any stock appreciation, phantom stock, profit participation or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Impact Shares.
Section 3.04 Subsidiaries.
(a) Section 3.04 of the Disclosure Schedules lists each subsidiary of the Company (each, a “Subsidiary”), indicating the type of legal entity, its jurisdiction of formation and the number and type of shares or other equity or ownership interests thereof held by the Company (the “Subsidiary Equity Interests”). Except for the Subsidiaries listed in Section 3.04 of the Disclosure Schedules, the Company does not own, directly or indirectly, any capital stock or other equity securities of any corporation or have any direct or indirect equity or ownership interest, including interests in partnerships, limited liability companies and joint ventures, and is not a general or limited partner in any partnership, a member of any limited liability company or a co-venturer in any joint venture or other business enterprise.
(b) The Company owns, directly or indirectly through another Subsidiary, beneficially and of record, all of the outstanding Subsidiary Equity Interests of each Subsidiary, free and clear of all Encumbrances. All of the Subsidiary Equity Interests have been duly authorized, are validly issued, fully paid and non-assessable.
Section 3.05 No Conflicts; Consents. The execution, delivery and performance by each of SED and Seller of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of SED, Seller or any member of the Company Group; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to SED, Seller or any member of the Company Group; (c) except as set forth in Section 3.05 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which SED, Seller or any member of the Company Group is a party or by which SED, Seller or any member of the Company Group is bound or to which any of their respective properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business of any member of the Company Group ; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of any member of the Company Group. Except for the approvals, confirmations and/or waivers from the Singapore Exchange Securities Trading Limited and/or Hong Leong Finance Limited as set forth in, and except as otherwise set forth in, Section 3.05 of the Disclosure Schedules, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to SED, Seller or any member of the Company Group in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.
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Section 3.06 SED Stockholder Approval. The approval by the holders of SED common stock is the only vote of holders of any class of DSS capital stock necessary to adopt and approve this Agreement and the transactions contemplated hereby. The affirmative vote of Persons holding at least a majority of the issued and outstanding shares of SED common stock as of the record date for the SED Stockholders’ Meeting is the only vote of SED stockholders required to approve this Agreement and the transactions contemplated hereby. SED’s board of directors, by resolution duly adopted by the unanimous vote of the entire board of directors at a meeting duly called and held, has (i) determined that this Agreement and the transactions contemplated hereby are advisable and are in the best interests of SED and its stockholders, (ii) authorized and approved this Agreement and the transactions contemplated hereby, (iii) directed that the this Agreement and the transactions contemplated hereby be submitted for consideration at the SED Stockholders’ Meeting, and (iv) recommended that its stockholders approve the this Agreement and the transactions contemplated hereby.
Section 3.07 Financial Statements; Accounting.
(a) The unaudited consolidated financial statements of the Company and its Subsidiaries consisting of the consolidated balance sheet as at December 31 in each of the years 2019 and 2018 and the related consolidated statements of income and retained earnings, stockholders’ equity and cash flow for the years then ended, including the notes thereto (the “Annual Financial Statements”), and unaudited consolidated financial statements consisting of the consolidated balance sheet as at March 31, 2020, and the related consolidated statements of income and retained earnings, stockholders’ equity and cash flow for the three-month period then ended, including the notes thereto (the “Interim Financial Statements” and together with the Annual Financial Statements, the “Financial Statements”) have been delivered to Buyer. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Annual Financial Statements). The Financial Statements are based on the books and records of the Company Group, and fairly present the financial condition of the Company Group as of the respective dates they were prepared and the results of the operations of the Company Group for the periods indicated. The consolidated balance sheet of the Company Group as of December 31, 2019, is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the consolidated balance sheet of the Company Group as of March 31, 2020, is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”.
(b) The Company and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Section 3.08 Undisclosed Liabilities. The Company Group has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“Liabilities”), except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount.
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Section 3.09 Absence of Certain Changes, Events and Conditions. Since the Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to any member of the Company Group, any:
(a) event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;
(b) amendment of the charter, by-laws or other organizational documents of the Company;
(c) split, combination or reclassification of any shares of its capital stock;
(d) issuance, sale or other disposition of any of its capital stock, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;
(e) declaration or payment of any dividends or distributions on or in respect of any of its capital stock or redemption, purchase or acquisition of its capital stock;
(f) material change in any method of accounting or accounting practice of the Company, except as required by GAAP or as disclosed in the notes to the Financial Statements;
(g) material change in its cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;
(h) entry into any Contract that would constitute a Material Contract;
(i) incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;
(j) transfer, assignment, sale or other disposition of any of the assets shown or reflected in the Balance Sheet or cancellation of any debts or entitlements;
(k) transfer or assignment of or grant of any license or sublicense under or with respect to any Company Intellectual Property or Company IP Agreements;
(l) abandonment or lapse of or failure to maintain in full force and effect any Company IP Registration, or failure to take or maintain reasonable measures to protect the confidentiality or value of any Trade Secrets included in the Company Intellectual Property;
(m) material damage, destruction or loss (whether or not covered by insurance) to its property;
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(n) any capital investment in, or any loan to, any other Person;
(o) acceleration, termination, material modification to or cancellation of any material Contract (including, but not limited to, any Material Contract) to which any member of the Company Group is a party or by which it is bound;
(p) any material capital expenditures;
(q) imposition of any Encumbrance upon any of any member of the Company Group’s properties, capital stock or assets, tangible or intangible;
(r) (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $50,000, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;
(s) hiring or promoting any person except to fill a vacancy in the ordinary course of business;
(t) adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a a union, works council or labor organization (collectively, “Union”), in each case whether written or oral;
(u) any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its stockholders or current or former directors, officers and employees;
(v) entry into a new line of business or abandonment or discontinuance of existing lines of business;
(w) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;
(x) purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $10,000, individually (in the case of a lease, per annum) or $100,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;
(y) acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof;
(z) action by any member of the Company Group to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period; or
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(aa) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.
Section 3.10 Material Contracts.
(a) Section 3.10(a) of the Disclosure Schedules lists each of the following Contracts of any member of the Company Group (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in Section 3.11(b) of the Disclosure Schedules and all Company IP Agreements set forth in Section 3.12(b) of the Disclosure Schedules, being “Material Contracts”):
(i) each Contract involving aggregate consideration in excess of $100,000 and which, in each case, cannot be cancelled by the member of the Company Group without penalty or without more than 90 days’ notice;
(ii) all Contracts that require any member of the Company Group to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions;
(iii) all Contracts that provide for the indemnification by any member of the Company Group of any Person or the assumption of any Tax, environmental or other Liability of any Person;
(iv) all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);
(v) all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which any member of the Company Group is a party;
(vi) all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which any member of the Company Group is a party and which are not cancellable without material penalty or without more than 90 days’ notice;
(vii) except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including, without limitation, guarantees) of any member of the Company Group;
(viii) all Contracts with any Governmental Authority to which any member of the Company Group is a party (“Government Contracts”);
(ix) all Contracts that limit or purport to limit the ability of any member of the Company Group to compete in any line of business or with any Person or in any geographic area or during any period of time;
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(x) any Contracts to which any member of the Company Group is a party that provide for any joint venture, partnership or similar arrangement by any member of the Company Group;
(xi) all Contracts between or among any member of the Company Group on the one hand and Seller or any Affiliate of Seller (other than any member of the Company Group) on the other hand;
(xii) all collective bargaining agreements or Contracts with any Union to which any member of the Company Group is a party; and
(xiii) any other Contract that is material to the Company Group and not previously disclosed pursuant to this Section 3.10.
(b) Each Material Contract is valid and binding on the Company Group member party thereto in accordance with its terms and is in full force and effect. None of the Company Group member or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer.
Section 3.11 Title to Assets; Real Property.
(a) No member of the Company Group owns or has owned any Real Property. Each member of the Company Group has good and valid title to, or a valid leasehold interest in, all Real Property and personal property and other assets reflected in the Annual Financial Statements or acquired after the Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):
(i) those items set forth in Section 3.11(a) of the Disclosure Schedules;
(ii) liens for Taxes not yet due and payable;
(iii) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of the Company Group;
(iv) easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the business of the Company Group; or
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(v) liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of the Company Group.
(b) Section 3.11(b) of the Disclosure Schedules lists (i) the street address of each parcel of Real Property; (ii) if such property is leased or subleased by any member of the Company Group, the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. With respect to leased Real Property, Seller has delivered or made available to Buyer true, complete and correct copies of any leases affecting the Real Property. The Company is not a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of any member of the Company Group’s business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. No material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than any member of the Company Group. There are no Actions pending nor, to the Seller’s Knowledge, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.
(c) Condition and Sufficiency of Assets. Except as set forth in Section 3.11(c) of the Disclosure Schedules, the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of each member of the Company Group are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by each member of the Company Group, together with all other properties and assets of such entity, are sufficient for the continued conduct of its business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct its business as currently conducted.
Section 3.12 Intellectual Property.
(a) Section 3.12(a) of the Disclosure Schedules contains a correct, current, and complete list of: (i) all Company IP Registrations, specifying as to each, as applicable: the title, mark, or design; the record owner and inventor(s), if any; the jurisdiction by or in which it has been issued, registered, or filed; the patent, registration, or application serial number; the issue, registration, or filing date; and the current status; (ii) all unregistered Trademarks included in the Company Intellectual Property; (iii) all proprietary Software of any member of the Company Group; and (iv) all other Company Intellectual Property used or held for us] in any member of the Company Group’s business as currently conducted and as proposed to be conducted.
(b) Section 3.12(b) of the Disclosure Schedules contains a correct, current, and complete list of all Company IP Agreements, specifying for each the date, title, and parties thereto, and separately identifying the Company IP Agreements: (i) under which any member of the Company Group is a licensor or otherwise grants to any Person any right or interest relating to any Company Intellectual Property; (ii) under which any member of the Company Group is a licensee or otherwise granted any right or interest relating to the Intellectual Property of any Person; and (iii) which otherwise relate to any member of the Company Group’s ownership or use of Intellectual Property, in each case identifying the Intellectual Property covered by such Company IP Agreement. Seller has provided Buyer with true and complete copies (or in the case of any oral agreements, a complete and correct written description) of all Company IP Agreements, including all modifications, amendments and supplements thereto and waivers thereunder. Each Company IP Agreement is valid and binding on the member of the Company Group party thereto in accordance with its terms and is in full force and effect. Neither the member of the Company Group party thereto nor any other party thereto is, or is alleged to be, in breach of or default under, or has provided or received any notice of breach of, default under, or intention to terminate (including by non-renewal), any Company IP Agreement.
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(c) Except as set forth in Section 3.12(c) of the Disclosure Schedules, the specified the member of the Company Group is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record, owner of all right, title, and interest in and to the Company Intellectual Property, and has the valid and enforceable right to use all other Intellectual Property used or held for use in or necessary for the conduct of its business as currently conducted and as proposed to be conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances. Each member of the Company Group has entered into binding, valid and enforceable, written Contracts with each of its current and former employees and independent contractors whereby such employee or independent contractor (i) acknowledges a member of the Company Group’s exclusive ownership of all Intellectual Property invented, created, or developed by such employee or independent contractor within the scope of his or her employment or engagement with the Company; (ii) grants to a member of the Company Group a present, irrevocable assignment of any ownership interest such employee or independent contractor may have in or to such Intellectual Property; and (iii) irrevocably waives any right or interest, including any moral rights, regarding any such Intellectual Property, to the extent permitted by applicable Law. Seller has provided Buyer with true and complete copies of all such Contracts. All assignments and other instruments necessary to establish, record, and perfect a member of the Company Group’s ownership interest in the Company IP Registrations have been validly executed, delivered, and filed with the relevant Governmental Authorities and authorized registrars.
(d) Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of, or require the consent of any other Person in respect of, any member of the Company Group’s right to own or use any Company Intellectual Property or Licensed Intellectual Property.
(e) All of the Company Intellectual Property and Licensed Intellectual Property is valid and enforceable, and all Company IP Registrations are subsisting and in full force and effect. The Company has taken all necessary steps to maintain and enforce the Company Intellectual Property and Licensed Intellectual Property and to preserve the confidentiality of all Trade Secrets included in the Company Intellectual Property, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements. All required filings and fees related to the Company IP Registrations have been timely submitted with and paid to the relevant Governmental Authorities and authorized registrars. Seller has provided Buyer with true and complete copies of all file histories, documents, certificates, office actions, correspondence, assignments, and other instruments relating to the Company IP Registrations.
(f) The conduct of any member of the Company Group’s business as currently and formerly conducted and as proposed to be conducted, including the use of the Company Intellectual Property and Licensed Intellectual Property in connection therewith, and the products, processes and services of any member of the Company Group have not infringed, misappropriated or otherwise violated, and will not infringe, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person. No Person has infringed, misappropriated or otherwise violated any Company Intellectual Property or Licensed Intellectual Property.
(g) There are no Actions (including any opposition, cancellation, revocation, review, or other proceeding), whether settled, pending, or threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, or other violation by any member of the Company Group of the Intellectual Property of any Person; (ii) challenging the validity, enforceability, registrability, patentability, or ownership of any Company Intellectual Property or Licensed Intellectual Property or any member of the Company Group’s right, title, or interest in or to any Company Intellectual Property or Licensed Intellectual Property; or (iii) by any member of the Company Group or by the owner of any Licensed Intellectual Property alleging any infringement, misappropriation, or other violation by any Person of the Company Intellectual Property or such Licensed Intellectual Property. Neither Seller nor any member of the Company Group is aware of any facts or circumstances that could reasonably be expected to give rise to any such Action. The Company is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to restrict or impair the use of any Company Intellectual Property or Licensed Intellectual Property.
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(h) Section 3.12(h) of the Disclosure Schedules contains a correct, current, and complete list of all social media accounts used in any member of the Company Group’s business. The Company has complied with all terms of use, terms of service, and other Contracts and all associated policies and guidelines relating to its use of any social media platforms, sites, or services (collectively, “Platform Agreements”). There are no Actions, whether settled, pending, or threatened, alleging any (A) breach or other violation of any Platform Agreement by any member of the Company Group; or (B) defamation, violation of publicity rights of any Person, or any other violation by any member of the Company Group in connection with its use of social media.
(i) All Company IT Systems are in good working condition and are sufficient for the operation of each member of the Company Group’s business as currently conducted and as proposed to be conducted, except where any such failure would not have a Company Material Adverse Effect. In the past three (3) years, there has been no (A) malfunction, failure, continued substandard performance or other impairment of the Company IT Systems that has had or would have a Company Material Adverse Effect, or (B) denial-of-service, or other cyber incident, including any cyberattack of the Company IT Systems. Each member of the Company Group has taken all commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity of its Company IT Systems, including implementing and maintaining appropriate backup, disaster recovery, and Software and hardware support arrangements.
Section 3.13 Privacy and Data Security.
(a) The Company, and, to Seller’s Knowledge, all vendors, processors, or other third parties acting for or on behalf of the company in connection with the Processing of Personal Information or that otherwise have been authorized to have access to Personal Information in the possession or control of any member of the Company Group, comply and at all times in the past three (3) years have complied, with all of the following in the conduct of the Business: (A) Privacy Laws; (B) rules of self-regulatory organizations, including the Payment Card Industry Data Security Standard; (C) industry standards, guidelines, and best practices, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework; (D) the Business Privacy and Data Security Policies; and (E) all obligations or restrictions concerning the privacy, security, or Processing of Personal Information under any Contract to which any member of the Company Group is a party or otherwise bound as of the date hereof.
(b) The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not: (A) conflict with or result in a violation or breach of any Privacy Laws or Business Privacy and Data Security Policies (as currently existing or as existing at any time during which any Personal Information was collected or Processed by or for any member of the Company Group in the conduct of its business); or (B) require the consent of or notice to any Person concerning such Person’s Personal Information.
(c) The Company has posted to each of its websites and published or otherwise made available in connection with each of its business products a Business Privacy and Data Security Policy. No disclosure or representation made or contained in any Business Privacy and Data Security Policy has been inaccurate, misleading, deceptive, or in violation of any Privacy Laws (including by containing any material omission), and each member of the Company Group’s practices with respect to the Processing of Personal Information in the Business conform, and at all times in the past three (3) years have conformed, to the Business Privacy and Data Security Policies that govern the use of such Personal Information. Seller has delivered or made available to Buyer true, complete, and correct copies of all Business Privacy and Data Security Policies that are currently or in the past three (3) years were in effect.
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(d) In the past three (3) years, (A) to Seller’s Knowledge, no Personal Information in the possession or control of any member of the Company Group, or held or Processed by any vendor, processor, or other third party for or on behalf of any member of the Company Group, in the conduct of the Business has been subject to any data or security breach or unauthorized access, disclosure, use, loss, denial or loss of use, alteration, destruction, compromise, or Processing (a “Security Incident”), and (B) no member of the Company Group has notified and, to Seller’s Knowledge, there have been no facts or circumstances that would require any member of the Company Group to notify, any Governmental Authority or other Person of any Security Incident in the conduct of the Business.
(e) In the past three (3) years, no member of the Company Group has received any notice, request, claim, complaint, correspondence, or other communication in writing from any Governmental Authority or other Person, and to Seller’s Knowledge there has not been any audit, investigation, enforcement action (including any fines or other sanctions), or other Action relating to, any actual, alleged, or suspected Security Incident or violation of any Privacy Law involving Personal Information in the possession or control of any member of the Company Group, or held or Processed by any vendor, processor, or other third party for or on behalf of any member of the Company Group, in the conduct of the Business.
(f) In the conduct of the Business, each member of the Company Group has at all times in the past three (3) years implemented and maintained, and required all vendors, processors, and other third parties that Process any Personal Information for or on behalf of any member of the Company Group to implement and maintain, all security measures, plans, procedures, controls, and programs, including written information security programs, to (A) identify and address internal and external risks to the privacy and security of Personal Information in their possession or control; (B) implement, monitor, and improve adequate and effective administrative, technical, and physical safeguards to protect such Personal Information and the operation, integrity, and security of its software, systems, applications, and websites involved in the Processing of Personal Information; and (C) provide notification in compliance with applicable Privacy Laws in the case of any Security Incident.
(g) In the past three (3) years, the Company Group has /at least annually performed a security risk assessment and a privacy impact assessment and obtained an independent vulnerability assessment performed by a recognized third-party audit firm. Each member of the Company Group has used reasonable efforts to address and remediate all threats and deficiencies identified in each such assessment. Section 3.13(g) of the Disclosure Schedules sets forth a complete and accurate list of each such internal and external assessment.
Section 3.14 Inventory. No member the Company Group holds any inventory (whether raw materials, work-in-process or finished goods).
Section 3.15 Accounts Receivable. No member the Company Group has any accounts receivable.
Section 3.16 Customers and Suppliers.
(a) No member the Company Group has any customer for goods or services.
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(b) Except with respect to any Material Contract set forth in Section 3.10(a) of the Disclosure Schedules, no member the Company Group has paid consideration to any supplier for goods or services rendered in an amount greater than or equal to $100,000 for each of the two most recent fiscal year.
Section 3.17 Insurance. Section 3.17 of the Disclosure Schedules sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability and other casualty and property insurance maintained by Seller or its Affiliates (including any member of the Company Group) and relating to the assets, business, operations, employees, officers and directors of any member of the Company Group (collectively, the “Insurance Policies”) and true and complete copies of such Insurance Policies have been made available to Buyer. Such Insurance Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. Neither the Seller nor any of its Affiliates (including any member of the Company Group) has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of any member of the Company Group. All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. Except as set forth on Section 3.17 of the Disclosure Schedules, there are no claims related to the business of any member of the Company Group pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. None of Seller or any of its Affiliates (including any member of the Company Group) is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the applicable member of the Company Group and are sufficient for compliance with all applicable Laws and Contracts to which the applicable member of the Company Group is a party or by which it is bound.
Section 3.18 Legal Proceedings; Governmental Orders.
(a) Except as set forth in Section 3.18(a) of the Disclosure Schedules, there are no Actions pending or, to Seller’s Knowledge, threatened (a) against or by any member of the Company Group affecting any of its properties or assets (or by or against Seller or any Affiliate thereof and relating to any member of the Company Group); or (b) against or by any member of the Company Group, Seller or any Affiliate of Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
(b) Except as set forth in Section 3.18(b) of the Disclosure Schedules, there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting any member of the Company Group or any of its properties or assets. The Company is in compliance with the terms of each Governmental Order set forth in Section 3.18(b) of the Disclosure Schedules. No event has occurred or circumstances exist that may constitute or result in (with or without notice or lapse of time) a violation of any such Governmental Order.
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Section 3.19 Compliance with Laws; Permits.
(a) Except as set forth in Section 3.19(a) of the Disclosure Schedules, each member of the Company Group has complied, and is now complying, with all Laws applicable to it or its business, properties or assets.
(b) All Permits required for each member of the Company Group to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 3.19(b) of the Disclosure Schedules lists all current Permits issued to any member of the Company Group, including the names of the Permits and their respective dates of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 3.19(b) of the Disclosure Schedules.
(c) Without limiting the foregoing, each member of the Company Group holds, and is operating in compliance with, all Permits and orders of the U.S. Food and Drug Administration (the “FDA”), its foreign counterparts. Each member of the Company Group is in compliance with all applicable federal, state, local and foreign laws, regulations, orders and decrees applicable to the manufacture, distribution, import and export of regulated products and component parts and ingredients, except as would not reasonably be expected to have a Company Material Adverse Effect. No member of the Company Group has received any FDA Form 483, warning letter, untitled letter or other correspondence or written notice from any Governmental Authority, alleging or asserting noncompliance with the U.S. Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) or comparable foreign laws. No member of the Company Group has been notified, either orally or in writing, by any Governmental Authority that a clinical study has been put on hold or may be put on hold. Each member of the Company Group, and to the Seller’s Knowledge, each of their respective directors, officers, employees and agents, is and has been in material compliance with applicable health care laws, including, to the extent applicable, without limitation, the U.S. Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.), the U.S. Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the U.S. Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.), as amended by the U.S. Health Information Technology for Economic and Clinical Health Act of 2009 (42 U.S.C. § 17921 et seq.), and the regulations promulgated pursuant to such laws, and comparable state laws and foreign laws (collectively, “Health Care Laws”), except, in each case, as would not reasonably be expected to have a Company Material Adverse Effect. No member of the Company Group has received written notice of any ongoing claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Authority or third party alleging that any product operation or activity is in material violation of any Health Care Laws or any Permits. Each member of the Company Group has filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments thereto as required by any Health Care Laws or any Permits and all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission), except where any of the foregoing would not be reasonably expected to have a Company Material Adverse Effect. No member of the Company Group has, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any other notice or action relating to any alleged product defect or violation and, to the Seller’s knowledge, no third party has initiated or conducted any such notice or action relating to any member of the Company Group’s products in development.
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(d) No member of the Company Group is a party to any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, or similar agreements, or has any reporting obligations pursuant to any such agreement, plan or correction or other remedial measure entered into with any Governmental Authority.
Section 3.20 Environmental Matters.
(a) The Company is currently and has been in compliance with all Environmental Laws and has not, and the Seller has not, received from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.
(b) The Company has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in Section 3.20(b) of the Disclosure Schedules) necessary for the ownership, lease, operation or use of the business or assets of any member of the Company Group and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect by Seller through the Closing Date in accordance with Environmental Law, and neither Seller nor any member of the Company Group is aware of any condition, event or circumstance that might prevent or impede, after the Closing Date, the ownership, lease, operation or use of the business or assets of any member of the Company Group as currently carried out. With respect to any such Environmental Permits, Seller has undertaken, or will undertake prior to the Closing Date, all measures necessary to facilitate transferability of the same, and neither any member of the Company Group nor the Seller is aware of any condition, event or circumstance that might prevent or impede the transferability of the same, nor have they received any Environmental Notice or written communication regarding any material adverse change in the status or terms and conditions of the same.
(c) No real property currently or formerly owned, operated or leased by any member of the Company Group is listed on, or has been proposed for listing on, the National Priorities List (or CERCLIS) under CERCLA, or any similar state list.
(d) There has been no Release of Hazardous Materials in contravention of Environmental Law with respect to the business or assets of any member of the Company Group or any real property currently or formerly owned, operated or leased by any member of the Company Group, and neither any member of the Company Group nor Seller has received an Environmental Notice that any real property currently or formerly owned, operated or leased in connection with the business of any member of the Company Group (including soils, groundwater, surface water, buildings and other structure located on any such real property) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by, Seller or any member of the Company Group.
(e) Section 3.20(e) of the Disclosure Schedules contains a complete and accurate list of all active or abandoned aboveground or underground storage tanks owned or operated by any member of the Company Group.
(f) Section 3.20(f) of the Disclosure Schedules contains a complete and accurate list of all off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by any member of the Company Group or Seller and any predecessors as to which any member of the Company Group or Seller may retain liability, and none of these facilities or locations has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar state list, and neither Seller nor any member of the Company Group has received any Environmental Notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by any member of the Company Group or Seller.
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(g) Neither Seller nor any member of the Company Group has retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law.
(h) Seller has provided or otherwise made available to Buyer and listed in Section 3.20(h) of the Disclosure Schedules: (i) any and all environmental reports, studies, audits, records, sampling data, site assessments, risk assessments, economic models and other similar documents with respect to the business or assets of any member of the Company Group or any currently or formerly owned, operated or leased real property which are in the possession or control of the Seller or Company related to compliance with Environmental Laws, Environmental Claims or an Environmental Notice or the Release of Hazardous Materials; and (ii) any and all material documents concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws (including, without limitation, costs of remediation, pollution control equipment and operational changes).
(i) Neither the Seller nor any member of the Company Group is aware of or reasonably anticipates, as of the Closing Date, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of any member of the Company Group as currently carried out.
(j) Seller owns and controls all Environmental Attributes (a complete and accurate list of which is set forth in Section 3.20(j) of the Disclosure Schedules) and has not entered into any contract or pledge to transfer, lease, license, guarantee, sell, mortgage, pledge or otherwise dispose of or encumber any Environmental Attributes as of the date hereof. Neither Seller nor any member of the Company Group is aware of any condition, event or circumstance that might prevent, impede or materially increase the costs associated with the transfer (if required) to Buyer of any Environmental Attributes after the Closing Date.
Section 3.21 Employment Matters.
(a) No member of the Company Group currently has or ever has had any employees.
(b) Section 3.21(a) of the Disclosure Schedules contains a list of all persons who are independent contractors or consultants of each member of the Company Group as of the date hereof, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full-time or part-time); (iii) retention date; (iv) current annual base compensation rate or contract fee; (v) commission, bonus or other incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof. Except as set forth in Section 3.21(a) of the Disclosure Schedules, as of the date hereof, all compensation, including wages, commissions, bonuses, fees and other compensation, payable to all independent contractors or consultants of any member of the Company Group for services performed on or prior to the date hereof have been paid in full (or accrued in full on the Interim Balance Sheet) and there are no outstanding agreements, understandings or commitments of any member of the Company Group with respect to any compensation, commissions, bonuses or fees.
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(c) No member of the Company Group is, or has ever been, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has never been, any Union representing or purporting to represent any employee of any member of the Company Group.
(d) The Company is and has been in compliance with all applicable Laws pertaining to consultants and independent contractors of any member of the Company Group, including all Laws relating to labor relations, equal opportunities, fair practices, discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave and unemployment insurance. All individuals characterized and treated by any member of the Company Group as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. There are no Actions against any member of the Company Group pending, or to the Seller’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former consultant or independent contractor of any member of the Company Group, including, without limitation, any charge, investigation or claim relating to the Laws referred to in the first sentence of this paragraph or any other employment related matter arising under applicable Laws.
Section 3.22 Benefit Matters.
(a) Neither Seller or any of its Affiliates nor any member of the Company Group currently has or ever maintained, sponsored, contributed to, or required to be contributed to, for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of any member of the Company Group or any spouse or dependent of such individual pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off (PTO), medical, vision, dental, disability, welfare, Code Section 125 cafeteria, fringe benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, (each, a “Benefit Plan”), nor is there any Benefit Plan under which any member of the Company Group or any of its ERISA Affiliates has or may have any Liability, or with respect to which Buyer or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise.
(b) Except as set forth in Section 3.22(b) of the Disclosure Schedules, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer, independent contractor or consultant of any member of the Company Group to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation (including stock-based compensation) due to any such individual; (iii) result in “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (vi) require a “gross-up” or other payment to any “disqualified individual” within the meaning of Section 280G(c) of the Code.
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(c) Each member of the Company Group has complied with the WARN Act, and it has no plans to undertake any action that would trigger the WARN Act.
Section 3.23 Taxes. Except as set forth in Section 3.23 of the Disclosure Schedules:]
(a) All Tax Returns required to be filed on or before the Closing Date by the Company Group have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes due and owing by the Company Group (whether or not shown on any Tax Return) have been, or will be, timely paid.
(b) Each member of the Company Group has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.
(c) No claim has been made by any taxing authority in any jurisdiction where any member of the Company Group does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.
(d) No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of any member of the Company Group.
(e) The amount of the Company Group’s Liability for unpaid Taxes for all periods ending on or before March 31, 2020, does not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the Financial Statements. The amount of the Company Group’s Liability for unpaid Taxes for all periods following the end of the recent period covered by the Financial Statements shall not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) as adjusted for the passage of time in accordance with the past custom and practice of the Company Group (and which accruals shall not exceed comparable amounts incurred in similar periods in prior years).
(f) Section 3.23(f) of the Disclosure Schedules sets forth:
(i) the taxable years of any member of the Company Group as to which the applicable statutes of limitations on the assessment and collection of Taxes have not expired;
(ii) those years for which examinations by the taxing authorities have been completed; and
(iii) those taxable years for which examinations by taxing authorities are presently being conducted.
(g) All deficiencies asserted, or assessments made, against any member of the Company Group as a result of any examinations by any taxing authority have been fully paid.
(h) No member of the Company Group is a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority.
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(i) Seller has delivered to Buyer copies of all federal, state, local and foreign income, franchise and similar Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, any member of the Company Group for all Tax periods ending after December 31, 2016.
(j) There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) upon the assets of any member of the Company Group.
(k) No member of the Company Group is a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement.
(l) No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any taxing authority with respect to any member of the Company Group.
(m) No member of the Company Group has been a member of an affiliated, combined, consolidated or unitary Tax group for Tax purposes. No member of the Company Group has any Liability for Taxes of any Person (other than the Company Group) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor, by contract or otherwise.
(n) No member of the Company Group will be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of:
(i) any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date;
(ii) an installment sale or open transaction occurring on or prior to the Closing Date;
(iii) a prepaid amount received on or before the Closing Date;
(iv) any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or
(v) any election under Section 108(i) of the Code.
(o) No member of the Company Group has been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code.
(p) No member of the Company Group is, nor has been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).
(q) There is currently no limitation on the utilization of net operating losses, capital losses, built-in losses, tax credits or similar items of any member of the Company Group under Sections 269, 382, 383, 384 or 1502 of the Code and the Treasury Regulations thereunder (and comparable provisions of state, local or foreign Law).
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(r) Section 3.23(r) of the Disclosure Schedules sets forth all foreign jurisdictions in which any member of the Company Group is subject to Tax, is engaged in business or has a permanent establishment. No member of the Company Group has entered into a gain recognition agreement pursuant to Treasury Regulations Section 1.367(a)-8. No member of the Company Group has transferred an intangible the transfer of which would be subject to the rules of Section 367(d) of the Code.
(s) No property owned by any member of the Company Group is (i) required to be treated as being owned by another person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, (ii) subject to Section 168(g)(1)(A) of the Code, or (iii) subject to a disqualified leaseback or long-term agreement as defined in Section 467 of the Code.
Section 3.24 Money Laundering Laws. The operations of each member of the Company Group are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”), and no Proceeding involving any member of the Company Group with respect to the Money Laundering Laws is pending or, to the Knowledge of Seller, threatened.
Section 3.25 Foreign Corrupt Practices. Neither any member of the Company Group nor, to Seller’s Knowledge, any director, officer, agent, employee or other Person acting on behalf of any member of the Company Group has, in the course of its actions for, or on behalf of, any member of the Company Group (a) used any corporate or company funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
Section 3.26 No Disagreements with Accountants and Lawyers. To the Knowledge of Seller, there are no disagreements of any kind, including but not limited to any disagreements regarding fees owed for services rendered, presently existing, or reasonably anticipated by Seller or any member of the Company Group to arise, between any member of the Company Group and the accountants and lawyers formerly or presently employed by any member of the Company Group which could affect Seller or any member of the Company Group’s ability to perform any of its obligations under this Agreement, and each member of the Company Group is current with respect to any fees owed to its accountants and lawyers. No independent accountant who was previously engaged as the principal accountant to audit the any member of the Company Group’s financial statements has resigned (or indicated it has declined to stand for re-election after the completion of the current audit) or was dismissed, and there were no disagreements with the accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of the accountant, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report.
Section 3.27 Books and Records. The minute books and stock record books of each member of the Company Group, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices. The minute books of each member of the Company Group contain accurate and complete records of all meetings, and actions taken by written consent of, the stockholders, the board of directors (or other governing body) and any committees thereof, and no meeting, or action taken by written consent, of any such stockholders, board of directors (or other governing body) or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Company.
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Section 3.28 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or other Ancillary Document based upon arrangements made by or on behalf of Seller.
Section 3.29 Investment Representations
(a) Investment Purpose. Seller understands and agrees that the consummation of this Agreement including the delivery of the DSS Shares to Seller in exchange for the Impact Shares as contemplated hereby may constitute the offer and sale of securities under the Securities Act and applicable state securities laws and that the DSS Shares are being acquired for Seller’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act.
(b) Accredited Investor Status. Seller is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act (an “Accredited Investor”).
(c) Reliance on Exemptions. Seller understands that the DSS Shares are being issued to Seller in reliance upon specific exemptions from the registration requirements of United States federal and state securities Laws and that DSS and Buyer are relying upon the truth and accuracy of, and Seller’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Seller set forth herein in order to determine the availability of such exemptions and the eligibility of Seller to acquire the DSS Shares.
(d) Information. Seller and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of DSS and materials relating to the issuance of the DSS Shares that have been requested by Seller or its advisors. Seller and its advisors, if any, have been afforded the opportunity to ask questions of the management of DSS. Seller understands that its investment in the DSS Shares involves a significant degree of risk. Seller is not aware of any facts that may constitute a breach of any of DSS’s or Buyer’s representations and warranties made herein. Seller has received and reviewed the SEC Reports and consents to such SEC Reports being delivered to Seller via the DSS’s filings with the SEC through its electronic EDGAR database.
(e) Governmental Review. Seller understands that no United States federal or state agency or any other Governmental Authority has passed upon or made any recommendation or endorsement of the DSS Shares.
(f) Transfer or Resale. Seller understands that the sale or re-sale of the DSS Shares has not been and is not being registered under the Securities Act or any applicable state or foreign securities Laws, and the DSS Shares may not be Transferred unless the DSS Shares are sold pursuant to an effective registration statement under the Securities Act, Seller shall have delivered to DSS, at the cost of Seller, an opinion of U. S. securities counsel reasonably satisfactory to DSS that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the DSS Shares to be sold or transferred may be sold or transferred pursuant to an exemption from the registration requirements of the Securities Act (including Rule 144 promulgated under the Securities Act (or a successor rule) (“Rule 144”)), which opinion is accepted by DSS, the DSS Shares are sold or transferred to an Affiliate of Seller who agrees to sell or otherwise transfer the DSS Shares only in accordance with this Section 3.29 and who is an Accredited Investor, or the DSS Shares are sold pursuant to Regulation S under the Securities Act (or a successor rule) (“Regulation S”), and Seller shall have delivered to DSS, at the cost of Seller, an opinion of U. S. securities counsel reasonably satisfactory to DSS that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by DSS; (ii) any sale of DSS Shares made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such DSS Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither DSS or Buyer nor any other Person is under any obligation to register the DSS Shares under the Securities Act or any state or foreign securities Laws or to comply with the terms and conditions of any exemption thereunder (in each case).
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(g) Legends. Seller understands that the DSS Shares, until such time as they may have been registered under the Securities Act, or may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold or other restrictions, the DSS Shares, and any securities into which the DSS Shares may be converted or for which they may be exchanged, will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed with DSS’s transfer agent against transfer of the certificates for such securities):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE[, AND THE SECURITIES INTO WHICH THEY ARE CONVERTIBLE,] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE OR FOREIGN SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.”
The legend set forth above shall be removed and DSS shall issue a certificate without such legend to the holder of any DSS Shares upon which it is stamped, if, unless otherwise required by applicable state securities Laws, (a) the DSS Shares are registered for sale under an effective registration statement filed under the Securities Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold or other restrictions, or (b) such holder provides DSS with an opinion of counsel as provided above. Seller agrees to sell all DSS Shares, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. If Seller effects a sale, assignment or transfer of the DSS Shares in accordance with Section 3.29(f), DSS shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by Seller to effect such sale, transfer or assignment.
Section 3.30 Proxy Information. The information contained in the SED Meeting Circular (other than information supplied by DSS or Buyer or any of their Affiliates specifically for use therein) as of the date thereof, and up to and including the date of the SED Stockholders’ Meeting, (i) will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances in which they were made, not misleading, (ii) will disclose all facts that the SED board of directors deems material to a vote on this Agreement and the transactions contemplated hereby, and (iii) will comply in all material respects with the provisions of applicable Singapore law. The information contained in the DSS Proxy Statement supplied by SED, Seller or any member of the Company Group, or any of their Affiliates specifically for use therein as of the date thereof, and up to and including the date of the DSS Stockholders’ Meeting, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances in which they were made, not misleading.
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Section 3.31 Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND DSS
Except as set forth in the correspondingly numbered Section of the Disclosure Schedules (which will be delivered to Seller and SED on or before the SED Circular Filing Date and shall be attached to and become a part of this Agreement as of the SED Circular Filing Date), each of DSS and Buyer, jointly and severally, represents and warrants to each of Seller and SED that the statements contained in this ARTICLE IV will be true and correct as of the SED Circular Filing Date.
Section 4.01 Organization and Authority. Each of Buyer and DSS is a corporation duly organized, validly existing and in good standing under the Laws of the state of its incorporation. Each of Buyer and DSS has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of Buyer and DSS of this Agreement and any Ancillary Document to which it is a party, the performance by each of Buyer and DSS of its obligations hereunder and thereunder and the consummation by each of Buyer and DSS of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of each of Buyer and DSS, subject to the approval of this agreement and the transactions contemplated hereby by the holders of DSS common stock. This Agreement has been duly executed and delivered by each of Buyer and DSS, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer or DSS, as the case may be, enforceable against it in accordance with its terms. When each Ancillary Document to which it is or will be a party has been duly executed and delivered by Buyer or DSS (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Buyer or DSS, as the case may be, enforceable against it in accordance with its terms.
Section 4.02 DSS Stockholder Approval. The approval by the holders of DSS common stock is the only vote of holders of any class of DSS capital stock necessary to adopt and approve this Agreement and the transactions contemplated hereby. The affirmative vote of Persons holding at least a majority of the issued and outstanding shares of DSS common stock as of the record date for the DSS Stockholders’ Meeting is the only vote of DSS stockholders required to approve the this Agreement and the transactions contemplated hereby. DSS’s board of directors, by resolution duly adopted by the unanimous vote of the entire board of directors at a meeting duly called and held or acting by unanimous written consent, has (i) determined that this Agreement and the transactions contemplated hereby are advisable and are in the best interests of DSS and its stockholders, (ii) authorized and approved this Agreement and the transactions contemplated hereby, (iii) directed that the this Agreement and the transactions contemplated hereby be submitted for consideration at the DSS Stockholders’ Meeting, and (iv) recommended that its stockholders approve the this Agreement and the transactions contemplated hereby.
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Section 4.03 No Conflicts; Consents. The execution, delivery and performance by each of Buyer and DSS of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of its certificate of incorporation, by-laws or other organizational documents; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to it; or (c) require the consent, notice or other action by any Person under any material Contract to which it is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer or DSS in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.
Section 4.04 Investment Purpose. Buyer is acquiring the Impact Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Impact Shares are not registered under the Securities Act, or any state or foreign securities laws, and that the Impact Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.
Section 4.05 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Buyer or DSS.
Section 4.06 Legal Proceedings. There are no Actions pending or, to Buyer’s knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.
Section 4.07 DSS Shares. Assuming the accuracy of the representations and warranties made by SED and the Seller herein, the DSS Common Shares and the DSS Preferred Shares, when issued and delivered as provided herein, and the shares of DSS common stock issuable upon conversion of the DSS Preferred Shares, upon conversion thereof as provided in the Certificate of Designations, will have been duly authorized, and will be validly issued, fully paid and non-assessable, and will have been issued in accordance with a valid exemption to the registration requirements of the Securities Act.
Section 4.08 SEC Reports.
(a) DSS has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC since January 1, 2018, pursuant to the Exchange Act (the “SEC Reports”).
(b) As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, 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 consolidated financial statements of DSS included in the SEC Reports comply in all respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements as permitted by Form 10-Q), and fairly present in all material respects (subject in the case of unaudited statements, to normal, recurring audit adjustments) the financial position of DSS and its subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended.
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(c) Internal Accounting Controls. As set forth in the SEC Reports, DSS and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Section 4.09 Proxy Information. The information contained in the DSS Proxy Statement (other than information supplied by SED, Seller or any member of the Company Group, or any of their Affiliates specifically for use therein) as of the date thereof, and up to and including the date of the DSS Stockholders’ Meeting, (i) will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances in which they were made, not misleading, (ii) will disclose all facts that the DSS board of directors deems material to a vote on this Agreement and the transactions contemplated hereby, and (iii) will comply in all material respects with the provisions of the Exchange Act. The information contained in the sed Meeting Circular supplied by DSS, Buyer or any of their Affiliates specifically for use therein as of the date thereof, and up to and including the date of the SED Stockholders’ Meeting, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances in which they were made, not misleading.
ARTICLE V
COVENANTS
Section 5.01 Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld or delayed), each of Seller and SED shall, and shall cause each member of the Company Group to, (x) conduct its business in the ordinary course of business consistent with past practice; and (y) use reasonable best efforts to maintain and preserve intact the current organization, business and franchise of each member of the Company Group and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having business relationships with any member of the Company Group. Without limiting the foregoing, from the date hereof until the Closing Date, each of Seller and SED shall:
(a) cause each member of the Company Group to preserve and maintain all of its Permits;
(b) cause each member of the Company Group to pay its debts, Taxes and other obligations when due;
(c) cause each member of the Company Group to maintain the properties and assets owned, operated or used by it in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;
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(d) cause each member of the Company Group to continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;
(e) cause each member of the Company Group to defend and protect its properties and assets from infringement or usurpation;
(f) cause each member of the Company Group to perform all of its obligations under all Contracts relating to or affecting its properties, assets or business;
(g) cause each member of the Company Group to maintain its books and records in accordance with past practice;
(h) cause each member of the Company Group to comply in all material respects with all applicable Laws; and
(i) cause each member of the Company Group not to take or permit any action that would cause any of the changes, events or conditions described in Section 3.09 to occur.
Section 5.02 Access to Information. From the date hereof until the Closing, each of Seller and SED shall, and shall cause each member of the Company Group to, (a) afford Buyer and its Representatives full and free access to and the right to inspect all of the Real Property, properties, assets, premises, books and records, Contracts and other documents and data related to each member of the Company Group; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to each member of the Company Group as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives of Seller, SED and each member of the Company Group to cooperate with Buyer in its investigation of the Company Group. Any investigation pursuant to this Section 5.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of Seller, SED or any member of the Company Group. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller or SED in this Agreement.
Section 5.03 No Solicitation of Other Bids.
(a) Each of Seller and SED shall not, and shall not authorize or permit any of its Affiliates (including any member of the Company Group) or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Each of Seller and SED shall immediately cease and cause to be terminated, and shall cause its Affiliates (including each member of the Company Group) and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving any member of the Company Group; (ii) the issuance or acquisition of shares of capital stock or other equity securities of any member of the Company Group; or (iii) the sale, lease, exchange or other disposition of any significant portion of any member of the Company Group’s properties or assets.
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(b) In addition to the other obligations under this Section 5.03, each of Seller and SED shall promptly (and in any event within one Business Day after receipt thereof by Seller, SED or its Representatives) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.
(c) Each of Seller and SED agrees that the rights and remedies for noncompliance with this Section 5.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.
Section 5.04 Notice of Certain Events.
(a) From the date hereof until the Closing, each of Seller and SED shall promptly notify Buyer in writing of:
(i) any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Seller or SED hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 to be satisfied;
(ii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;
(iii) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and
(iv) any Actions commenced or, to Seller’s Knowledge, threatened against, relating to or involving or otherwise affecting Seller, SED or any member of the Company Group that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.18 or that relates to the consummation of the transactions contemplated by this Agreement.
(b) Buyer’s receipt of information pursuant to this Section 5.04 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller or SED in this Agreement (including Section 8.02 and Section 9.01(b)) and shall not be deemed to amend or supplement the Disclosure Schedules.
Section 5.05 Confidentiality. From and after the Closing, each of Seller and SED shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning any member of the Company Group, except to the extent that Seller or SED can show that such information (a) is generally available to and known by the public through no fault of Seller, SED any of their Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller, SED any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller, SED or any of their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, Seller or SED shall promptly notify Buyer in writing and shall disclose only that portion of such information which Seller is advised by its counsel in writing is legally required to be disclosed, provided that Seller or SED, as the case may be, shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.
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Section 5.06 Non-Competition; Non-Solicitation.
(a) For a period of five (5) years commencing on the Closing Date (the “Restricted Period”), neither of Seller nor SED shall, nor shall permit any of its Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether formed prior to or after the date of this Agreement) between any member of the Company Group and customers or suppliers of any member of the Company Group. Notwithstanding the foregoing clause (ii), Seller, SED or their Affiliates may own, directly or indirectly, solely as an investment, securities of any such Person that are traded on any national securities exchange if none of Seller, SED or any of their Affiliates is not a controlling Person of, or a member of a group which controls, such Person and do not, in the aggregate, directly or indirectly, own 5% or more of any class of securities of such Person.
(b) During the Restricted Period, neither of Seller nor SED shall, nor shall permit any of its Affiliates to, directly or indirectly, hire or solicit any employee of the Company Group or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, that nothing in this Section 5.06(b) shall prevent Seller, SED or any of their Affiliates from hiring any employee whose employment has been terminated by the Company Group or Buyer.
(c) During the Restricted Period, neither of Seller nor SED shall, nor shall permit any of its Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of any member of the Company Group or potential clients or customers of any member of the Company Group for purposes of diverting their business or services from any member of the Company Group.
(d) Each of Seller and SED acknowledges that a breach or threatened breach of this Section 5.06 would give rise to irreparable harm to Buyer and DSS, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller or SED of any such obligations, Buyer or DSS shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).
(e) Each of Seller and SED acknowledges that the restrictions contained in this Section 5.06 are reasonable and necessary to protect the legitimate interests of Buyer and DSS and constitute a material inducement to each of Buyer and DSS to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 5.06 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 5.06 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.
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Section 5.07 Governmental Approvals and Consents.
(a) Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Documents. Each party shall cooperate fully with the other Party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.
(b) The Parties shall use reasonable best efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 3.05 and Section 4.03 of the Disclosure Schedules.
(c) Without limiting the generality of the Parties’ undertakings pursuant to subsections (a) and (b) above, each of the Parties hereto shall use all reasonable best efforts to:
(i) respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any Ancillary Document;
(ii) avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any Ancillary Document; and
(iii) in the event any Governmental Order adversely affecting the ability of the Parties to consummate the transactions contemplated by this Agreement or any Ancillary Document has been issued, to have such Governmental Order vacated or lifted.
(d) If any consent, approval or authorization necessary to preserve any right or benefit under any Contract to which any member of the Company Group is a party is not obtained prior to the Closing, Seller and SED shall, subsequent to the Closing, cooperate with Buyer and the Company Group in attempting to obtain such consent, approval or authorization as promptly thereafter as practicable. If such consent, approval or authorization cannot be obtained, Seller and SED shall use their reasonable best efforts to provide the applicable member of the Company Group with the rights and benefits of the affected Contract for the term thereof, and, if Seller and SED provide such rights and benefits, the applicable member of the Company Group shall assume all obligations and burdens thereunder.
(e) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller, SED or any member of the Company Group with Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other parties hereunder in advance of any filing, submission or attendance, it being the intent that the Parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other Party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other Party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.
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(f) Notwithstanding the foregoing, nothing in this Section 5.07 shall require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Buyer, any member of the Company Group or any of their respective Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Company Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer of the transactions contemplated by this Agreement; or (iii) any material modification or waiver of the terms and conditions of this Agreement.
Section 5.08 Books and Records.
(a) In order to facilitate the resolution of any claims made against or incurred by Seller or SED prior to the Closing, or for any other reasonable purpose, for a period of ten (10) years after the Closing, Buyer shall:
(i) retain the books and records (including personnel files) of each member of the Company Group relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of the applicable member of the Company Group; and
(ii) upon reasonable notice, afford the Representatives of Seller and SED reasonable access (including the right to make, at their expense, photocopies), during normal business hours, to such books and records;
provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in ARTICLE VI.
(b) In order to facilitate the resolution of any claims made by or against or incurred by Buyer or any member of the Company Group after the Closing, or for any other reasonable purpose, for a period of ten (10) years following the Closing, Seller and SED shall:
(i) retain the books and records (including personnel files) of Seller and SED which relate to each member of the Company Group and its operations for periods prior to the Closing; and
(ii) upon reasonable notice, afford the Representatives of Buyer or any member of the Company Group reasonable access (including the right to make, at Buyer’s expense, photocopies), during normal business hours, to such books and records;
provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in ARTICLE VI.
(c) No Party shall be obligated to provide any other Party with access to any books or records (including personnel files) pursuant to this Section 5.08 where such access would violate any Law.
Section 5.09 Closing Conditions From the date hereof until the Closing, each Party hereto shall, and Seller and SED shall cause each member of the Company Group to, use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in ARTICLE VII hereof.
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Section 5.10 DSS Stockholder Approval. As promptly as practicable after the approval of the transactions contemplated by this Agreement by all applicable Governmental Authorities, in accordance with DSS’s certificate of incorporation and by-laws, applicable Law and this Agreement, DSS shall submit the this Agreement and the transactions contemplated hereby to its stockholders for approval at the DSS Stockholders’ Meeting with the recommendation that its stockholders approve this Agreement and the transactions contemplated hereby.
Section 5.11 DSS Proxy Statement.
(a) Seller and SED shall use their best efforts to deliver to Buyer and DSS a complete set of Disclosure Schedules in accordance with the introduction to ARTICLE III within fourteen (14) days after the date of this Agreement. The Parties shall cooperate with one another in the preparation of the DSS Proxy Statement. DSS will provide SED and Seller and their counsel with a reasonable opportunity to review and comment on the DSS Proxy Statement (and all supplements and amendments thereto) prior to delivering it to holders of DSS Common Stock, and will provide SED and Seller and their counsel with a copy of the final DSS Proxy Statement (and all supplements and amendments thereto) promptly after it is delivered to holders of the DSS common stock. Each Party shall promptly notify the others if at any time it becomes aware that the DSS Proxy Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. In such event, DSS shall prepare and deliver to holders of DSS common stock a supplement or an amendment to the DSS Proxy Statement that corrects such misstatement or omission.
(b) On the DSS Proxy Filing Date, each of Seller and SED shall deliver to DSS and Buyer a certificate, dated the DSS Proxy Filing Date and signed by a duly authorized officer, that (i) other than the representations and warranties of Seller and SED contained in Section 3.01, Section 3.02, Section 3.03, Section 3.07(a) and Section 3.28, the representations and warranties of Seller and SED contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto are true and correct in all respects (in the case of any representation or warranty qualified by materiality or Company Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Company Material Adverse Effect) on and as of the DSS Proxy Filing Date a with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects), and (ii) the representations and warranties of Seller and SED contained in Section 3.01, Section 3.02, Section 3.03, Section 3.07(a) and Section 3.28 shall be true and correct in all respects on and as of the DSS Proxy Filing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects)
Section 5.12 SED Stockholder Approval. As promptly as practicable after the approval of the Contemplated Transactions by all applicable Governmental Authorities, in accordance with SED’s constitution, applicable Law and this Agreement, SED shall submit the this Agreement and the transactions contemplated hereby to its stockholders for approval at the SED Stockholders’ Meeting with the recommendation that its stockholders approve this Agreement and the transactions contemplated hereby.
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Section 5.13 SED Meeting Circular.
(a) Buyer and DSS shall use their best efforts to deliver to Seller and SED a complete set of Disclosure Schedules in accordance with the introduction to ARTICLE IV within fourteen (14) days after the date of this Agreement. The Parties shall cooperate with one another in the preparation of the SED Meeting Circular. SED will provide DSS and Buyer and their counsel with a reasonable opportunity to review and comment on the SED Meeting Circular (and all supplements and amendments thereto) prior to delivering it to holders of SED common stock, and will provide SED and Buyer and their counsel with a copy of the final SED Meeting Circular (and all supplements and amendments thereto) promptly after it is delivered to holders of the SED common stock. Each Party shall promptly notify the others if at any time it becomes aware that the SED Meeting Circular contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. In such event, SED shall prepare and deliver to holders of SED common stock a supplement or an amendment to the SED Meeting Circular that corrects such misstatement or omission.
(b) On the SED Circular Filing Date, each of Buyer and DSS shall deliver to SED and Seller a certificate, dated the SED Circular Filing Date and signed by a duly authorized officer, that (i) other than the representations and warranties of Buyer and DSS contained in Section 4.01 and Section 4.04, the representations and warranties of Buyer contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Company Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Company Material Adverse Effect) on and as of the SED Circular Filing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects), and (ii) the representations and warranties of Buyer and DSS contained in Section 4.01 and Section 4.04 shall be true and correct in all respects on and as of SED Circular Filing Date with the same effect as though made at and as of such date.
Section 5.14 Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no Party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate as to the timing and contents of any such announcement.
Section 5.15 Further Assurances. Following the Closing, each of the Parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
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ARTICLE VI
TAX MATTERS
Section 6.01 Tax Covenants.
(a) Without the prior written consent of Buyer, Seller and SED (and, prior to the Closing, each member of the Company Group, its Affiliates and their respective Representatives) shall not, to the extent it may affect, or relate to, any member of the Company Group, make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer or any member of the Company Group in respect of any Post-Closing Tax Period. Each of Seller and SED agrees that neither Buyer nor DSS is to have any liability for any Tax resulting from any action of Seller, SED, any member of the Company Group, their Affiliates or any of their respective Representatives, and agrees to indemnify and hold harmless Buyer and DSS (and, after the Closing Date, any member of the Company Group) against any such Tax or reduction of any Tax asset.
(b) All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the Ancillary Documents (including any real property transfer Tax and any other similar Tax) shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).
(c) Buyer shall prepare, or cause to be prepared, all Tax Returns required to be filed by any member of the Company Group after the Closing Date with respect to a Pre-Closing Tax Period. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by Law) and without a change of any election or any accounting method and shall be submitted by Buyer to Seller (together with schedules, statements and, to the extent requested by Seller, supporting documentation) at least 45 days prior to the due date (including extensions) of such Tax Return. If Seller objects to any item on any such Tax Return, it shall, within ten days after delivery of such Tax Return, notify Buyer in writing that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Buyer and Seller shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and Seller are unable to reach such agreement within ten days after receipt by Buyer of such notice, Buyer and Seller shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Seller’s Accountants or Buyer’s Accountants (the “Independent Accountant”) who, acting as experts and not arbitrators, shall resolve the disputed items, and any determination by the Independent Accountant shall be final. The Independent Accountant shall resolve any disputed items within twenty days of having the item referred to it pursuant to such procedures as it may require. If the Independent Accountant is unable to resolve any disputed items before the due date for such Tax Return, the Tax Return shall be filed as prepared by Buyer and then amended to reflect the Independent Accountant’s resolution. The costs, fees and expenses of the Independent Accountant shall be borne equally by Buyer and Seller. The preparation and filing of any Tax Return of any member of the Company Group that does not relate to a Pre-Closing Tax Period shall be exclusively within the control of Buyer.
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Section 6.02 Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon any member of the Company Group shall be terminated as of the Closing Date. After such date none of the members of the Company Group, Seller, SED nor any of their Affiliates and their respective Representatives shall have any further rights or liabilities thereunder.
Section 6.03 Tax Indemnification. Each of Seller and SED, jointly and severally, shall indemnify each member of the Company Group, Buyer, DSS and each Buyer Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 3.23; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VI; (c) all Taxes of any member of the Company Group or relating to its business for all Pre-Closing Tax Periods; (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which any member of the Company Group (or any predecessor of any member of the Company Group) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and all Taxes of any person imposed on any member of the Company Group arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date. In each of the above cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith, each of Seller and SED, jointly and severally, shall reimburse Buyer for any Taxes of any member of the Company Group that are the responsibility of Seller pursuant to this Section 6.03 within ten Business Days after payment of such Taxes by Buyer, DSS or any member of the Company Group.
Section 6.04 Straddle Period. In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:
(a) in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property, or (iii) required to be withheld, deemed equal to the amount which would be payable if the taxable year ended with the Closing Date; and
(b) in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period.
Section 6.05 Section 338(h)(10) Election.
(a) Election. At Buyer’s option, each member of the Company Group and Seller (and if necessary, SED) shall join with Buyer in making a timely election under Section 338(h)(10) of the Code (and any corresponding election under state, local, and foreign Law) with respect to the purchase and sale of the Impact Shares of the Company hereunder (collectively, a “Section 338(h)(10) Election”). Seller shall pay any Tax attributable to the making of the Section 338(h)(10) Election and each of Seller and SED, jointly and severally, shall indemnify Buyer and each member of the Company Group against any adverse consequences arising out of any failure to pay any such Taxes.
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(b) Allocation of Purchase Price. If a Section 338(h)(10) Election is made, Seller and Buyer agree that the Purchase Price and the Liabilities of the Company Group (plus other relevant items) shall be allocated among the assets of the Company Group for all purposes (including Tax and financial accounting) as shown on the allocation schedule (the “Allocation Schedule”). A draft of the Allocation Schedule shall be prepared by Seller and delivered to Buyer within thirty (30) days following the Closing Date for its approval. If Buyer notifies Seller in writing that Buyer objects to one or more items reflected in the Allocation Schedule, Seller and Buyer shall negotiate in good faith to resolve such dispute; provided, however, that if Seller and Buyer are unable to resolve any dispute with respect to the Allocation Schedule within sixty (60) days following the Closing Date, such dispute shall be resolved by the Independent Accountant. The fees and expenses of such accounting firm shall be borne equally by Seller and Buyer. Buyer, each member of the Company Group and Seller shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with the Allocation Schedule. Any adjustments to the Purchase Price pursuant to Section 2.04 herein shall be allocated in a manner consistent with the Allocation Schedule.
Section 6.06 Contests. Buyer agrees to give written notice to Seller of the receipt of any written notice by any member of the Company Group, Buyer, DSS or any of their Affiliates which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be sought by Buyer pursuant to this ARTICLE VI (a “Tax Claim”); provided, that failure to comply with this provision shall not affect Buyer’s right to indemnification hereunder. Buyer shall control the contest or resolution of any Tax Claim; provided, however, that Buyer shall obtain the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed) before entering into any settlement of a claim or ceasing to defend such claim; and, provided further, that Seller shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by Seller.
Section 6.07 Cooperation and Exchange of Information. The Parties shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this ARTICLE VI or in connection with any audit or other proceeding in respect of Taxes of any member of the Company Group. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by tax authorities. Each Party shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of any member of the Company Group for any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other Party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of any member of the Company Group for any taxable period beginning before the Closing Date, Seller or SED, on the one hand, or Buyer or SED, on the other (as the case may be) shall provide the other Parties with reasonable written notice and offer the other Parties the opportunity to take custody of such materials.
Section 6.08 Tax Treatment of Indemnification Payments. Any indemnification payments pursuant to this ARTICLE VI shall be treated as an adjustment to the Purchase Price by the Parties for Tax purposes, unless otherwise required by Law.
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Section 6.09 Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.23 and this ARTICLE VI shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days.
Section 6.10 Overlap. To the extent that any obligation or responsibility pursuant to ARTICLE VIII may overlap with an obligation or responsibility pursuant to this ARTICLE VI, the provisions of this ARTICLE VI shall govern.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to Obligations of All Parties. The obligations of each Party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have been approved by the requisite vote of (i) the Board of Directors of each of DSS and Buyer, and (ii) the stockholders of DSS at the DSS Stockholders’ Meeting.
(b) This Agreement and the transactions contemplated hereby shall have been approved by the requisite vote of (i) the Board of Directors of each of SED and Seller, (ii) the stockholder of the Seller, and (iii) the stockholders of SED at the SED Stockholders’ Meeting.
(c) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
(d) Seller and SED shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 3.05, and Buyer and DSS shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 4.03, in each case, in form and substance reasonably satisfactory to Buyer and Seller, and no such consent, authorization, order and approval shall have been revoked.
(e) The Certificate of Designations shall have been filed with the Secretary of State of the State of New York.
Section 7.02 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:
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(a) On or before the DSS Proxy Filing Date, Seller’s Accountants (or another independent public accounting firm registered with the PCAOB acceptable to DSS and Buyer in their sole discretion) shall have delivered their audit report containing their unqualified opinion on the Annual Financial Statements and their review report on the Interim Financial Statements in accordance with PCAOB Auditing Standard.
(b) No member of the Company Group shall have any Indebtedness as of the Closing.
(c) The boards of directors of DSS and Buyer shall have received a written report from Destum Partners, Inc. (or such other independent financial advisory firm as the boards shall determine) (the “Valuation Report”) setting forth their determination of the fair market value of the Impact Shares (which determination shall be conclusive for all purposes under this Agreement and the Ancillary Documents) (the “Impact Value”), a copy of which shall be provided to Seller and SED, and such Valuation Report has not been amended or rescinded as of the Closing.
(d) Other than the representations and warranties of Seller and SED contained in Section 3.01, Section 3.02, Section 3.03, Section 3.07(a) and Section 3.28, the representations and warranties of Seller and SED contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Company Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Company Material Adverse Effect) on and as of the DSS Proxy Filing Date and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Seller and SED contained in Section 3.01, Section 3.02, Section 3.03, Section 3.07(a) and Section 3.28 shall be true and correct in all respects on and as of the DSS Proxy Filing Date and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).
(e) Each of Seller and SED shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Seller shall have performed such agreements, covenants and conditions, as so qualified, in all respects.
(f) No Action shall have been commenced against Buyer, DSS, Seller, SED or any member of the Company Group, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.
(g) All approvals, consents and waivers that are listed on Section 3.05 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing.
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(h) From the date of this Agreement, there shall not have occurred any Company Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Company Material Adverse Effect.
(i) The Ancillary Documents shall have been executed and delivered by the Parties thereto and true and complete copies thereof shall have been delivered to Buyer.
(j) Each of Seller and SED shall have delivered to Buyer a good standing certificate (or its equivalent) for each member of the Company Group from the secretary of state or similar Governmental Authority of the jurisdiction under the Laws in which such entity is organized.
(k) Seller shall have delivered, or caused to be delivered, to Buyer stock certificates evidencing the Impact Shares, free and clear of Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank and with all required stock transfer tax stamps affixed.
(l) Buyer shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of each of Seller and SED, that each of the conditions set forth in Section 7.02(a) and Section 7.02(e) have been satisfied.
(m) Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each of Seller and SED certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors and stockholders of Seller and SED authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.
(n) Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each of Seller and SED certifying the names and signatures of the officers of Seller authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder.
(o) Each of Seller and SED shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.
Section 7.03 Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the following conditions:
(a) Other than the representations and warranties of Buyer and DSS contained in Section 4.01 and Section 4.05, the representations and warranties of Buyer and DSS contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or DSS Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or DSS Material Adverse Effect) on and as of the SED Circular Filing Date and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Buyer and DSS contained in Section 4.01 and Section 4.05 shall be true and correct in all respects on and as of the SED Circular Filing Date and on and as of the Closing Date with the same effect as though made at and as of such date.
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(b) Each of Buyer and DSS shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and the each of the Ancillary Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Buyer shall have performed such agreements, covenants and conditions, as so qualified, in all respects.
(c) No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.
(d) All approvals, consents and waivers that are listed on Section 4.03 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Seller at or prior to the Closing.
(e) SED shall have obtained a written opinion from an independent financial adviser reasonably satisfactory to Buyer and DSS stating whether this Agreement and the transactions contemplated by this Agreement are on normal commercial terms and whether this Agreement and the transactions contemplated by this Agreement is prejudicial to the interests of SED and its minority shareholders, a copy of which will be provided to Buyer and DSS, and such opinion has not been amended or rescinded as of the Closing.
(f) From the date of this Agreement, there shall not have occurred any DSS Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a DSS Material Adverse Effect.
(g) The Ancillary Documents shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to Seller.
(h) Buyer shall have delivered to Seller:
(i) a duly executed and authenticated certificate or certificates representing the DSS Common Shares, free and clear of all Encumbrances, registered in the name of the Seller; and
(ii) a duly executed and authenticated certificate or certificates representing the DSS Preferred Shares, free and clear of all Encumbrances, registered in the name of the Seller.
(i) Seller shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of each of Buyer and DSS, that each of the conditions set forth in Section 7.03(a) and Section 7.03(b) have been satisfied.
(j) Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each of Buyer and DSS certifying that attached thereto are true and complete copies of all resolutions adopted by the boards of directors and stockholders of Buyer and of DSS authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.
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(k) Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each of Buyer and DSS certifying the names and signatures of the officers of Buyer authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder.
(l) Each of Buyer and DSS shall have delivered to Seller such other documents or instruments as Seller reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.
ARTICLE VIII
INDEMNIFICATION
Section 8.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein (other than any representations or warranties contained in Section 3.23 which are subject to ARTICLE VI) shall survive the Closing and shall remain in full force and effect until the date that is three (3) years from the Closing Date; provided, that the representations and warranties in (a) Section 3.01, Section 3.03, Section 3.28, Section 4.01 and Section 4.05 shall survive indefinitely, (b) Section 3.20 shall survive for a period of five (5) years after the Closing, and (c) Section 3.22 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and agreements of the Parties contained herein (other than any covenants or agreements contained in ARTICLE VI which are subject to ARTICLE VI) shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.
Section 8.02 Indemnification by Seller and SED. Subject to the other terms and conditions of this ARTICLE VIII, each of Seller and SED, jointly and severally, shall indemnify and defend each of DSS, Buyer and their Affiliates (including each member of the Company Group) and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:
(a) any inaccuracy in or breach of any of the representations or warranties of Seller or SED contained in this Agreement or in any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement (other than in respect of Section 3.23, it being understood that the sole remedy for any such inaccuracy in or breach thereof shall be pursuant to ARTICLE VI), as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);
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(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement (other than any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VI, it being understood that the sole remedy for any such breach, violation or failure shall be pursuant to ARTICLE VI); or
(c) any Transaction Expenses or Indebtedness of any member of the Company Group outstanding as of the Closing.
Section 8.03 Indemnification by Buyer and DSS. Subject to the other terms and conditions of this ARTICLE VIII, each of Buyer and DSS, jointly and severally, shall indemnify and defend each of SED, Seller and their Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:
(a) any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); or
(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement (other than ARTICLE VI, it being understood that the sole remedy for any such breach thereof shall be pursuant to ARTICLE VI).
Secction 8.04 Certain Limitations. The indemnification provided for in Section 8.02 and Section 8.03 shall be subject to the following limitations:
(a) Seller and SED shall not be liable to the Buyer Indemnitees for indemnification under Section 8.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) exceeds $500,000 (the “Basket”), in which event Seller shall be required to pay or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which Seller and SED shall be liable pursuant to Section 8.02(a) shall not exceed 100% of the nominal value of the Purchase Price set forth in Section 2.02 (as adjusted pursuant to Section 2.04) (the “Cap”).
(b) Buyer and DSS shall not be liable to the Seller Indemnitees for indemnification under Section 8.03(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.03(a) exceeds the Basket, in which event Buyer shall be required to pay or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which Buyer shall be liable pursuant to Section 8.03(a) shall not exceed the Cap.
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(c) Notwithstanding the foregoing, the limitations set forth in Section 8.04(a) and Section 8.04(b) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 3.01, Section 3.03, Section 3.20, Section 3.22, Section 3.28, Section 4.01 and Section 4.05.
(d) For purposes of this ARTICLE VIII, any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Company Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.
Secction 8.05 Indemnification Procedures. The party making a claim under this ARTICLE VIII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this ARTICLE VIII is referred to as the “Indemnifying Party”.
(a) Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 10 Business Days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is Seller or SED, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of any member of the Company Group, or (y) seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 8.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and SED, on the one hand, and Buyer and DSS, on the other hand, shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 5.05) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.
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(b) Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within five Business Days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).
(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 10 Business Days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 10 Business Days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to any member of the Company Group’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 10 Business Day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
(d) Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event or proceeding in respect of Taxes of any member of the Company Group (including, but not limited to, any such claim in respect of a breach of the representations and warranties in Section 3.23 hereof or any breach or violation of or failure to fully perform any covenant, agreement, undertaking or obligation in ARTICLE VI) shall be governed exclusively by ARTICLE VI hereof.
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Secction 8.06 Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE VIII, the Indemnifying Party shall satisfy its obligations within 10 Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such 10 Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to but excluding the date such payment has been made at a rate per annum equal to eight percent (8%). Such interest shall be calculated daily on the basis of a 365/366-day year and the actual number of days elapsed.
Secction 8.07 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the Parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.
Secction 8.08 Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 7.02 or Section 7.03, as the case may be.
Secction 8.09 Exclusive Remedies. Subject to Section 5.06 and Section 10.11, the Parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VIII. In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other Parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VIII. Nothing in this Section 8.09 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s fraudulent, criminal or intentional misconduct.
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ARTICLE IX
TERMINATION
Secction 9.01 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of Seller and Buyer;
(b) by Buyer by written notice to Seller if:
(i) Buyer is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Seller within ten days of Seller’s receipt of written notice of such breach from Buyer; or
(ii) any of the conditions set forth in Section 7.01 or Section 7.02 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by the date that is one hundred eighty (180) days after the date of this Agreement, unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
(c) by Seller by written notice to Buyer if:
(i) Seller is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Buyer within ten days of Buyer’s receipt of written notice of such breach from Seller; or
(ii) any of the conditions set forth in Section 7.01 or Section 7.03 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by the date that is one hundred eighty (180) days after the date of this Agreement, unless such failure shall be due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
(d) by Buyer or Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable;
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(e) by either Buyer or Seller if the stockholders of DSS vote on, but fail to approve, this Agreement and the transactions contemplated hereby at the DSS Stockholders’ Meeting (as it may be adjourned and reconvened); or
(f) by either Buyer or Seller if the stockholders of SED vote on, but fail to approve, this Agreement and the transactions contemplated hereby at the SED Stockholders’ Meeting (as it may be adjourned and reconvened).
Secction 9.02 Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any Party hereto except:
(a) as set forth in this ARTICLE IX and Section 5.05 and ARTICLE X hereof; and
(b) that nothing herein shall relieve any Party hereto from liability for any willful breach of any provision hereof.
ARTICLE X
MISCELLANEOUS
Secction 10.01 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses, whether or not the Closing shall have occurred.
Secction 10.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

If to Seller: | 7 Temasek Boulevard #29-01B, Suntec Tower One Singapore 038987 Facsimile: FAX NUMBER E-mail: danny@sed.com.sg Attention: Senior Vice President
with a copy to: | Shook Lin & Bok LLP Facsimile: [FAX NUMBER] E-mail: [E-MAIL ADDRESS] Attention: [ATTORNEY NAME]
If to DSS or Buyer: | 200 Canal View Blvd, Suite 300 Rochester, NY 14623 E-mail: fheuszel@dsssecure.com Attention: Chief Executive Officer
with a copy to: | Sichenzia Ross Ference LLP 1185 Avenue of the Americas, 37th Floor New York, NY 10036 E-mail: dmocasio@srf.law Attention: Darrin Ocasio

Secction 10.03 Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
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Secction 10.04 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Secction 10.05 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 5.06(e), upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Secction 10.06 Entire Agreement. This Agreement and the Ancillary Documents constitute the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
Secction 10.07 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided, however, that prior to the Closing Date, Buyer may, without the prior written consent of Seller, assign all or any portion of its rights under this Agreement to one or more of its direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning party of any of its obligations hereunder.
Secction 10.08 No Third-party Beneficiaries. Except as provided in Section 6.03 and ARTICLE VIII, this Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Secction 10.9 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
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Secction 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE Ancillary Documents OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEW YORK IN EACH CASE LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS] IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE Ancillary Documents OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(c).
Secction 10.11 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
Secction 10.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

| SINGAPORE EDEVELOPMENT LTD.
| By /s/ Chan Heng Fai, Ambrose Name: CHAN HENG FAI, AMBROSE Title: EXECUTIVE CHAIRMAN, EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER
| GLOBAL BIOMEDICAL PTE LTD.
| By /s/ Chan Heng Fai, Ambrose Name: CHAN HENG FAI, AMBROSE Title: DIRECTOR
| DOCUMENT SECURITY SYSTEMS, INC.
| By /s/ Frank D. Heuszel Name: FRANK D. HEUSZEL Title: GROUP CHIEF EXECUTIVE OFFICER
| DSS BIOHEALTH SECURITY INC.
| By /s/ Frank D. Heuszel Name: FRANK D. HEUSZEL Title: DIRECTOR

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