EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER AND EXCHANGE OF STOCK
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THIS AGREEMENT AND PLAN OF MERGER AND EXCHANGE OF STOCK ("Agreement") is
made and entered into as of the 31st day of January, 2001, by and among RETURN
ON INVESTMENT CORPORATION, a corporation organized and existing under the laws
of the State of Delaware ("ROI"), whose address is 0000 Xxxxxxx Xxxxx Xxxx.,
Xxxxx 000, Xxxxxxxx, XX 00000, NET400 ACQUISITION CORPORATION, a corporation
organized and existing under the laws of the State of Georgia and a wholly-owned
subsidiary of ROI (the "Subsidiary"), whose address is 0000 Xxxxxxx Xxxxx Xxxx.,
Xxxxx 000, Xxxxxxxx, XX 00000, NET400, INC., a corporation organized and
existing under the laws of the State of Georgia ("Net400"), whose address is 000
Xxxxx Xxxx Xxxxxxx, Xxxxxxxxx, XX 00000, Xxxxxx X. Xxxxx, an individual resident
of Florida ("Xxxxx"), whose address is 000 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxxxxx,
XX 00000, and Xxxxxxxxx X. Xxxxxxx, an individual resident of Georgia
("Xxxxxxx"), whose address is 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (Xxxxx and
Xxxxxxx, individually referred to as a "Net400 Shareholder" and collectively
referred to as the "Net400 Shareholders").
W I T N E S S E T H:
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WHEREAS, the Net400 Shareholders are the owners of over 80% of the issued
and outstanding shares of the no par value common stock of Net400; and
WHEREAS, the parties hereto desire to merge the Subsidiary with and into
Net400 by exchanging all of the issued and outstanding shares of Net400 common
stock (the "Net400 Common Stock") for a total of 300,000 shares of the $.01 par
value common stock of ROI as restricted in accordance with securities laws,
ROI's bylaws, and the Escrow Agreement as defined herein (the "ROI Common
Stock"), all subject to the terms, provisions, conditions and limitations set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties hereto, the parties hereto do hereby mutually covenant and agree as
follows:
1. THE MERGER
(a) THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with and in accordance with Section 14-2-1101,
et seq. of the Georgia Business Corporation Code (the "GBCC"), the Subsidiary
shall be merged with and into Net400 at the Effective Time (as defined in
Section 1(c) hereof). Following the Effective Time, the separate corporate
existence of the Subsidiary shall cease, and Net400 shall continue as the
surviving corporation (the "Surviving Corporation") under the name Net400, Inc.
and shall succeed to and assume all the rights and obligations of Net400 and the
Subsidiary in accordance with the GBCC.
(b) THE CLOSING; EFFECTIVE DATE. The closing of the Merger contemplated by
this Agreement (the "Closing") shall take place on February 1, 2001, or at such
other time and on such other date as is agreed to by the parties (the "Closing
Date"), which (subject to satisfaction or waiver of the conditions set forth in
Section 7) shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Section 7 at such location as the parties
may agree. If all of the parties hereto do not agree in writing to extend the
Closing Date beyond March 31, 2001, and the Closing does not occur on or prior
to such date, any party to this Agreement may, at its sole option, terminate
this Agreement by notifying the other parties in writing of such termination.
Upon such termination, each party shall be responsible for its own costs and
expenses related to this Agreement and no party shall have any obligation
hereunder except for those obligations that have been expressly agreed to herein
or agreed to in writing in a separate document as surviving the termination of
this Agreement.
(c) EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties shall file articles of merger (the "Articles of Merger") executed in
accordance with Section 14-2-1105 of the GBCC and shall make all other filings
or records required under the GBCC as soon as practical on or after the Closing
Date. The Merger shall become effective at such time as the Articles of Merger
are accepted for record by the Secretary of State of the State of Georgia or at
such other time as the Subsidiary and Net400 shall agree as specified in the
Articles of Merger but
not exceeding 30 days after the date the Articles of Merger are accepted for
record by the Secretary of State of the State of Georgia (the "Effective Time").
(d) EFFECT OF MERGER ON THE CONSTITUENT CORPORATIONS.
(1) GENERAL. The Merger shall have the effect set forth in Section
14-2-1106 of the GBCC. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time of the Merger, (i) the Surviving
Corporation shall possess all assets and property of every description, and
every interest therein, wherever located, and the rights, privileges,
immunities, powers, franchises and authority, of a public as well as of a
private nature, of each of the Subsidiary and Net400 (together, the
"Constituent Corporations"), (ii) all obligations belonging to or due each
of the Constituent Corporations shall be vested in, and become the
obligations of, the Surviving Corporation without further act or deed,
(iii) title to any real estate or any interest therein vested in either of
the Constituent Corporations shall not revert or in any way be impaired by
reason of the Merger, (iv) all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and (v) the Surviving Corporation shall be liable for all of
the debts and obligations of each of the Constituent Corporations, and any
claim existing, or action or proceeding pending, by or against either of
the Constituent Corporations may be prosecuted to judgment with right of
appeal, as if the Merger had not taken place.
(2) ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The
Articles of Incorporation of Net400, in effect as of the Effective Time,
shall become the Articles of Incorporation of the Surviving Corporation
from and after the Effective Time and until thereafter amended as provided
by law.
(3) BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Net400 shall be
the Bylaws of the Surviving Corporation from and after the Effective Time
and until thereafter altered, amended or repealed in accordance with the
GBCC, the Articles of Incorporation of the Surviving Corporation and said
Bylaws.
(4) DIRECTORS. The Board of Directors of Net400 at the Effective Time
shall, from and after the Effective Time, be the Board of Directors of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Articles of
Incorporation and applicable law.
(5) OFFICERS. The officers of Net400 at the Effective Time shall, from
and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and Bylaws.
(6) ASSETS, LIABILITIES. At the Effective Time, the assets,
liabilities, reserves and accounts of each of the Constituent Corporations
shall be taken upon the books of the Surviving Corporation at the amounts
at which they respectively shall be carried on the books of said
corporations immediately prior to the Effective Time, except as otherwise
set forth in this Agreement and subject to such adjustments, or elimination
of intercompany items, as may be appropriate in giving effect to the Merger
in accordance with generally accepted accounting principles.
(7) TAX TREATMENT. The parties hereto acknowledge that for federal
income tax purposes, it is intended that the Merger shall qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.
2. EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES.
(a) EFFECT ON STOCK. As of the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any stock of either of the
Constituent Corporations:
(1) CANCELLATION OF TREASURY STOCK. Each share of Subsidiary Stock
that is owned by the Subsidiary or by any subsidiary of the Subsidiary
shall automatically be canceled and retired and shall cease to exist, and
no Merger Consideration (as hereinafter defined) shall be delivered in
exchange therefor.
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(2) CONVERSION OF COMPANY STOCK. All of the issued and outstanding
shares of Net400 Common Stock shall at the Effective Time be converted into
300,000 shares of ROI Common Stock reduced by the number of shares at the
rate of $3.75 each for any amount over $200,000.00 in the net difference
between the Net400 liabilities and the cash and receivables as of the
Closing Date (the "Merger Consideration"). The number of shares of ROI
Common Stock referred to throughout this Agreement shall be adjusted from
time to time to reflect any stock splits or stock dividends or
reclassification of capital structure that occur after the date of this
Agreement. As of the Effective Time, all such Net400 Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate evidencing any
Net400 Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration to be issued in
consideration therefor upon surrender of such certificate in accordance
with Section 2(b) hereof.
(3) SUBSIDIARY STOCK. As of the Effective Time, all of the issued and
outstanding shares of Subsidiary common stock shall be converted into 1,000
shares of Net400 Common Stock.
(b) EXCHANGE OF CERTIFICATES. Upon the terms, subject to the conditions and
in reliance upon the representations and warranties contained herein and subject
to the Escrow Agreement, upon the proper surrender at Closing to ROI by the
Net400 Shareholders of the certificate or certificates which immediately prior
to the Closing represented outstanding shares of Net400 Common Stock (the
"Certificates") that are to be exchanged pursuant to Section 2(a) for the Merger
Consideration, the Net400 Shareholders shall be entitled to receive in exchange
therefor the Merger Consideration set forth opposite such Net400 Shareholder's
name on the Net400 Shareholders List (as defined in Section 6(d) hereof) subject
to adjustment as described herein.
3. CLOSING OBLIGATIONS.
(a) Closing Obligations of Net400 and the Net400 Shareholders. At the
Closing, Net400 and the Net400 Shareholders shall deliver to ROI the following:
(1) certificates representing all of the Net400 Common Stock, duly
endorsed (or accompanied by duly executed stock powers) for transfer to ROI
along with a release from each shareholder in form and substance
satisfactory to ROI;
(2) an executed Employment Agreement between ROI and Xxxxxxx, the form
of which is attached hereto as Schedule A-1;
(3) an executed Services Agreement between ROI and Xxxxx, the form of
which is attached hereto as Schedule A-2;
(4) a certificate, dated the Closing Date, stating that (i) the
representations and warranties of Net400 and the Net400 Shareholders
contained in this Agreement or any Schedule are true and correct in all
material respects on and as of the Closing Date, and (ii) Net400 and the
shareholders of Net400 have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Closing.
(5) an executed Escrow Agreement, the form of which is attached hereto
as Schedule B.
(6) an executed Proxy from each shareholder, the form of which is
attached hereto as Schedule C.
(b) Closing Obligations of ROI. At the Closing, ROI shall deliver to the
Net400 Shareholders the following:
(1) the Merger Consideration (or evidence that the ROI Common Stock
certificates representing the Merger Consideration have been duly ordered
from ROI's stock transfer agent less any shares that may be required for
adjustments as described herein);
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(2) an executed Employment Agreement between ROI and Xxxxxxx, the form
of which is attached hereto as Schedule A-1;
(3) an executed Services Agreement between ROI and Xxxxx, the form of
which is attached hereto as Schedule A-2;
(4) a certificate, dated the Closing Date, stating that (i) the
representations and warranties of ROI contained in this Agreement or any
Schedule are true and correct in all material respects on and as of the
Closing Date, (ii) ROI has performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Closing.
(5) an executed Escrow Agreement, the form of which is attached hereto
as Schedule B.
4. APPROVALS.
(a) The Net400 Shareholders and Net400 have approved this Agreement and the
transactions contemplated herein. Prior to the Closing Net400 and the Net400
Shareholders shall have taken any and all action required for the Merger.
(b) The ROI Board of Directors has approved this Agreement and the
transactions contemplated herein. The shareholders holding at least 65% of the
outstanding shares of common stock of ROI must approve the Merger prior to the
Closing. If such approval is not obtained on or before March 31, 2001, any party
to this Agreement may, at its sole option, terminate this Agreement by notifying
the other parties in writing of such termination. Upon such termination, each
party shall be responsible for its own costs and expenses related to this
Agreement and, except as expressly agreed to herein, no party shall have any
obligation hereunder.
5. REPRESENTATIONS AND WARRANTIES OF ROI. Except for the approvals
described in 4(b) hereof, ROI represents and warrants to the Net400 Shareholders
that the following representations and warranties are true and correct in all
material respects as of the Closing:
(a) ROI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it.
(b) ROI has the requisite corporate power and authority to execute and
deliver this Agreement and the Employment Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Employment Agreement by ROI and the consummation by ROI of the
transactions contemplated herein and therein have been duly authorized by ROI's
Board of Directors and, except for the approval of the ROI shareholders, no
other corporate or other proceedings on the part of ROI or the ROI shareholders
are necessary to authorize this Agreement and the Employment Agreement or for
ROI to consummate the transactions contemplated hereunder and thereunder. This
Agreement has been duly and validly executed and delivered by ROI and
constitutes, and the Employment Agreement when executed and delivered at Closing
will constitute, a valid and binding agreement of ROI, enforceable against ROI
in accordance with their terms, except as enforceability may be limited by
creditors' rights, bankruptcy, insolvency and general principles of equity.
(c) Neither the execution, delivery or performance of this Agreement or the
Employment Agreement by ROI, nor the consummation by ROI of the transactions
contemplated hereunder or thereunder, will (i) conflict with or result in any
breach of any provisions of the Articles of Incorporation or Bylaws of ROI, (ii)
require a filing with, or a permit, authorization, consent or approval of, any
federal, state, local or foreign court, arbitral tribunal, administrative agency
or commission or other governmental or other regulatory authority or
administrative agency or commission, except for filings or approvals required
under applicable federal or state securities laws and the filing of the Articles
of Merger, (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any mortgage, pledge, security interest, encumbrance, lien, claim or
charge of any kind or right of others of whatever nature, on any property or
asset of ROI pursuant to any of the terms, conditions or provisions of any
contract, agreement, lease, intellectual property license, note, bond, mortgage,
indenture, license, or other instrument or obligation to which ROI is a party or
by which it is bound or (iv) to the best knowledge of ROI,
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violate any law, order, writ, injunction, decree, statute, rule or regulation of
any governmental entity applicable to ROI or any of its properties or assets,
except, in the case of clauses (ii), (iii) and (iv), where failures to make such
filing or obtain such authorization, consent or approval would not have, or
where such violations, breaches or defaults or liens would not have,
individually or in the aggregate, a material adverse effect.
(d) To the best of ROI's knowledge, the representations contained in this
subsection (d) are complete and accurate. Any and all securities issued by ROI
have been issued in compliance with Federal and State securities laws. ROI has
filed with the Securities and Exchange Commission all of the documents ("ROI SEC
Documents") that it was required to file through the date of this Agreement. As
of their respective dates, the ROI SEC Documents did not contain any untrue
statements of material facts or omit to state material facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the ROI SEC Documents complied in all material respects with the
applicable requirements of the Securities Act of 1933 and the Securities
Exchange Act of 1934 and the rules and regulations promulgated under such
statutes. The financial statements contained in the ROI SEC Documents, together
with the notes thereto, have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods indicated
(except as may be indicated in the notes thereto or, in the case of the
unaudited financial statements, as permitted by Form 10-Q), reflect all known
liabilities of ROI required to be stated therein, including all known contingent
liabilities as of the end of each period reflected therein, and present fairly
the financial condition of ROI at said date and the results of operations and
cash flows of ROI for the periods then ended.
6. REPRESENTATIONS AND WARRANTIES OF NET400 AND XXXXX. Net400 and Xxxxx
respectively (and not jointly) represents and warrants to ROI that the following
representations and warranties pertaining to Net400 contained herein are true
and correct in all material respects as of the Closing:
(a) Net400 is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has the corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. Complete and correct copies of Net400's charter documents and
all amendments thereof to date, certified by the Secretary of State of Georgia,
and the by-laws, as amended to date, certified by an officer of Net400 will be
delivered to ROI at the Closing.
(b) Net400 and the Net400 Shareholders have the requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated herein and therein have
been duly authorized by Net400's Board of Directors and the Net400 Shareholders
and no other corporate or other proceedings on the part of Net400 or the Net400
Shareholders are necessary to authorize this Agreement and the Employment
Agreement or to consummate the transactions contemplated hereunder and
thereunder. This Agreement has been duly and validly executed and delivered by
Net400 and the Net400 Shareholders and constitutes a valid and binding agreement
of Net400 and the Net400 Shareholders, enforceable against Net400 and the Net400
Shareholders in accordance with its terms, except as enforceability may be
limited by creditors' rights, bankruptcy, insolvency and general principles of
equity.
(c) Neither the execution, delivery or performance of this Agreement or the
Employment Agreement, nor the consummation of the transactions contemplated
hereunder or thereunder, will (i) conflict with or result in any breach of any
provisions of the Articles of Incorporation or Bylaws of Net400, (ii) require a
filing with, or a permit, authorization, consent or approval of, any federal,
state, local or foreign court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or administrative
agency or commission, except for filings or approvals required under applicable
federal or state securities laws and the filing of the Articles of Merger, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any mortgage,
pledge, security interest, encumbrance, lien, claim or charge of any kind or
right of others of whatever nature, on any property or asset of Net400 pursuant
to any of the terms, conditions or provisions of any contract, agreement, lease,
intellectual property license, note, bond, mortgage, indenture, license, or
other instrument or obligation to which Net400 is a party or by which it is
bound or (iv) to the best knowledge of Net400, violate any law, order, writ,
injunction, decree, statute, rule or regulation of any governmental entity
applicable to ROI or any of its properties or assets, except, in the case of
clauses (ii), (iii) and (iv), where failures to make such
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filing or obtain such authorization, consent or approval would not have, or
where such violations, breaches or defaults or liens would not have,
individually or in the aggregate, a material adverse effect.
(d) Prior to the Closing, Net400 shall provide ROI with a list of all
shareholders of Net400 containing the name, address, social security number, and
number of Net400 shares owned by each shareholder immediately prior to the
Closing (the "Net400 Shareholder List"). The Net400 Shareholder List will
contain a complete and accurate listing of all outstanding shares and other
securities of Net400 of any kind, whether debt or equity. There are no
outstanding options or warrants of any kind for the purchase of shares or any
other securities of Net400, whether debt or equity.
(e) Net400 and the shareholders listed on the Net400 Shareholder List have
the requisite authority and capacity to perform the Merger.
(f) The Net400 Shareholders are the owners of record of over 80% of the
Net400 Common Stock and the shareholders listed on the Net400 Shareholder List
are the owners of record of all of the Net400 Common Stock and are entitled to
transfer such Net400 Common Stock in accordance herewith.
(g) By virtue of acquiring the Net400 Common Stock hereunder, ROI shall be
entitled to any and all rights and privileges to which the shareholders listed
on the Net400 Shareholder List are entitled by virtue of owning the Net400
Common Stock.
(h) Other than the Net400 Common Stock as shown on the Net400 Shareholder
List, each of the shareholders owns no other shares of common stock of Net400
and has not transferred or caused Net400 to issue any shares of common stock of
Net400 to anyone else.
(i) There is no material litigation pending or threatened against or
relating to the shareholders listed on the Net400 Shareholder List, or any of
them, that would affect the Net400 Common Stock or the transaction contemplated
by this Agreement.
(j) There is no effective order, decree or judgment of any court to which
the shareholders listed on the Net400 Shareholder List, or any of them, are a
party that would affect the Net400 Common Stock or the transaction contemplated
by this Agreement.
(k) The shareholders listed on the Net400 Shareholder List have good title
to the Net400 Common Stock to be transferred pursuant to this Agreement; such
Net400 Common Stock are validly issued and outstanding, and are paid for in
full; and each of the shareholders listed on the Net400 Shareholder List has
full legal right, power and authority to sell, assign and transfer the Net400
Common Stock to ROI pursuant to this Agreement.
(l) Schedule E, which is attached hereto and thereby made an integral part
hereof, contains the unaudited financial statements of Net400 for the fiscal
years ended December 31, 1998, 1999, and 2000. All such financial statements are
accurate and complete in all material respects. Except as disclosed on Schedule
E, there is no material litigation pending or threatened against Net400 and
there are no delinquent taxes of any kind. Schedule E-1, which is attached
hereto and thereby made an integral part hereof, contains a list of the
intellectual property of Net400 indicating whether or not each such item of
intellectual property is reflected on the Balance Sheet. Except as noted on said
Schedule E-1, Net400 is the owner of all such intellectual property and has
granted no rights of any kind related to the intellectual property to any other
party except for licenses granted in the ordinary course of business and said
licenses are listed on Schedule E-1. Schedule E-2, which is attached hereto and
thereby made an integral part hereof, contains a list of tangible assets of
Net400 whether or not such assets are reflected on the Balance Sheet. Except as
set forth in Schedule E-2, none of the personal property listed therein is held
under any lease, security agreement, conditional sales contract or other title
retention or security arrangement. Except as noted on Schedule E-2, Net400 is
the owner of all such assets and has granted no rights of any kind related to
the assets to any other party. Except as noted on the Schedules, Net400 has
good, valid and marketable title to all of its property and assets (whether
real, personal or mixed and whether tangible or intangible) free and clear of
all liens. Net400 does not own any real property.
(m) Schedule F attached hereto contains a correct and complete list of
every written contract, agreement, relationship or commitment, and every
material oral contract, commitment, agreement or relationship, to which the
Company is a party or by which the Company is bound (collectively, the "Material
Contracts"). True and complete copies of all Material Contracts have been
furnished to ROI. Except as set forth on Schedule F, (a) all of the Material
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Contracts are in full force and effect, (b) Net400 is not in default, and no
event has occurred which with the giving of notice or the passage of time or
both would constitute a default by Net400, under any Material Contract or any
other obligation owed by Net400, and (c) to the knowledge of Net400 and the
Net400 Shareholders, no event has occurred which with the giving of notice or
the passage of time or both would constitute such a default by any other party
to any such Material Contract or obligation. Net400 does not have any material
debts, liabilities or obligations of any nature (whether accrued, absolute,
contingent, direct, indirect, perfected, inchoate, unliquidated or otherwise,
whether due or to become due), except (a) liabilities and obligations under
Material Contracts or other liabilities and obligations described on the
attached Schedule F, (b) liabilities and obligations included in the financial
statements on Schedule E, and (c) liabilities and obligations which have arisen
after December 31, 2000, in the ordinary course of business, consistent with
past custom and practice (none of which is a liability resulting from breach of
contract, environmental matters, breach of warranty tort, infringement, claims
or lawsuits).
(n) Except as set forth on Schedule E, Net400 (i) has timely filed all Tax
Returns (as hereinafter defined) required to be filed by it for all periods
ending on or prior to the Closing, and such tax returns are true, correct and
complete in all material respects, (ii) has duly paid in full or made adequate
provision for the payment of all Taxes for all periods ending at or prior to the
Closing (whether or not shown on any Tax Return), and (iii) has not filed for an
extension to file any Tax Return not yet filed. No claim has been made by any
authority in a jurisdiction where Net400 does not file a Tax Return that Net400
is or may be subject to tax in such jurisdiction. No waivers of statutes of
limitation have been given by or requested with respect to any Taxes of Net400.
Except as set forth on Schedule E, Net400 has not agreed to any extension of
time with respect to any Tax deficiency. The liabilities and reserves for Taxes
reflected in the Net400 Financial Statements are adequate to cover all Taxes for
all periods ending on or prior to December 31, 2000, and there are no liens for
Taxes upon any property or asset of Net400, except for liens for Taxes not yet
due. Except as set forth on Schedule E, Net400 has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder, or other third
party.
(o) Any and all securities issued by Net400 have been issued in compliance
with Federal and State securities laws. Any and all filings required any
governmental authority have been filed by Net400 on a timely basis and such
filings are true and correct in all material respects.
(p) Net400 does not have, directly or indirectly, any ownership interest in
any other entity.
(q) Since December 31, 2000, Net400 has conducted its business only in the
ordinary course of business consistent with past custom and practice, and has
incurred no liabilities other than in the ordinary course of business consistent
with past custom and practice and there has been no material adverse change in
the assets, condition (financial or otherwise), operating results, employee or
customer relations, business activities or business prospects of Net400. Without
limitation of the foregoing and except as described herein, since December 31,
2000, and through the Closing Date, Net400 has not and will not have:
(i) sold, assigned or transferred any of the assets of its business or
mortgaged, pledged or subjected them to any Lien, charge or other
restriction;
(ii) sold, assigned, transferred, abandoned or permitted to lapse any
licenses or permits which, individually or in the aggregate, are material
to its business or any portion thereof, or any of the intellectual property
or other intangible assets, or disclosed any material proprietary
confidential information to any person, granted any license or sublicense
of any rights under or with respect to any intellectual property;
(iii) made or granted any increase in, or amended or terminated, any
existing plan, program, policy or arrangement;
(iv) conducted its cash management customs and practices (including
the timing of collection of receivables and payment of payables and other
current liabilities) and maintained its books and records other than in the
usual and ordinary course of business consistent with past custom and
practice;
(v) made any loans or advances to, or guarantees for the benefit of,
or entered into any transaction with any employee, officer or director;
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(vi) suffered any material loss, damage, destruction or casualty loss
to its business or waived any rights of material value, whether or not
covered by insurance and whether or not in the ordinary course of business;
(vii) declared, set aside or paid any dividend or distribution of cash
or other property to any stockholder or purchased, redeemed or otherwise
acquired any shares of its capital stock, or made any other payments to any
stockholder;
(viii) amended or authorized the amendment of its charter documents or
by-laws;
(ix) made any capital expenditures or commitments therefor in excess
of $10,000;
(x) paid any bonuses or compensation other than regular salary
payments, or increased the salaries, or paid any debt, to any stockholder,
director, officer, or employee, or entered into any employment, severance,
or similar contract with any director, officer, or employee;
(x) changed its authorized or issued capital stock; granted any stock
option or right to purchase shares of its capital stock; issued any
security convertible into such capital stock; granted any registration
rights; purchased, redeemed retired, or otherwise acquired any shares of
any such capital stock; or declared or paid any dividend or other
distribution or payment in respect of shares of capital stock;
(xi) cancelled or waived any claims or rights with a value in excess
of $10,000;
(xii) materially changed its accounting methods;
(xiii) entered into any other material transaction, other than in the
ordinary course of business consistent with past custom and practice; or
(xiv) committed to any of the foregoing.
(r) Net400 has not at any time made or committed to make any payments for
illegal political contributions or made any bribes, kickback payments or other
illegal payments.
(s) Schedule G attached hereto contains a correct and complete list setting
forth (a) the name, job title, current salary, accrued vacation and years of
employment for each employee of Net400, and (b) the names and total annual
compensation for all independent contractors who render services on a regular
basis to Net400. Except as set forth on Schedule G, no employee or independent
contractor of Net400 has received any bonus or increase in compensation and
there has been no general increase in the compensation or rate of compensation
payable to any employees or independent contractors of Net400 since December 31,
2000, nor has there been any change in any Employee Benefit Plan or any promise
by Net400 to employees or independent contractors orally or in writing of any
bonus or increase in compensation or a general increase or change in any
Employee Benefit Plan, whether or not legally binding. Net400 is not a party to
or obligated with respect to any (a) outstanding contracts with current or
former employees, agents, consultants, advisers, salesmen, sales
representatives, distributors, sales agents or dealers, or (b) collective
bargaining agreements or contracts with any labor union or other representative
of employees or any employee benefits provided for by any such agreement. No
strike, union organizational activity, allegation, charge or complaint of
employment discrimination or other similar occurrence has occurred during
Net400's operation of its business, or is pending or, to the knowledge of Net400
and the Net400 Shareholders, threatened against Net400; nor does Net400 or the
Net400 Shareholders know any basis for any such allegation, charge, or
complaint. Net400 has materially complied with all applicable legal requirements
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the withholding and
payment of social security, unemployment and other Taxes. There are no
administrative charges or court complaints pending or, to the knowledge of
Net400 and the Net400 Shareholders, threatened against Net400 before the U.S.
Equal Employment Opportunity Commission or any Governmental Entity concerning
alleged employment discrimination or any other matters relating to the
employment of labor; there is no unfair labor practice charge or complaint
relating to the business of Net400 pending or, to the knowledge of Company and
the Net400 Shareholders, threatened against Net400 before the National Labor
Relations Board or any similar state or local body; and, to the knowledge of
Net400 and the Net400 Shareholders, no such charges or complaints have been
brought against Net400.
8
(t) Schedule H is a complete and accurate list of the company names,
contact names, addresses, phone and facsimile numbers of all customers of Net400
who have purchased services and/or goods from Net400 since inception and all of
the sales prospects of Net400, and Net400 will deliver to Purchaser within ten
(10) days after the Closing an updated list of all customers and prospects with
any and all information Net400 has regarding such customers and prospects.
Net400 has not received any written or, to the knowledge of Net400 and Net400
Shareholders, oral notice, and Net400 does not have any knowledge, that any
customer of Net400 intends to discontinue or substantially diminish or change
its relationship with Net400 on account of the transactions contemplated herein
or otherwise (except as noted on Schedule H).
(u) None of Net400, the shareholders listed on the Net400 Shareholder List,
or any of their affiliates has employed or used the services of any finder or
broker in connection with the transactions contemplated herein.
7. CONDITIONS PRECEDENT TO CLOSING. The parties covenant and agree that the
Closing of the Merger shall be subject to the fulfillment of each of the
following covenants and agreements, each of which constitutes a condition
precedent to the obligations of the parties hereunder:
(a) The shareholders holding at least 65% of the outstanding shares of
common stock of ROI shall have approved the Merger.
(b) Net400 shall make available to ROI any and all data, records, and other
information as ROI, in its sole discretion, deems necessary to perform due
diligence prior to the Closing and said Closing shall be contingent upon ROI's
approval based on the results of said due diligence.
(c) At the Closing, Xxxxxxx shall enter into the Employment Agreement with
ROI.
(d) At the Closing, Xxxxx shall enter into the Services Agreement with ROI.
(e) At the Closing, Xxxxx and ROI shall enter into the Escrow Agreement.
(f) Prior to or at the Closing, ROI and Xxxxxxx Xxxxxxxx and Associates
shall enter into an agreement related to the software marketed by Net400 on
terms and conditions acceptable to ROI.
8. LEGEND ON SHARES; PIGGYBACK REGISTRATION. Each certificate for shares of
ROI Common Stock issued hereunder, unless at the time of exercise such shares
are registered under the Act, shall bear the following legend (and any
additional legend required by the any national securities exchanges upon which
such shares may, at the time of such exercise, be listed or under applicable
securities laws):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state. They may not be sold, transferred, assigned,
pledged, hypothecated, encumbered, or otherwise disposed of in the absence
of registration under said Act and all other applicable securities laws,
unless an exemption from registration is available.
The shareholders listed on the Net400 Shareholder List each will agree to hold
the shares of ROI Common Stock for a minimum of two (2) years after the Closing.
Except for the foregoing minimum holding period, the shareholders shall have
unlimited piggyback registration rights for any shares of ROI Common Stock
issued hereunder. If, after the foregoing minimum holding period, ROI at any
time proposes for any reason to register any of its securities under the
Securities Act of 1933, as amended (the "Act"), it shall each such time promptly
give written notice to the shareholders of its intention to do so, and upon the
written request, given within thirty (30) days after receipt of any such notice,
of any of the shareholders to register any shares of ROI Common Stock held by
any of them, ROI shall cause all such shares to be registered under the Act, all
to the extent requisite to permit the sale or other disposition by any of the
shareholders of the shares respectively held by them so registered. ROI, at its
sole expense, shall take all actions required and prepare and file any and all
documents required under the Act or any other securities or "blue sky" laws of
any jurisdictions reasonably requested by the shareholders or by the Securities
and Exchange Commission or any other regulatory agency.
9
9. ASSIGNMENT. Except as permitted herein, none of the parties to this
Agreement may assign its respective rights and obligations hereunder without the
prior written consent of the other parties hereto.
10. TERMINOLOGY AND SECTION HEADINGS. All personal pronouns in this
Agreement, whether used in the masculine, feminine or neuter gender shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Paragraphs are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
11. BINDING EFFECT. Subject to the restrictions on assignments set forth in
this Agreement, this Agreement and the rights of the parties hereunder shall
inure to the benefit of and be binding upon the parties and their respective
legal representatives, successors and assigns. Whenever in this Agreement a
reference is made to one of the parties, such reference shall be deemed to
include a reference to the legal representatives, successors and assigns of such
party.
12. SEVERABILITY. This Agreement shall be governed by and construed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
13. INTERPRETATION. In construing the terms and provisions of this
Agreement, it is understood and agreed that no court or other interpretive body
shall apply a presumption that the terms of this Agreement shall be more
strictly or particularly construed against one party hereto by reason of the
fact that said party, either directly or through its agents, prepared this
Agreement, it being understood and agreed that all parties, either directly or
through their agents, have fully participated in the preparation hereof.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, excluding any conflict of law
provisions. Any litigation to enforce or interpret this Agreement shall take
place in the state courts of Xxxx County, Georgia, or the federal courts for the
Northern District of Georgia.
15. ENTIRE AGREEMENT. Except as specifically provided in this Agreement to
the contrary, this Agreement constitutes the entire agreement between the
parties hereto regarding the subject matter hereof, and no modification hereof
shall be effective unless made a supplemental agreement in writing executed by
all of the parties hereto.
16. PUBLIC DISCLOSURE. Except as required by law, no party to this
Agreement other than ROI is permitted to make any written or oral statements or
disclose any information related to this Agreement and the transactions
contemplated hereby without the prior written consent of ROI.
10
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in multiple counterparts, each of which shall be deemed an original,
with their respective seals affixed thereto all as of the date and year first
above written.
RETURN ON INVESTMENT CORPORATION
Attest: /s/ XXXXXX XXXXX By: /s/ XXXXXXX XXXXXXX, XX.
-------------------- --------------------------------
Its: Secretary Its: President
[CORPORATE SEAL]
NET400 ACQUISITION CORPORATION
Attest: /s/ XXXXXX XXXXX By: /s/ XXXXXXX X. XXXXXXXXX
-------------------- --------------------------------
Its: Secretary Its: President
[CORPORATE SEAL]
NET400, INC.
Attest: /s/ XXXXXX X. XXXXX By: /s/ XXXXXX X. XXXXX
-------------------- --------------------------------
Its: Secretary Its: President
[CORPORATE SEAL]
NET400 SHAREHOLDERS:
/s/ XXXXXX X. XXXXX (SEAL)
------------------------------------
XXXXXX X. XXXXX
/s/ XXXXXXXXX X. XXXXXXX(SEAL)
------------------------------------
XXXXXXXXX X. XXXXXXX
