EXHIBIT 10.2
NON-BINDING INTERIM PLAN OF ARRANGEMENT AGREEMENT
This Non-Binding Interim Plan of Arrangement Agreement (the "Agreement") is made
and entered into and is effective as of the 12th day of October 2001, by and
among Inprimis, Inc., a Florida corporation, having its principal place of
business at 0000 Xxxxx Xxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 ("INPM"), DataWave
Systems, Inc., a Yukon corporation having its U.S. based offices located at 000
Xxxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxxx 00000 ("DTV"), and Cash Card
Communications Corp. Ltd., a Bermuda corporation, having its principal place of
business at 00 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxxx XX 00 ("C4") (collectively, the
"Parties").
RECITALS
A. The common shares of INPM ("INPM Shares") are currently listed for trading on
the Nasdaq Stock Market's National Market System ("NMS"), under the trading
symbol INPM;
B. The common shares of DTV ("DTV Shares") are listed for trading on the
Canadian Venture Exchange ("CDNX"), under the trading symbol DTV;
C. C4 is the largest single holder of DTV Shares, owning of record 15,775,000
DTV Shares, which constitute 36% of the issued and outstanding DTV Shares;
D. DTV is desirous of obtaining a listing for DTV on the Nasdaq;
E. INPM requires additional asset base in order to maintain its listing on
Nasdaq NMS;
F. The management of INPM and DTV have negotiated a plan of arrangement under
applicable provisions of the Yukon Business Corporation Act ("YBCA"), under
which DTV would become a wholly owned Yukon subsidiary of INPM in a
reorganization, with the shareholders of DTV indirectly exchanging their DTV
Shares for shares of INPM, which would, among other things, effect a means of
obtaining a Nasdaq listing for DTV (the "Arrangement"); and
G. The parties to this Agreement are agreed in principle to the Arrangement,
subject to the terms and conditions herein below set forth, and they currently
believe that the Arrangement is in the best interest of both INPM and DTV and
their respective shareholders. Accordingly, they agree to enter into this
Agreement for the express purpose of assuring INPM, DTV, the shareholders of
both companies, and relevant regulatory authorities of the likelihood of the
successful and timely completion of the Arrangement.
NOW, THEREFORE, in consideration of the mutual premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by all of the parties hereto, the parties to this Agreement agree
as follows:
PROVISIONS OF THE AGREEMENT
ARRANGEMENT TERMS. The parties hereto agree that it is their intent to enter
into an Arrangement whereby DTV shareholders would transfer their shares to a
yet to be created wholly owned Yukon subsidiary of INPM and in return receive
freely tradable INPM shares. The ratio of exchange of DTV Shares for shares of
INPM would be one share of DTV for one and a half (1 1/2) newly created shares
of INPM. Upon closing of the Arrangement, current DTV shareholders would own
84.99% of the issued and outstanding shares of INPM on a currently outstanding
basis, or 81.64% on a fully diluted basis. Warrants and options to purchase
shares in DTV would be exchanged for warrants and options to purchase INPM
Shares at the same ratio.
ISOLATION OF BUSINESS RISK. As a condition precedent to the closing (the
"Closing") of the transaction to be completed in the Arrangement, INPM shall
have transferred its pre-existing business into its wholly owned subsidiary
Inprimis Technologies, Inc., and Datawave is reasonably satisfied that Inprimis'
maximum aggregate liability for all matters arising out of that business at or
prior to Closing is less than One Million Seven Hundred Thousand Dollars
($1,700,000).
ARRANGEMENT AGREEMENT. DTV and INPM will negotiate and execute a formal
Arrangement Agreement that has the terms and conditions set out herein and
contains representations and warranties as are normal and prudent for Share
Exchange Agreements conducted among Nasdaq listed companies. The specific terms
of the Arrangement will be made with a view to reducing any negative tax
implications for DTV and INPM shareholders. The Arrangement Agreement will be
negotiated and signed at such time as the parties deem it expedient.
ARRANGEMENT TO COMPLY WITH APPLICABLE LAWS AND REGULATIONS. The transactions
contemplated under the Arrangement shall comply with all applicable provisions
of: (i) the Yukon Business Corporations Act, (ii) exemption provisions of
Section 3(a)(10) of the U.S. Securities Act of 1933, and (iii) all other
applicable laws. The Parties acknowledge and agree that the initial listing
requirements of Nasdaq may be required to be met upon consummation of the
Arrangement, and that the listing of DTV on CDNX may be suspended pending
closing of the Arrangement. Further, the Parties acknowledge that the
Arrangement will require prospectus level proxy circulars to shareholders of
each of DTV and INPM, approval of the Arrangement by a two-thirds majority of
the DTV shareholders casting votes on the matter, approval by the necessary
majority of INPM shareholders of an increase in the authorized capital of INPM
sufficient to effect the Arrangement and the Share Exchange Agreement between
C4, INPM and others of even date herewith (the "Share Exchange Agreement"), and
a court hearing on the fairness of the Arrangement to shareholders.
C4 AGREES TO THE ARRANGEMENT. C4 consents to DTV and INPM entering into this
agreement and, subject to its terms and the conditions and those of the Share
Exchange Agreement, C4 agrees to sell its control block of DTV shares to INPM
prior to Closing of the Arrangement. C4 acknowledges that its agreement to sell
its control block of shares to INPM constitutes a fundamental part of the
consideration for INPM and DTV's agreements herein.
CLOSING. The closing of the Arrangement (the "Closing") will take place on
January 2, 2002 or such other date as is agreed by DTV and INPM.
INPM'S NEW BOARD OF DIRECTORS. Upon Closing, INPM shall be governed by a board
of directors (the "New INPM Board") consisting of nine directors. For one year
following the Closing, six directors shall be appointed by the management of DTV
(the "DTV Board Members") and three directors shall be appointed by the current
management of INPM (the "INPM Board Members"). Four members of the New INPM
Board shall be executives. The three INPM directors shall include Eduard Will,
whom the parties have agreed will be Chairman of Board. From the date of Closing
until the next annual general meeting of INPM, if an INPM appointed director
resigns, declines nomination for election, is removed from the board or vacates
the board for any reason, then the resulting vacancy shall be filled by a person
agreed upon by the remaining INPM directors. The Parties agree to vote and take
such other action as is necessary to implement the provisions set forth in this
section.
INPM SENIOR MANAGEMENT COMPENSATION. The Arrangement Agreement will provide
that, following the Closing, the officers of INPM shall consist of a Chief
Executive Officer ("CEO"), Chairman, Deputy Chairman and Chief Financial Officer
("CFO"), with initial annual compensation set at $200,000 for the CEO, $160,000
for the Chairman and $150,000 for the CFO. The Parties have agreed that the CEO
shall be Xxxx Xxxxxxx, the Chairman shall be Eduard Will, the Deputy Chairman
shall be Xxx Xxxxxx and the CFO shall be Xxxx Xxxxxx. Funds are denominated in
US dollars.
STANDSTILL PROVISION. From the date of this Agreement and continuing until the
earlier of: Closing of the Arrangement or the date the Agreement terminates
pursuant to the terms set out below, each of INPM and DTV agree to refrain from
discussing the acquisition or sale of all or any part of its business
operations, except among each other or as required by law. In addition, until
the Closing, neither DTV nor INPM will, without the written consent of the
other, issue any securities, enter into contracts or otherwise act outside of
the normal course of business, make payments to any related party except in the
normal course of business, sell or negotiate to sell material assets of their
business, or take any other action that would be considered by a prudent
businessperson to materially and adversely affect the company.
REPRESENTATIONS AND WARRANTIES.
INPM hereby represents and warrants to DTV and to C4 that:
except as expressly set forth to the contrary in this Agreement or the Share
Exchange Agreement, the publicly available documents filed by or on behalf of
INPM with the U.S. Securities and Exchange Commission (the "Public Record") were
true and correct in all material respects at the time they were filed and, at
such time, none of these documents contained any untrue statement of any
material fact nor did they omit to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which they
were made, not misleading;
the information concerning INPM to be contained in the proxy information
circular and/or other disclosure circular to be jointly delivered by INPM and
DTV to the DTV shareholders pursuant
to the Plan of Arrangement (the "Circular") will contain no untrue statement of
a material fact and will not omit to state a material fact that is required to
be stated or that is necessary to make a statement therein not misleading in the
light of the circumstances in which it will be made, and such information in the
Circular will constitute full, true and plain disclosure of all material facts
relating to INPM; and
from June 30, 2001, through the date of this Agreement, there has not been any
material adverse change in the condition or operation of INPM or in its assets,
liabilities or financial condition except as has been disclosed in the Public
Record, this Agreement, the Share Exchange Agreement or as has otherwise been
disclosed in writing by INPM prior to the date of this Agreement.
DTV hereby represents and warrants to DTV and to C4 that:
except as expressly set forth to the contrary in this Agreement or the Share
Exchange Agreement, the documents filed by or on behalf of DTV in the Public
Record were true and correct in all material respects at the time they were
filed and, at such time, none of these documents contained any untrue statement
of any material fact nor did they omit to state a material fact necessary in
order to make the statements made, in the light of the circumstances under which
they were made, not misleading;
the information concerning DTV to be contained in the Circular will contain no
untrue statement of a material fact and will not omit to state a material fact
that is required to be stated or that is necessary to make a statement therein
not misleading in the light of the circumstances in which it will be made, and
such information in the Circular will constitute full, true and plain disclosure
of all material facts relating to DTV; and
from December 31, 2000, through the date of this Agreement, there has not been
any material adverse change in the condition or operation of DTV or in its
assets, liabilities or financial condition except as has been disclosed in the
Public Record, this Agreement or the Share Exchange Agreement or as has
otherwise been disclosed in writing by DTV prior to the date of this Agreement.
DUE DILIGENCE. Each of DTV and INPM will fully co-operate with the other in
assisting the other to conduct complete due diligence, and will provide to
management and professional advisors of the other all information reasonably
requested. The receiving party agrees not to disclose to others any of the
information so received and to treat the same as having been received in
confidence, and not to use any such information for any purpose other than
evaluating the Arrangement.
CONDITIONS OF CLOSING. The Closing of the Arrangement will be subject to the
following conditions precedent:
The Board of Directors of INPM shall have received the opinion of XxXxxx & Ghee,
Inc., nationally recognized valuation consultants, that the Arrangement is fair
to the stockholders of INPM.
The Board of Directors of DTV shall have received the opinion of a firm of
valuation consultants acceptable to DTV, that the Arrangement is fair to the
stockholders of DTV.
The Boards of Directors of DTV and INPM shall each have adopted the formal
Arrangement Agreement and the Board of Directors of DTV shall have recommended
to its shareholders that they approve the Arrangement Agreement;
The shareholders of DTV shall have approved of the Arrangement and the
transactions contemplated thereby subject to the terms and conditions set forth
herein and in the formal Arrangement Agreement;
The shareholders of INPM shall have approved an increase in the authorized
capital of INPM sufficient to effect the Arrangement and the transactions
contemplated thereby;
The boards of DTV and INPM, each acting reasonably, being satisfied with the
terms of the formal Arrangement Agreement and the results of their due
diligence.
all necessary consents of third parties to the Arrangement have been obtained
and there are no legal impediments to completing the Arrangement on its terms
that neither INPM nor DTV shall have filed for bankruptcy, become the subject of
an involuntary bankruptcy proceeding or other insolvency proceeding or had a
receiver appointed for its assets; and
A court of competent jurisdiction shall have confirmed the Arrangement as fair
to the Parties and their shareholders.
NOTICES. Any notice under this Agreement shall be in writing and shall be
effective when actually delivered in person or three days after being deposited
in the mail, registered or certified, postage prepaid and addressed to the party
at the address stated in this Agreement, or at such other address as either
party may from time to time designate by written notice to the other.
TIME. Time is of the essence of this Agreement.
WAIVER. Failure of any party at any time to require performance of any provision
of this Agreement shall not limit the party's right to enforce the provision,
nor shall any waiver of any breach of any provision be a waiver of any
succeeding breach of any provision or a waiver of the provision itself for any
other provision.
ASSIGNMENT. No party hereto may transfer or assign this Agreement without the
prior written consent of the other parties.
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, without giving effect to the conflicts of
laws rules of that state.
ARBITRATION. If at any time during the term of this Agreement any dispute,
difference or disagreement shall arise upon or in respect of the Agreement, and
the meaning and construction hereof, every such dispute, difference and
disagreement shall be referred to a single arbiter
agreed upon by the parties, or if no single arbiter can be agreed upon, an
arbiter or arbiters shall be selected in accordance with the rules of the
American Arbitration Association and such dispute, difference or disagreement
shall be settled by arbitration in accordance with the then prevailing
commercial rules of the American Arbitration Association and shall be binding on
each of the parties, and judgment upon the award rendered by the arbiter may be
entered in any court having jurisdiction thereof.
ATTORNEYS' FEES. In the event an arbitration, suit or action is brought by any
party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party or parties shall be entitled
to have their reasonable expenses (including attorneys' fees at trial and all
appellate levels) paid by the other party or parties.
PRESUMPTION. This Agreement or any section thereof shall not be construed
against any party due to the fact that said Agreement or any section thereof was
drafted by said party.
ENTIRE AGREEMENT. This Agreement contains the entire understanding between the
Parties and supersedes any prior understandings and agreements between them
respecting the subject matter of this Agreement; provided that this Agreement
does not supersede the understandings and agreements set forth in that certain
Non-Disclosure Agreement dated as of September 23, 2001, between INPM and DTV,
nor does it supersede the Share Exchange Agreement of even date herewith between
INPM and C-4.
MODIFICATIONS MUST BE IN WRITING. This Agreement may not be changed orally. All
modifications of this Agreement must be in writing and must be signed by the
party against whom the modification is sought to be enforced.
AGREEMENT NOT BINDING. This Agreement is a non-binding expression of the intent
of the parties hereto to work together to achieve their various objectives
through a formal Plan of Arrangement. Any of the parties hereto can terminate
this Agreement at any time, without liability, upon sending written notice to
the other parties of their intent to do so.
COUNTERPARTS. This Agreement may be executed in several counterparts and all so
executed shall constitute one Agreement, binding on the Parties even though any
party hereto does not sign the original or the same counterpart.
FACSIMILE SIGNATURES. Facsimile transmission of any signed original document,
and the retransmission of any signed facsimile transmission, shall be the same
as delivery of the original signed document. At the request of either party, a
party shall confirm documents with a facsimile transmitted signature by signing
an original document.
PARTIES IN INTEREST. Nothing herein shall be construed to be to the benefit of
any third party not described in this Agreement, nor is it intended that any
provision shall be for the benefit of any such third party.
SAVINGS CLAUSE. If any provision of this Agreement, or the application of such
provision to any person or circumstance, shall be held invalid, the remainder of
this Agreement, or the application
of such provision to persons or circumstances other than those as to which it is
held invalid, shall not be affected thereby.
TAX ISSUES. Each party has consulted with its own tax advisors and accountants
with respect to the tax and accounting consequences, respectively, of the
transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to have been duly
authorized and executed pursuant to resolutions adopted by their respective
boards of directors as of the date and year first written above.
INPRIMIS, INC. CASH CARD COMMUNICATIONS
CORP, LTD.
Per: /s/ Eduard Will Per: /s/ Xxx Xxxxxx
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Eduard Will, CEO Xxx Xxxxxx, CEO
DATAWAVE SYSTEMS, INC.
Per: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, CEO
