EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INTERNATIONAL CARD ESTABLISHMENT, INC.,
a Delaware corporation,
ICE SUB INC.
a Nevada corporation,
AND
NEOS MERCHANT SOLUTIONS, INC.,
a Nevada corporation,
DATED AS OF SEPTEMBER ___, 2004
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PILLSBURY WINTHROP LLP
CONFIDENTIAL
PREAMBLE
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as the or
this "Agreement") is entered into as of this ___ day of September 2004, by and
between INTERNATIONAL CARD ESTABLISHMENT, INC., a Delaware corporation ("ICE"),
ICE Sub Inc., a Nevada corporation and wholly-owned subsidiary of ICE ("ICE
SUB") and NEOS Merchant Solutions, Inc., a Nevada corporation ( "NEOS").
RECITALS
WHEREAS, NEOS is a Nevada corporation with authorized capital stock of
two million (2,000,000) shares of Common Stock, par value $0.0001 (the "COMMON
STOCK"), and one million (1,000,000) shares of Preferred Stock, par value
$0.0001 (the "PREFERRED STOCK," and together with the Common Stock, the "NEOS
CAPITAL STOCK"), all of which shall be converted into the Common Stock
immediately prior to the Closing (as hereinafter defined in Section 2.1.2);
WHEREAS, ICE is a Delaware corporation with authorized capital stock
consisting of one hundred million (100,000,000) shares of Common Stock, par
value $0.0005 (the "ICE COMMON STOCK" and each share thereof an "ICE COMMON
SHARE");
WHEREAS, ICE Sub is a Nevada corporation with authorized capital stock
consisting of one thousand (1,000) shares of common stock, no par value, all of
which are issued and outstanding as of the date hereof;
WHEREAS, each of the boards of directors of ICE, ICE Sub and NEOS has
determined that the Merger (as hereinafter defined in Section 2.1.1) is in the
best interests of their respective stockholders, and the board of directors of
NEOS has recommended that the Stockholders (as hereinafter defined in Section
1.1) approve the Merger;
WHEREAS, contemporaneously herewith, as an evidence of a portion of the
Merger Consideration (as hereinafter defined in Section 1.1) pursuant to this
Agreement, ICE and ICE Sub has issued to NEOS Liquidating, LLC, a California
limited liabilities company (the "TRUST"), a promissory note for the amount of
five hundred thousand dollars ($500,000.00), convertible at the option of the
Trust into ICE Common Stock, due and payable by ICE on January 1, 2005, in
substantially the form attached hereto as EXHIBIT A;
WHEREAS, contemporaneously herewith, as an evidence of a portion of the
Merger Consideration (as hereinafter defined in Section 1.1) pursuant to this
Agreement, ICE and ICE Sub has issued to the Trust a promissory note for the
amount of one million five hundred thousand dollars ($1,500,000.00), convertible
at the option of the Trust into ICE Common Stock, due and payable by ICE on
January 1, 2006, in substantially the form attached hereto as EXHIBIT B;
WHEREAS, contemporaneously herewith, as a condition and an inducement
to NEOS' willingness to enter into this Agreement, ICE and each of its officers
and directors has entered into a Lock-Up Agreement with the Stockholders (as
hereinafter defined in Section 1.1) in the form attached hereto as EXHIBIT C (as
hereinafter defined in Section 1.1), to become effective at the Effective Time
(as hereinafter defined in Section 1.1);
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WHEREAS, contemporaneously herewith, as a condition and an inducement
to NEOS' willingness to enter into this Agreement, ICE has entered into a Proxy
Agreement with the Stockholders (as hereinafter defined in Section 1.1) in the
form attached hereto as EXHIBIT D (as hereinafter defined in Section 1.1), to
become effective at the Effective Time (as hereinafter defined in Section 1.1);
WHEREAS, contemporaneously herewith, as a condition and an inducement
to NEOS' willingness to enter into this Agreement, ICE has entered into a
Management Rights Letter with the Stockholders (as hereinafter defined in
Section 1.1) in the form attached hereto as EXHIBIT E (as hereinafter defined in
Section 1.1), to become effective at the Effective Time (as hereinafter defined
in Section 1.1);
WHEREAS, contemporaneously herewith, as a condition and an inducement
to NEOS' willingness to enter into this Agreement, ICE has entered into a
License Agreement with the Trust in the form attached hereto as EXHIBIT F (as
hereinafter defined in Section 1.1), to become effective at the Effective Time
(as hereinafter defined in Section 1.1);
WHEREAS, contemporaneously herewith, as a condition and an inducement
to NEOS' willingness to enter into this Agreement, ICE has entered into a
Piggyback Registration Rights Agreement with the Stockholders (as hereinafter
defined in Section 1.1) in the form attached hereto as EXHIBIT G (as hereinafter
defined in Section 1.1), to become effective at the Effective Time (as
hereinafter defined in Section 1.1); and
WHEREAS, it is the intention of ICE, ICE Sub and NEOS that the
transactions contemplated hereby constitute a tax-free "reorganization" as
defined in the Internal Revenue Code of 1986, as amended (the "CODE"), and that
all the terms and provisions of this Agreement be interpreted, construed and
enforced to effectuate this intent.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, promises, representations and warranties contained herein, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"2006 NOTE" shall have the meaning set forth in Section 2.8.5 of this
Agreement.
"AFFILIATE" shall mean any individual, partnership, corporation,
entity or other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with
the Person specified.
"AGREEMENT" shall have the meaning set forth in the Preamble to this
Agreement.
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"ANCILLARY AGREEMENTS" shall mean the agreements attached hereto as
EXHIBITS A - G.
"APPLICABLE LAW" shall mean any Law applicable to NEO, any of the
Stockholders (as hereinafter defined in this Section 1.1), ICE or ICE Sub
or any of their respective Affiliates, properties, assets, officers,
directors, employees or agents, as the case may be.
"ARTICLES OF MERGER" shall have the meaning set forth in Section 2.2
of this Agreement.
"ASSUMPTION LIMIT" shall have the meaning set forth in Section 5.4 of
this Agreement.
"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in
the State of California.
"CASH CONSIDERATION" shall mean five hundred thousand dollars
($500,000), to be received by Stockholders (as hereinafter defined in this
Section 1.1) at Closing pursuant to Article 2 of this Agreement.
"CCC" shall have the meaning set forth in Section 2.11 of this
Agreement.
"CERTIFICATES" shall have the meaning set forth in Section 2.8.1 of
this Agreement.
"CLOSING" shall have the meaning set forth in Section 2.1.2 of this
Agreement.
"CLOSING DATE" shall have the meaning set forth in Section 2.1.2 of
this Agreement.
"CLOSING MEASUREMENT PRICE" shall mean the average of the closing
prices for an ICE Common Share on the OTC Bulletin Board as reported in THE
WALL STREET JOURNAL for the twenty (20) consecutive Trading Days (as
hereinafter defined in this Section 1.1) ending on and including the second
Trading Day preceding the Closing Date.
"CODE" shall have the meaning set forth in the Recitals to this
Agreement.
"COMMON STOCK" shall mean the common stock, par value $0.0001 per
share, of NEOS.
"CONTRACTS" shall mean all written or oral contracts, agreements,
evidences of indebtedness, guarantees, leases and executory commitments
greater than fifty thousand dollars ($50,000) individually to which NEOS or
any of its Subsidiaries is a party or by which any of NEOS' or any of its
Subsidiaries' properties or assets are bound, or otherwise related to NEOS
Business.
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"EFFECTIVE TIME" shall have the meaning set forth in Section 2.2 of
this Agreement.
"ENCUMBRANCE" shall mean any lien, pledge, mortgage, security
interest, claim, charge, easement, limitation, commitment, encroachment,
restriction (other than a restriction on transferability imposed by federal
or state securities Laws) or other encumbrance of any kind or nature
whatsoever (whether absolute or contingent).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"GAAP" shall mean generally accepted accounting principles, as applied
in the United States.
"GOVERNMENTAL AUTHORITY" shall mean any United States or foreign
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the SEC or any other
United States or foreign government authority, agency, department, board,
commission or instrumentality of the United States, any state of the United
States or any political subdivision thereof or any foreign jurisdiction,
and any court, tribunal or arbitrator(s) of competent jurisdiction, and any
United States or foreign governmental or non-governmental self-regulatory
organization, agency or authority (including the New York Stock Exchange
and the National Association of Securities Dealers).
"HOLDER" shall have the meaning set forth in Section 2.7 of this
Agreement.
"ICE" shall have the meaning set forth in the Preamble to this
Agreement.
"ICE BALANCE SHEET" shall have the meaning set forth in Section 3.13
of this Agreement.
"ICE COMMON SHARE" shall mean one (1) share of ICE Common Stock.
"ICE COMMON STOCK" shall mean the shares of common stock, par value
$0.0005 per share, of ICE.
"ICE CURE PERIOD" shall have the meaning set forth in Section 8.1.5 of
this Agreement.
"ICE DISCLOSURE SCHEDULE" shall have the meaning set forth in the
introduction to Article 3 of this Agreement.
"ICE INSIDER SHARES" shall have the meaning set forth in Section 7.8
of this Agreement.
"ICE MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, assets, liabilities, financial condition or results of
operations of ICE and its Subsidiaries, taken as a whole, or on the ability
of
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ICE or ICE Sub to complete the Closing pursuant to the terms hereof or comply
with its obligations hereunder; PROVIDED, HOWEVER, that an ICE Material Adverse
Effect shall not be deemed to have occurred if such effect is attributable to
changes in general U.S. or world economic or capital market conditions or
changes generally affecting the industry in which ICE and its Subsidiaries
operate (provided that such changes do not have a disproportionate adverse
impact on ICE and its Subsidiaries, taken as a whole).
"ICE SEC FILINGS" shall have the meaning set forth in Section 3.13 of
this Agreement.
"ICE SUB" shall have the meaning set forth in the Preamble to this
Agreement.
"ICE SUB DISCLOSURE SCHEDULE" shall have the meaning set forth in the
introduction to Article 3 of this Agreement.
"ICE TRANSFER AGENT" shall have the meaning set forth in Section 2.8.2
of this Agreement.
"KNOWLEDGE" of (i) NEOS shall mean the actual knowledge after
reasonable inquiry of any of its officers and (ii) ICE shall mean the
actual knowledge after reasonable inquiry of any of its officers.
"LAW" shall mean any domestic or foreign federal, state or local
statute, law (whether statutory or common law), ordinance, rule,
administrative interpretation, regulation, order, writ, injunction,
directive, judgment, decree, policy, guideline or other requirement or
arbitration award or finding (including those of the National Association
of Securities Dealers, New York Stock Exchange or any other self-regulatory
organization).
"LICENSE AGREEMENT" shall have the meaning set forth in Section 7.10
of this Agreement.
"LOCK-UP AGREEMENT" shall have the meaning set forth in Section 7.8 of
this Agreement.
"MERGER" shall have the meaning set forth in Section 2.1.1 of this
Agreement.
"MERGER CONSIDERATION" shall mean the aggregate of Cash Consideration
and Stock Consideration.
"NEOS" shall have the meaning set forth in the Preamble to this
Agreement.
"NEOS BUSINESS" shall mean the business and operations of NEOS and any
of its Subsidiaries in the manner in which the same have been conducted
prior to the date hereof and are currently being conducted by NEOS, whether
conducted by NEOS or any of its Subsidiaries.
"NEOS CAPITAL STOCK" shall mean the Preferred Stock and the Common
Stock.
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"NEOS CURE PERIOD" shall have the meaning set forth in Section 8.1.3
of this Agreement.
"NEOS DISCLOSURE SCHEDULE" shall have the meaning set forth in the
introduction to Article 4 of this Agreement.
"NEOS DISSENTING SHARES" shall have the meaning set forth in Section
2.11 of this Agreement.
"NEOS FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.4 of this Agreement.
"NEOS MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, assets, liabilities, financial condition or results of
operations of NEOS and its Subsidiaries, taken as a whole, or on the
ability of NEOS to complete the Closing pursuant to the terms hereof or
comply with its obligations hereunder or that adversely affects ICE's
ability to conduct and operate NEOS Business after the Closing; PROVIDED,
however, that a NEOS Material Adverse Effect shall not be deemed to have
occurred (a) if such effect is attributable to changes in general U.S. or
world economic or capital market conditions or changes generally affecting
the industry in which NEOS and its Subsidiaries operate NEOS Business
(provided that such changes do not have a disproportionate adverse impact
on NEOS and its Subsidiaries, taken as a whole); (b) if such effect is
attributable to announcement of this Agreement; or (c) any litigation
brought or threatened against NEOS or its directors or officers in respect
of this Agreement arising from allegations of breach of fiduciary duty
relating to this Agreement.
"NEOS OPTIONS" shall mean any and all options issued by NEOS to
purchase shares of Common Stock under any NEOS stock option plan or
agreement.
"NEOS WARRANTS" shall mean any and all warrants issued by NEOS to
purchase shares of NEOS Capital Stock.
"NRS" shall have the meaning set forth in Section 2.1.1 of this
Agreement.
"OPTIONHOLDERS" shall mean the Holders of NEOS Options.
"PERMITTED ENCUMBRANCES" shall mean (a) Encumbrances for current Taxes
not yet due and payable; (b) purchase money security interests and (c)
liens imposed by Law, such as mechanics' liens.
"PER SHARE CASH CONSIDERATION" shall mean Cash Consideration divided
by the number of outstanding shares of Common Stock at the Effective Time.
"PER SHARE MERGER CONSIDERATION" shall mean Per Share Cash
Consideration and Per Share Stock Consideration.
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"PER SHARE STOCK CONSIDERATION" shall mean Stock Consideration (as
hereinafter defined in this Section 1.1) divided by the number of
outstanding shares of Common Stock at the Effective Time.
"PERSON" shall mean any individual, corporation, company, partnership
(limited or general), limited liability company, joint venture,
association, trust, Governmental Authority or other entity.
"PIGGYBACK REGISTRATION RIGHTS AGREEMENT" shall have the meaning set
forth in Section 7.11 of this Agreement.
"PREFERRED STOCK" shall mean the preferred stock, par value $0.001 per
share, of NEOS.
"PROXY AGREEMENT" shall have the meaning set forth in Section 7.9 of
this Agreement.
"PROXY HOLDER" shall have the meaning set forth in Section 7.9 of this
Agreement.
"PROXY SHARES" shall have the meaning set forth in Section 7.9 of this
Agreement.
"SEC" shall mean the United States Securities and Exchange Commission,
and any successor thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder.
"SERIES A CONVERTIBLE PREFERRED STOCK" shall mean the Series A
Convertible Preferred Stock, par value $0.0001 per share, of NEOS.
"SERIES A-1 PREFERRED STOCK" shall mean the Series A-1 Convertible
Preferred Stock, par value $0.0001 per share, of NEOS.
"SERIES B CONVERTIBLE PREFERRED STOCK" shall mean the Series B
Convertible Preferred Stock, par value $0.0001 per share, of NEOS.
"STOCKHOLDERS" shall mean the holders of shares of NEOS Capital Stock
as of immediately prior to the Effective Time (which shall include
Optionholders that have exercised their NEOS Options immediately prior to
the Effective Time).
"STOCK CONSIDERATION" shall mean the aggregate number of ICE Common
Shares equal to the quotient (rounded down to the nearest whole share) of
(x) four million dollars ($4,000,000) divided by (y) the Closing
Measurement Price, issuable at Closing pursuant to Article 2 of this
Agreement.
"SUBSIDIARY" of a Person shall mean any other Person more than 50% of
the voting stock (or of any other form of other voting or controlling
equity interest in the case of a Person that is not a corporation) of which
is beneficially owned by the Person directly or indirectly through one or
more other Persons.
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"SUPERIOR PROPOSAL" shall mean a bona fide proposal made by a third
party to acquire NEOS pursuant to a merger, a sale of all or substantially
all of its assets or otherwise on terms which a majority of the board of
directors of NEOS determines, at a duly constituted meeting of the board of
directors, in its reasonable good faith judgment (after consultation with
its financial advisor) to be more favorable from a financial point of view
to Stockholders than the Merger and for which financing, to the extent
required, is then committed or in the good faith judgment of the board of
directors of the Company is reasonably available.
"SURVIVING CORPORATION" shall have the meaning set forth in Section
2.1.1 of this Agreement.
"TAKEOVER STATUTE" shall mean any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal Laws in the United States.
"TAX" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TRADING DAY" shall mean any day on which the OTC Bulletin Board is
open and available for at least five (5) hours for the trading of
securities.
"TRANSMITTAL LETTER" shall have the meaning set forth in Section 2.8.1
of this Agreement.
"TRUST" shall have the meaning set forth in the Preamble to this
Agreement.
ARTICLE 2
THE MERGER
SECTION 2.1 THE MERGER.
Section 2.1.1 MERGER OF NEOS INTO ICE SUB. Upon the terms and subject
to satisfaction or waiver of the conditions set forth in this Agreement,
and in accordance with the Nevada Revised Statutes ("NRS"), at the
Effective Time, NEOS shall be merged with and into ICE Sub (the "MERGER").
As a result of the Merger, the separate corporate existence of NEOS shall
cease and ICE Sub shall continue as the surviving company of the Merger
(the "SURVIVING CORPORATION").
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Section 2.1.2 CLOSING. Unless this Agreement shall have been
terminated pursuant to Article 8 of this Agreement, and subject to the
satisfaction (or, to the extent permitted by this Agreement, the waiver) of
each of the conditions set forth in Article 6 and Article 7 of this
Agreement, the consummation of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of ICE at 000
Xxxxxxxxx Xxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, at 10:00 a.m.,
Pacific Time, on a day following the satisfaction (or, to the extent
permitted by this Agreement, the waiver) of each of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date but subject to the fulfillment of those conditions) set forth
in Article 6 and Article 7 of this Agreement (but in any event, within two
(2) Business Days after the satisfaction or waiver of each of the
conditions set forth in Article 6 and Article 7 of this Agreement), or at
such other date, time and place as ICE and NEOS shall mutually agree in
writing (the exact date on which the Closing takes place, the "CLOSING
DATE").
SECTION 2.2 EFFECTIVE TIME. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date, the parties hereto shall cause the
Merger to be consummated by filing an articles of merger (the "ARTICLES OF
MERGER") with the Secretary of State of the State of Nevada, in such form as
required by, and executed in accordance with the relevant provisions of, the NRS
(the date and time of such filing, or if another date and time is specified in
such filing, such specified date and time, being the "EFFECTIVE TIME").
SECTION 2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the NRS. Without
limiting the generality of the foregoing, at the Effective Time, except as
otherwise provided herein, all the property, rights, privileges, powers and
franchises of NEOS and ICE Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of NEOS and ICE Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4 CHARTER AND BYLAWS. The articles of incorporation and bylaws of
ICE Sub as in effect immediately prior to the Effective Time shall be the
articles of incorporation and bylaws of the Surviving Corporation until each
shall thereafter be amended in accordance with their respective terms and as
provided by Applicable Law.
SECTION 2.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. Xxxx Xxxx
Xxxxx, Xxxxxxx X.X. Xxxxxxxxxxxx and Xxxxxxx X. Xxxxxxxx shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the articles of incorporation and bylaws of the Surviving Corporation. The
officers of NEOS immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with
the articles of incorporation and bylaws of the Surviving Corporation.
SECTION 2.6 CONVERSION OF PREFERRED STOCK INTO COMMON STOCK. Immediately
prior to the Effective Time, all Preferred Stock (and securities exercisable for
shares thereof) shall be converted into Common Stock pursuant to the terms of
the articles of incorporation of NEOS on file with the Secretary of State of the
State of Nevada immediately prior to the Effective Time. All shares of Preferred
Stock converted pursuant to this Section 2.6 shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist at the
Effective Time.
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SECTION 2.7 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of ICE, ICE Sub, NEOS or the
holders of any of the following securities (each, a "HOLDER"):
Section 2.7.1 SHARES OF COMMON STOCK OF ICE SUB. Each share of common
stock of ICE Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and be exchanged for a newly and validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation such that immediately following the Effective Time, ICE will be
the sole and exclusive owner of the shares of capital stock of the
Surviving Corporation.
Section 2.7.2 SHARES OF COMMON STOCK. Each share of Common Stock
outstanding immediately prior to the Effective Time (other than any shares
of Common Stock held in the treasury of NEOS immediately prior to the
Effective Time, which shares shall be canceled and extinguished without any
payment being made in respect thereof, or any NEOS Dissenting Shares) shall
be converted into the right to receive Per Share Merger Consideration. All
shares of Common Stock converted pursuant to this Section 2.7.2 shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist after the Effective Time.
Section 2.7.3 NEOS WARRANTS. NEOS shall take all actions necessary to
provide that, at the Effective Time, each NEOS Warrant that is outstanding,
unexercised and unexpired immediately prior to the Effective Time, whether
or not then exercisable, shall be canceled.
Section 2.7.4 NEOS OPTIONS. NEOS shall take all actions necessary,
including obtaining any requisite consents of the Optionholders, to provide
that, at the Effective Time, (i) each unvested NEOS Option shall vest and
(ii) each NEOS Option that is outstanding, unexercised and unexpired
immediately prior to the Effective Time shall be canceled and terminated.
Section 2.7.5 OTHER NEOS SECURITIES. NEOS shall take all actions
necessary to provide that, at the Effective Time, each NEOS securities
exercisable or convertible into NEOS Capital Stock that is outstanding,
unexercised and unexpired immediately prior to the Effective Time, whether
or not then exercisable, shall be canceled.
Section 2.7.6 NO FRACTIONAL ICE COMMON SHARES. No certificates or
scrip representing fractional ICE Common Shares shall be issued in
connection with the Merger, but in lieu thereof each Holder who would
otherwise be entitled to receive a fraction of an ICE Common Share shall
receive from ICE one (1) additional whole share of ICE Common Share in
place and instead of the fractional ICE Common Share.
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Section 2.7.7 RESTRICTIONS ON SHARES OF NEOS CAPITAL STOCK. If any
shares of NEOS Capital Stock outstanding immediately prior to the Effective
Time are unvested or are subject to a repurchase option, risk of forfeiture
or other condition under any applicable restricted stock purchase agreement
or other agreement with NEOS, then the ICE Common Shares issued in exchange
for such shares will also be unvested and subject to the same repurchase
option, risk of forfeiture or other condition, and the certificates
representing such ICE Common Shares may accordingly be marked with
appropriate legends. NEOS shall not, by any action or inaction, prevent ICE
from enforcing any such repurchase option or other right set forth in any
such restricted stock purchase agreement or other agreement from and after
the Effective Time.
SECTION 2.8 DISTRIBUTION OF THE MERGER CONSIDERATION.
Section 2.8.1 DISTRIBUTION OF TRANSMITTAL LETTER. Prior to the Closing
Date, ICE shall make available to and, as soon as practicable following the
Effective Time (and, in any event, within five (5) Business Days
thereafter), ICE shall cause to be mailed to each record holder of
certificates evidencing Common Stock (the "CERTIFICATES") a letter of
transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to ICE or its designated representative
and shall be in such form and have such other customary provisions as ICE
shall reasonably specify) (the "TRANSMITTAL LETTER") and instructions for
such holder's use in effecting the surrender of the Certificates and the
exercise of the rights of such holder to obtain its portion of the Merger
Consideration.
Section 2.8.2 DELIVERY OF MERGER CONSIDERATION. Upon surrender to ICE
or its designated representative of any Certificates for cancellation,
together with a duly executed and completed Transmittal Letter, the holder
of such Certificate shall be entitled to receive, in exchange therefor the
Merger Consideration to which such holder is entitled pursuant to Section
2.7 of this Agreement. ICE shall use its commercially reasonable efforts to
cause Pacific Stock Transfer Company ("ICE TRANSFER AGENT") to transmit the
Merger Consideration (including the transfer of Cash Consideration in cash
by check or by wire transfer of immediately available funds to an account
or accounts specified by the Stockholders in their Transmittal Letters) to
which such holder is entitled within five (5) Business Days after receipt
of all such holder's Certificates for cancellation, together with a duly
executed and completed Transmittal Letter.
Section 2.8.3 CANCELLATION OF NEOS CAPITAL STOCK. Upon surrender of
each Certificate and delivery by ICE of the Merger Consideration to be
delivered in exchange therefor, such Certificate shall forthwith be
canceled. Until so surrendered, each Certificate (other than Certificates
representing NEOS Dissenting Shares) shall be deemed for all corporate
purposes to evidence only the right to receive upon such surrender the
Merger Consideration into which Common Stock represented thereby shall have
been converted in accordance with the terms and upon the conditions of this
Agreement.
Section 2.8.4 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF
COMMON STOCK. No dividends or other distributions with respect to ICE
Common Shares declared or made after the Effective Time and with a record
date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the ICE Common Shares to be
issued in exchange therefor until the holder of record of such Certificate
shall surrender such Certificate. Subject to Applicable Law, promptly
following surrender of any such Certificate, there shall be paid to the
record holder of the certificates representing ICE Common Shares issued in
exchange therefor, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time, if any, theretofore payable with respect to such ICE Common
Shares.
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Section 2.8.5 PROMISSORY NOTES. In addition to the Merger
Consideration, at the Effective Time, ICE shall issue to the Trust (i)
promissory note for the amount of five hundred thousand dollars
($500,000.00), convertible at the option of the Trust into ICE Common
Stock, due and payable by ICE on January 1, 2005, in substantially the form
attached hereto as EXHIBIT A, and (ii) a promissory note for the amount of
one million five hundred thousand dollars ($1,500,000.00), convertible at
the option of the Trust into ICE Common Stock, due and payable by ICE on
January 1, 2006, in substantially the form attached hereto as EXHIBIT B
(the "2006 NOTE"); PROVIDED, HOWEVER, to the extent that the liabilities of
NEOS exceeds the Assumption Limit, as calculated pursuant to Section 5.4,
such excess liabilities shall be deducted from the 2006 Note on a
dollar-for-dollar basis, and the amount of the 2006 Note shall be so
accordingly reduced, the calculation for which shall be tendered by ICE to
the Trust and mutually agreed upon within thirty (30) days after the
Closing Date
SECTION 2.9 NO FURTHER OWNERSHIP RIGHTS IN SHARES OF NEOS CAPITAL STOCK.
The Merger Consideration delivered upon the surrender for exchange of NEOS
Capital Stock in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of NEOS
Capital Stock, and there shall be no further registration of transfers of NEOS
Capital Stock which were outstanding immediately prior to the Effective Time on
the records of the Surviving Corporation. If, after the Effective Time, the
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article 2.
SECTION 2.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, ICE shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Merger Consideration as may
be required pursuant to Section 2.7 of this Agreement; PROVIDED, HOWEVER, that
ICE may, in its sole discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver an indemnity or bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against ICE with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 2.11 DISSENTING SHARES. Any holder of shares of NEOS Capital Stock
issued and outstanding immediately prior to the Effective Time with respect to
which dissenters' rights, if any, are available by reason of the Merger pursuant
to Section 92A.300 ET SEQ. of the NRS or Chapter 13 of the California
Corporations Code (the "CCC") who has not voted in favor of the Merger or
consented thereto in writing and who complies with Section 92A.300 ET SEQ. of
the NRS or Chapter 13 of the CCC ("NEOS DISSENTING SHARES") shall not be
entitled to receive any portion of the Merger Consideration pursuant to this
Article 2, unless such holder fails to perfect, effectively withdraws or loses
its dissenters' rights under the NRS or the CCC. Such holder shall be entitled
12
to receive only such rights as are granted under Section 92A.300 ET SEQ. of the
NRS or Chapter 13 of the CCC. If any such holder fails to perfect, effectively
withdraws or loses such dissenters' rights under the NRS or the CCC, such NEOS
Dissenting Shares shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Merger Consideration to which such
shares of NEOS Capital Stock are entitled pursuant to this Article 2, without
interest. Prior to the Effective Time, NEOS shall give ICE prompt notice of any
demands for appraisal pursuant to Section 92A.300 ET SEQ. of the NRS or Chapter
13 of the CCC received by NEOS, withdrawals of any such demands and any other
documents or instruments received by NEOS in connection therewith. ICE shall
have the right to participate in and direct all negotiations and proceedings
with respect to any such demands. Prior to the Effective Time, NEOS shall not,
except with the prior written consent of ICE, which consent shall not
unreasonably be withheld or delayed, make any payment with respect to, or settle
or offer to settle, any such demands, or agree to do any of the foregoing. Any
payments made with respect to NEOS Dissenting Shares shall be made solely by the
Surviving Corporation, and no funds or other property have been or shall be
provided by ICE, ICE Sub or any of ICE's Affiliates for such payment.
SECTION 2.12 WITHHOLDING. ICE shall be entitled to deduct and withhold from
any consideration otherwise payable pursuant to this Agreement such amounts as
it may be required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of applicable Tax Law. To the extent
that amounts are so withheld or paid over to or deposited with the relevant
Governmental Authority by ICE, such amounts shall be treated for all purposes of
this Agreement as having been paid to the applicable Person in respect of which
ICE made such deduction and withholding.
SECTION 2.13 EXEMPTION FROM REGISTRATION. The ICE Common Shares to be
issued pursuant to Section 2.7.2 hereof in connection with the Merger will be
issued in a transaction exempt from registration under the Securities Act by
reason of Section 4(2) of the Securities Act and/or Rule 506 promulgated under
Regulation D or Regulation S of the Securities Act and will be qualified under
the applicable state securities laws in each of the states where the
Stockholders are domiciled. The parties hereto acknowledge and agree that as a
condition to effecting such issuance as a private placement pursuant to Section
4(2) of the Securities Act, ICE shall be entitled to obtain from each
Stockholder a stockholder questionnaire in a form reasonably satisfactory to ICE
and that ICE will be relying upon the representations made by each Stockholder
in such stock questionnaires in connection with the issuance of ICE Common
Shares to such shareholder. The shares of ICE Common Stock so issued pursuant to
Section 2.7.2 hereof in connection with the Merger will not be registered under
the Securities Act and will constitute "restricted securities" within the
meaning of the Securities Act, and the certificates representing the shares of
ICE Common Stock shall bear appropriate legends to identify such privately
placed shares as being restricted under the Securities Act, to comply with
applicable state securities laws and, if applicable, to notice the restrictions
on transfer of such shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ICE
As a material inducement to NEOS to enter into this Agreement , except as
set forth in the Disclosure Schedules delivered by ICE (the "ICE DISCLOSURE
SCHEDULE") and ICE Sub (the "ICE SUB DISCLOSURE SCHEDULE") to NEOS prior to the
13
execution of this Agreement, each section of which shall only qualify the
representation or warranty in the correspondingly numbered Section of this
Agreement, ICE and ICE Sub hereby represents and warrants to NEOS as follows:
SECTION 3.1 ORGANIZATION. ICE is a corporation, duly organized, validly
existing and in good standing under the Laws of the State of Delaware. ICE Sub
is a corporation, duly organized, validly existing and in good standing under
the Laws of the State of Nevada. Each of ICE and ICE Sub has the corporate power
and authority, and each possesses all material governmental franchises,
licenses, permits, authorizations and approvals necessary to carry on their
respective businesses substantially in the manner as they are currently being
conducted and to own, lease and operate all of their respective properties and
assets except where failure to have such governmental franchises, licenses,
permits, authorizations or approvals could not reasonably be expected to have an
ICE Material Adverse Effect.
SECTION 3.2 CAPITALIZATION. As of the Closing Date, the authorized capital
stock of ICE shall consist of one hundred million (100,000,000) shares of common
stock, par value $0.0005, of which twenty-three million three hundred ninety-six
thousand three hundred twenty-four (23,396,324) shares shall be issued and
outstanding. All said shares are validly issued, fully paid and non-assessable.
SECTION 3.3 FINANCIAL STATEMENTS. ICE has furnished to Stockholder audited
financial statements as of December 31, 2003 and unaudited financial statements
for the periods ending March 31, 2004. Said financial statements contain the
balance sheets of ICE. All of said financial statements, (i) are in accordance
with ICE's books and records, (ii) present fairly the financial position of ICE
as of such dates, and its results of operations and changes in financial
position for the respective periods indicated, (iii) have been prepared in
conformity with GAAP applied on a consistent basis, and (iv) consistent with
prior business practice, contain adequate reserves for all known or contingent
liabilities, losses and refunds with respect to services or products already
rendered or sold.
SECTION 3.4 CHANGES IN FINANCIAL CONDITION. Except as it relates to the
transactions contemplated by this Agreement, from the date of the Financial
Statements to the Closing Date, there has been no material change in the
properties, assets, liabilities, financial condition, business, operations,
affairs or prospects of ICE from that set forth or reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
have been, either in any case or in the aggregate, materially adverse.
SECTION 3.5 AUTHORITY; NO VIOLATION.
Section 3.5.1 Each of ICE and ICE Sub has full power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which it
is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements to which each of ICE and ICE Sub is a party and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of each of ICE and
ICE Sub, and no other corporate action on the part of ICE or ICE Sub is
14
necessary to approve this Agreement or the Ancillary Agreements to which
they are a party or authorize or consummate the transactions contemplated
hereby and thereby. This Agreement and the Ancillary Agreements to which
each of ICE and ICE Sub is a party have been duly and validly executed and
delivered by each of ICE and ICE Sub (assuming the due authorization,
execution and delivery of this Agreement and the Ancillary Agreements by
the other parties hereto and thereto) constitute or will constitute valid
and binding obligations of each of ICE and ICE Sub, enforceable against
each of ICE and ICE Sub in accordance with their terms, except as the
enforceability thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium or similar Laws relating to or
affecting the rights of creditors generally and the availability of
equitable relief (whether in proceedings at law or in equity).
Section 3.5.2 Neither the execution and delivery of this Agreement or
the Ancillary Agreements to which it is a party by each of ICE and ICE Sub
nor the consummation by ICE or ICE Sub of the transactions contemplated
hereby or thereby to be performed by ICE or ICE Sub, nor compliance by ICE
or ICE Sub with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the organizational documents of ICE or ICE Sub,
(ii) (x) violate, conflict with or require any notice, filing, consent or
approval under any material Applicable Law to which ICE, ICE Sub or any of
their respective Subsidiaries or any of their respective properties,
contracts or assets are subject (except for the filing of the Articles of
Merger and federal and state securities laws filings), or (y) violate,
conflict with, result in a breach of any provision of or the loss of any
benefit under, constitute a default (or an event which, with or without
notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate or result in a right of acceleration of the performance required
by, result in the creation of any Encumbrance upon the properties,
contracts or assets of ICE or ICE Sub under, or require any notice,
approval or consent under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
ICE, ICE Sub or any of their respective Subsidiaries is a party, or by
which ICE, ICE Sub or any of their respective Subsidiaries, or any of their
respective properties or assets, may be bound or affected in any material
respect.
SECTION 3.6 CONSENTS AND APPROVALS. Except for the filing of the Articles
of Merger with the Secretary of State of the State of Nevada, no consents or
approvals of or filings or registrations with any Governmental Authority or any
other Person are necessary in connection with the execution and delivery by ICE
or ICE Sub of this Agreement and the Ancillary Agreements to which they are a
party or the consummation by ICE or ICE Sub of the transactions contemplated
hereby or thereby.
SECTION 3.7 MINUTE BOOK. The records of meetings and other corporate
actions of ICE (including any committees of the Board) which are contained in
the Minute books of ICE contain complete and accurate records of the matters
reflected in such minutes.
SECTION 3.8 LITIGATION; CLAIMS. ICE is not a party to, and there are not
any claims, actions, suits, investigations or proceedings pending or threatened
against ICE or its business, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, which if determined adversely would have a material effect
15
on the business or financial condition of ICE or the ability of ICE to carry on
its business. The consummation of the transactions herein contemplated will not
conflict with or result in the breach or violation of any judgment, order, writ,
injunction or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
SECTION 3.9 TAXES AND REPORTS. At the Closing Date, ICE (i) will have filed
all tax returns required to be filed by any jurisdiction, domestic or foreign,
to which it is or has been subject, (ii) has either paid in full all taxes due
and taxes claimed to be due by each jurisdiction, and any interest and penalties
with respect thereto, and (iii) has adequately reflected as liabilities on its
books, all taxes that have accrued for any period to and including the Closing
Date.
SECTION 3.10 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of ICE's
knowledge ICE has complied with, and is not in violation of any federal, state,
local or foreign statute, law, rule or regulation with respect to the conduct of
ICE's businesses.
SECTION 3.11 NO BROKER. No broker, finder or similar intermediary has acted
for or on behalf of, or is entitled to any broker's, finder's or similar fee or
other commission from, ICE, ICE Sub or any of their respective Subsidiaries in
connection with this Agreement or the transactions contemplated hereby.
SECTION 3.12 VALID ISSUANCE OF ICE COMMON SHARES. The ICE Common Shares to
be issued by ICE in connection with the Merger, when issued and paid for in
accordance with the terms of this Agreement, will be (a) validly issued, fully
paid, nonassessable and free of any preemptive rights and (b) issued in
compliance with all material applicable foreign, federal and state securities
laws.
SECTION 3.13 SEC FILINGS. ICE has timely filed all registration statements,
prospectuses, forms, reports, definitive proxy statements, schedules and
documents required to be filed by it under the Securities Act or the Exchange
Act, as the case may be, since December 31, 2003 (collectively, the "ICE SEC
FILINGS"). Each ICE SEC Filing (i) as of the time it was filed, complied or, if
filed subsequent to the date hereof, will comply, in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not, at the time it was filed, or, if filed subsequent to the date
hereof, will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were or will be made, not misleading. Each of the consolidated financial
statements (including, in each case, any notes thereto) contained in the ICE SEC
Filings was, or will be, prepared in accordance with GAAP applied (except as may
be indicated in the notes thereto and, in the case of unaudited quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act) on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto), and each presented, or will present, fairly and accurately
the consolidated financial position and condition, results of operations and
cash flows of ICE and the consolidated Subsidiaries of ICE as of the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal year-end adjustments which did not and
would not, individually or in the aggregate, have an ICE Material Adverse
Effect). The books and records of ICE and each of its Subsidiaries have been,
16
and are being, maintained in accordance with applicable material legal and
accounting requirements. Except as and to the extent set forth on the
consolidated balance sheet of ICE and its consolidated Subsidiaries as of
December 31, 2003 (the "ICE BALANCE SHEET"), none of ICE nor any of its
consolidated Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet or in notes thereto prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since December 31, 2003 that would not, individually or in the
aggregate, have an ICE Material Adverse Effect. Each required form, report and
document containing financial statements that ICE has filed with or furnished to
the SEC since December 31, 2003 was accompanied by the certifications required
to be filed or furnished by ICE's chief executive officer and chief financial
officer pursuant to the Xxxxxxxx-Xxxxx Act of 2002 and at the time of filing or
submission of each such certification, such certification (i) was true and
accurate and complied with the Xxxxxxxx-Xxxxx Act, (ii) did not contain any
qualifications or exceptions to the matters certified therein, except as
otherwise permitted under the Xxxxxxxx-Xxxxx Act, and (iii) has not been
modified or withdrawn. Neither ICE nor any of its officers has received notice
from any Governmental Authority questioning or challenging the accuracy,
completeness, content, form or manner of filing or furnishing of such
certifications. ICE's disclosure controls and procedures (as defined in Sections
13a-14(c) and 15d-14(c) of the Exchange Act) effectively enable ICE to comply
with, and the appropriate officers of ICE to make all certifications required
under, the Xxxxxxxx-Xxxxx Act.
SECTION 3.14 INFORMATION SUPPLIED BY ICE AND ICE SUB. None of the
information regarding ICE, ICE Sub or any of their Subsidiaries supplied or to
be supplied by ICE, ICE Sub or any of their Subsidiaries for inclusion in any
other documents to be filed with any Governmental Authority in connection with
the transactions contemplated by this Agreement or the Ancillary Agreements
will, at the respective times such documents are filed with any Governmental
Authority, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 3.15 MATERIAL MISSTATEMENTS AND OMISSIONS. No representations or
warranties by ICE or ICE Sub in this Agreement or any exhibit, certificate or
schedule furnished to NEOS pursuant hereto or thereto, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements or facts contained therein not
misleading.
SECTION 3.16 REORGANIZATION TREATMENT.
Section 3.16.1 INTENTION REGARDING ICE STOCK. Except with respect to
(i) open-market purchases of ICE's stock pursuant to a general stock
repurchase program of ICE that has not been created or modified in
connection with the Merger or (ii) payments of cash in lieu of the issuance
of fractional shares, neither ICE nor any Person related to ICE within the
meaning of Treasury Regulation Sections 1.368-1(e)(3), (e)(4) and (e)(5)
has any plan or intention to, redeem or otherwise acquire any of the stock
of ICE issued to the Stockholders pursuant to this Agreement following the
Merger.
17
Section 3.16.2 ACQUISITIONS OF COMPANY SHARES. Neither ICE nor, to the
knowledge of ICE, any person related to ICE (within the meaning of Treasury
Regulation Sections 1.368-1(e)(3), (e)(4) and (e)(5)) has acquired any
Common Stock or Preferred Stock in contemplation of the Merger or otherwise
as part of a plan of which the Merger is part.
Section 3.16.3 CONTROL. ICE has no plan or intention to cause the
Surviving Corporation, after the Merger, to issue additional shares of
stock of the Surviving Corporation that would result in ICE losing control
of the Surviving Corporation within the meaning of Section 368(c) of the
Code.
Section 3.16.4 INTENTION REGARDING THE SURVIVING CORPORATION. ICE has
no plan or intention: (i) to liquidate the Surviving Corporation; (ii) to
merge the Surviving Corporation into another corporation; (iii) to sell or
otherwise dispose of any shares of stock of the Surviving Corporation
pursuant to the Agreement, except for transfers and successive transfers
described in Treasury Regulation Section 1.368-2(k) or transfers and
successive transfers to one or more corporations controlled in each
transfer by the transferor corporation (within the meaning of Section
368(c) of the Code); or (iv) to cause the Surviving Corporation to sell or
otherwise dispose of any of its assets, except for (w) dispositions made in
the ordinary course of business, (x) transfers and successive transfers
described in Treasury Regulation Section 1.368-2(k) or transfers and
successive transfers to one or more corporations controlled in each
transfer by the transferor corporation (within the meaning of Section
368(c) of the Code), (y) dispositions after which the Surviving Corporation
would continue to hold the amount of assets set forth in Section 4.29.1
following the Merger (assuming the correctness of the representation set
forth in Section 4.29.1), or (z) transfers to partnerships that satisfy the
provisions of Treasury Regulation Section 1.368-1(d)(4)(iii)(B).
Section 3.16.5 NEOS BUSINESS. ICE will cause the Surviving Corporation
to continue NEOS's historic business or use a significant portion of NEOS's
historic business assets in a business. For purposes of this
representation, ICE will be deemed to satisfy the foregoing representation
if (a) the members of ICE's qualified group (as defined in Treasury
Regulation Section 1.368-1(d)(4)(ii)), in the aggregate, continue the
historic business of NEOS or use a significant portion of NEOS's historic
business assets in a business, or (b) the foregoing activities are
undertaken by a partnership as contemplated by Treasury Regulation Section
1.368-1(d)(4).
Section 3.16.6 INVESTMENT COMPANY. Neither ICE nor ICE Sub is an
investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code.
Section 3.16.7 INTERCORPORATE INDEBTEDNESS. At the Effective Time,
there will be no intercorporate indebtedness existing between ICE or ICE
Sub and NEOS that was issued or acquired, or will be settled, at a
discount.
Section 3.16.8 TAX REPORTING. After the Merger, ICE will cause NEOS to
comply with the reporting requirements set forth in Treasury Regulation
Section 1.368-3 by attaching the required statement to each of NEOS's and
its timely filed United States federal income Tax Returns for the taxable
year in which the Merger occurs.
18
Section 3.16.9 CONTROL. Prior to and at the Effective Time of the
Merger, ICE will be in control of ICE Sub within the meaning of section
368(c) of the Code.
Section 3.16.10 FRACTIONAL SHARES. The rounding up to the next whole
share of fractional shares of ICE Common Shares is solely for the purpose
of avoiding the expense and inconvenience to ICE of issuing fractional
shares and does not represent separately bargained-for consideration. The
aggregate total such round-up in the Merger will not exceed one percent
(1%) of the total consideration that will be issued in the Merger to
Stockholders in exchange for their shares of NEOS Capital Stock.
Section 3.16.11 COMPENSATION. None of the compensation to be received
by any employee of NEOS after the Merger (who, prior to the Merger, was
also a Stockholder) will be separate consideration for, or allocable to,
any of his or her shares of NEOS Capital Stock. None of the ICE Common
Shares to be received by any Stockholder (that is also an employee of NEOS)
in the Merger will be separate consideration for, or allocable to, any
employment agreement or non-competition agreement. The compensation to be
paid to any employee of ICE or NEOS after the Merger (who, prior to the
Merger, was a Stockholder) pursuant to arrangements entered into after the
Merger will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar
services.
Section 3.16.12 NO SUBSIDIARY STOCK. No stock of ICE Sub or any other
direct or indirect subsidiary of ICE will be issued to Stockholders in the
Merger.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NEOS
Except as set forth in the Disclosure Schedule delivered by NEOS to ICE and
ICE Sub prior to the execution of this Agreement (the "NEOS DISCLOSURE
SCHEDULE") and NEOS Financial Statements, NEOS represents and warrants to ICE
and ICE Sub as follows:
SECTION 4.1 ORGANIZATION. NEOS is a corporation duly incorporated, validly
existing and, at the closing, in good standing under the laws of the State of
Nevada has the corporate power and authority to own or lease its properties and
to carry on business as now being conducted.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of NEOS consists
of three million (3,000,000) shares, par value $0.0001, of which (i) two million
(2,000,000) shares are Common Stock, of which five hundred six thousand two
hundred twenty-one (506,231) shares are currently issued and outstanding, (ii)
six hundred thousand (600,000) shares are Series A Convertible Preferred Stock,
of which five hundred thousand (500,000) shares are currently issue and
outstanding, (iii) one hundred sixty thousand (160,000) shares are Series A-1
Convertible Preferred Stock, of which one hundred forty-eight thousand three
hundred nineteen (148,319) shares are currently issued and outstanding and (iv)
three hundred nineteen thousand five hundred seventy (319,570) shares are Series
B Convertible Preferred Stock, of which two hundred thirty-six thousand two
hundred ninety-one (236,291) shares are currently issued and outstanding. All
19
said shares are validly issued, fully paid and non-assessable. There are no
outstanding options, warrants, rights, commitments or agreements of any kind
relating to the issuance of any shares of Common Stock or other equity or
convertible security of NEOS to any person. None of the shares of Common Stock
is reserved for any purpose. NEOS is not subject to any obligation (contingent
or otherwise), nor does it have any option to repurchase or otherwise acquire or
retire any shares of its Common Stock.
SECTION 4.3 AUTHORITY. NEOS has the full power and authority to enter into
this Agreement and to carry out its obligations hereunder. Other than approval
by the Board of Directors of NEOS and Stockholders, no proceeding on the part of
NEOS is necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement constitutes the legal, valid and binding obligation of
NEOS, enforceable in accordance with its terms.
SECTION 4.4 NEOS FINANCIAL STATEMENTS. NEOS has furnished, or will furnish
prior to the Closing Date, to ICE audited financial statements as of December
31, 2002 and 2003 (the "NEOS FINANCIAL STATEMENTS"). The NEOS Financial
Statements contain the balance sheet of NEOS. The NEOS Financial Statements, (i)
are in accordance with NEOS's books and records, (ii) present fairly the
financial position of NEOS as of such dates, and its results of operations and
changes in financial position for the respective periods indicated, (iii) have
been prepared in conformity with GAAP applied on a consistent basis, and (iv)
consistent with prior business practice, contain adequate reserves for all known
or contingent liabilities, losses and refunds with respect to services or
products already rendered or sold.
SECTION 4.5 NEOS MATERIAL ADVERSE EFFECT. From the date of the NEOS
Financial Statements to the Closing Date, there has been no NEOS Material
Adverse Effect that is not set forth or reflected in the NEOS Financial
Statements.
SECTION 4.6 TITLE TO ASSETS. NEOS has and on the Closing Date will have
good record and marketable title to all its assets. Such assets are subject to
no Encumbrance except for Permitted Encumbrances.
SECTION 4.7 ALL PATENT/LICENSE RIGHTS. To the best of its knowledge, NEOS
owns or possesses the requisite licenses or other rights to use all licenses,
patents, trademarks, service marks, service names and trade names presently
used. As of the date of this Agreement, there is no claim or action by any
person, or proceeding pending, or threatened which challenges the exclusive
rights of NEOS with respect to said rights used, or contemplated to be used, in
NEOS Business. Nothing contained in this Section 4.7 is or shall be deemed to
constitute a representation or warranty that such licenses, patents, trademarks,
or trade names (i) may continue to be utilized by NEOS, (ii) will not be
challenged in the future or (iii) will be upheld if challenged.
SECTION 4.8 CONTRACTS/OTHER RIGHTS. Prior to the Closing, NEOS will furnish
ICE with a true and complete list and description of all Contracts. Each of the
Contracts is valid and enforceable in accordance with its terms. NEOS is not in
default of the performance, observance or fulfillment of any material
obligations, covenant or condition contained therein. No event has occurred
which with or without the giving of notice or lapse of time, or both, would
20
constitute a default thereunder. Furthermore, except as may be disclosed in
writing at the time of delivery, no Contract, in the reasonable opinion of NEOS,
contains any contractual requirement with which there is a likelihood NEOS will
be unable to fulfill.
SECTION 4.9 EFFECT OF AGREEMENT. To the best of its Knowledge, the
execution and delivery by NEOS of this Agreement and the consummation of the
transactions herein contemplated, (i) will not conflict with, or result in a
breach of the terms of, or constitute a default under or violation of, any
Applicable Law, or the articles of incorporation or bylaws of NEOS, any Contract
or give rise to any interests or rights, including rights of termination,
acceleration or cancellation, in or with respect to any of the properties,
assets, agreements, leases, or NEOS Business.
SECTION 4.10 PERSONAL PROPERTY. All of the property, assets and equipment
owned by or used by NEOS is in good repair, well maintained, and in good and
satisfactory operating condition consistent with their age, free from any known
defects, except such minor defects as to not substantially interfere with the
continued use thereof in the conduct of normal operations and such property,
assets, and equipment which is owned by NEOS is valued on the NEOS Financial
Statements at original purchase price less reasonable depreciation consistently
applied in accordance with GAAP.
SECTION 4.11 MINUTE BOOK. The records of meetings and other corporate
actions of NEOS and the Board of Directors (including any committees of the
Board) of NEOS which are contained in the minute books of NEOS contain complete
and accurate records of the matters reflected in such minutes.
SECTION 4.12 LITIGATION; CLAIMS. NEOS is not a party to, and there are not
any claims, actions, suits, investigations or proceedings pending or threatened
against NEOS or NEOS Business, at law or in equity, or before or by any
Governmental Authority, which if determined adversely would constitute a NEOS
Material Adverse Effect. The consummation of the transactions herein
contemplated will not conflict with or result in the breach or violation of any
judgment, order, writ, injunction or decree of any Governmental Authority.
SECTION 4.13 TAXES AND REPORTS. At the Closing Date, NEOS (i) will have
filed all tax returns required to be filed by any jurisdiction, domestic or
foreign, to which it is or has been subject, (ii) has either paid in full all
taxes due and taxes claimed to be due by each jurisdiction, and any interest and
penalties with respect thereto, and (iii) has adequately reflected as
liabilities on its books, all taxes that have accrued for any period to and
including the Closing Date. No state of facts exists or has existed which would
constitute grounds for the assessment of any taxes with respect to the periods
which have not been audited by the Internal Revenue Service or any other taxing
authority. There are no outstanding tax elections, or agreements or waivers
extending the statutory period of limitation, applicable to any federal or state
return for taxes of NEOS for any period.
SECTION 4.14 PERSONNEL. Included in the corporate records described, in
part, in Section 4.11 of this Agreement, is a true and correct list of all
directors, officers and employees of NEOS. NEOS is not aware that any officer or
employee has any intention to terminate his or her employment with NEOS, and
NEOS is not a party to or bound by any employment agreement, or collective
bargaining or other labor agreement.
21
SECTION 4.15 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of its
Knowledge, NEOS has complied with, and are not in violation of any Applicable
Law with respect to the conduct of NEOS Businesses, which violation might
constitute a NEOS Material Adverse Effect.
SECTION 4.16 LEASES. Prior to the Closing, NEOS will furnish ICE with a
true and complete list and description of all leases of real property and
equipment by and between NEOS and the lessees. Each of said leases are valid and
enforceable in accordance with its terms.
SECTION 4.17 NATURE OF REPRESENTATION. NEOS has taken reasonable care to
ensure that all disclosures and facts are true and accurate and that there are
no other material facts, the omission of which would make misleading any
statement herein. Further, no representation, warranty or agreement made by NEOS
in this Agreement or any of the Schedules or any other Exhibits hereto and no
statement made in the Schedules or any such Exhibit, list, certificate or
schedule or other instrument or disclosure furnished by NEOS in connection with
the transactions herein contemplated contains, or will contain, any untrue
statement of a material fact necessary to make any statement, representation,
warranty or agreement not misleading.
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
SECTION 5.1 ACCESS TO INFORMATION. NEOS shall afford representatives of ICE
reasonable access to officers, personnel, and professional representatives of
NEOS and to the financial, contractual and corporate records of NEOS as shall be
reasonably necessary for ICE's investigations and appraisal of NEOS.
SECTION 5.2 EFFECT OF INVESTIGATIONS. Any such investigation by ICE of NEOS
shall not affect any of the representations and warranties hereunder and shall
not be conducted in such manner as to interfere unreasonably with the operation
of the business of NEOS.
SECTION 5.3 FURTHER ASSURANCES. Upon the terms and subject to the
conditions contained in this Agreement, the parties hereby agree, in each case
both before and after the Closing, (i) to use all commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement, (ii) to use their respective
commercially reasonable efforts to cause the Merger to qualify, and not take any
actions which to their knowledge could reasonably be expected to prevent the
Merger from qualifying, as a reorganization under the provisions of Section
368(a) of the Code, (iii) to execute any documents, instruments or conveyances
of any kind which may be reasonably necessary or advisable to carry out any of
the transactions contemplated hereunder and thereunder and (iv) to cooperate, to
the extent practicable, with each other in connection with the foregoing.
Without limiting the generality of the foregoing, the parties agree to use their
respective commercially reasonable efforts (A) to promptly seek to obtain any
necessary consents (including, without limitation, the making of all filings
required to be made with any U.S. or foreign Governmental Authority with respect
22
to this Agreement, the Merger and the other transactions contemplated hereby),
(B) to give all notices to, and make all registrations and filings with third
parties, including submissions of information requested by U.S. and foreign
Governmental Authorities and (C) to fulfill all other conditions to this
Agreement. Notwithstanding the foregoing, (y) no amendment or modification shall
be made to any Contract to obtain any required consent in response to the
request of a U.S. or foreign Governmental Authority without the prior written
consent of ICE and (z) no party hereto or any of their respective Affiliates
shall be required to sell, transfer, divest or otherwise dispose of any of its
respective business, assets or properties in connection with this Agreement, the
Merger or any of the other transactions contemplated hereby. Each party shall
deliver customary closing certificates and representations for the purpose of
facilitating delivery of the opinions of counsel contemplated by this Agreement.
SECTION 5.4 ASSUMPTION OF LIABILITIES. ICE shall assume all outstanding
liabilities of NEOS as of the Closing, listed in SCHEDULE B attached hereto. Any
liabilities of NEOS in excess of the one million dollars ($1,000,000) in the
aggregate (the "ASSUMPTION LIMIT"), including in such calculation the difference
between the amount of the account payables minus the amount of account
receivables of NEOS, shall be paid by ICE but deducted from the 2006 Note as
provided for in Section 2.8.5; PROVIDED, HOWEVER, that where the amount of NEOS'
account receivables is greater than the amount of NEOS' account payables, the
surplus of the difference between NEOS' account receivables minus NEOS' account
payables shall be deducted from the calculation of liabilities of NEOS in excess
of the Assumption Limit.
SECTION 5.5 PAYMENT OF NEOS TRANSACTION COSTS. ICE shall pay on behalf of
NEOS (i) all expenses incurred by NEOS with Xxxxxxx & White, LLP in connection
with the NEOS Financial Statements and (ii) up to twenty thousand dollars
($20,000) of the legal fess incurred by NEOS with Pillsbury Winthrop LLP for
services rendered in connection with the Merger concurrently with the Closing
hereunder. Except as expressly provided otherwise in this or other sections of
this Agreement, the parties hereto shall each bear their respective direct and
indirect expenses incurred in connection with the negotiation and preparation of
this Agreement and the Ancillary Agreements and the consummation of the Merger
and the other transactions contemplated hereby and thereby.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF ICE AND ICE SUB
The obligations of ICE and ICE Sub under this Agreement are, at the option
of ICE, subject to the satisfaction, at and prior to the Closing Date, of the
following conditions:
SECTION 6.1 FULFILLMENT OF COVENANTS. All the terms, covenants and
conditions of this Agreement to be complied with and performed by NEOS on or
before the Closing Date shall have been duly complied with and performed.
SECTION 6.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by all parties to this Agreement shall be
true as of the Closing Date.
23
SECTION 6.3 NO LITIGATION. There shall be no action, proceeding,
investigation or pending or actual litigation the purpose of which is to enjoin
or may be to enjoin the transactions contemplated by this Agreement or which
would have the effect, if successful, of imposing a material liability upon ICE,
or any of the officers or directors thereof, because of this consummation of the
transactions contemplated by this Agreement.
SECTION 6.4 NEOS DISSENTING SHARES. No more than five percent (5%) of NEOS
Capital Stock issued and outstanding immediately prior to the Effective Time
shall be NEOS Dissenting Shares.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF NEOS
The obligations of NEOS under this Agreement are, at the option of NEOS,
subject to the satisfaction, at and prior to the Closing Date, of the following
conditions:
SECTION 7.1 FULFILLMENT OF COVENANTS. All the terms, covenants and
conditions of this Agreement to be complied with and performed by ICE and ICE
Sub at or before the Closing Date shall have been duly complied with and
performed.
SECTION 7.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by all parties to this Agreement shall be
true as of the Closing Date.
SECTION 7.3 NO LITIGATION. There shall be no action, proceeding,
investigation or pending or actual litigation the purpose of which is to enjoin
or may be to enjoin the transactions contemplated by this Agreement or which
would have the effect, if successful, of imposing a material liability upon
NEOS, or any of the officers or directors thereof, because of the consummation
of the transactions contemplated by this Agreement.
SECTION 7.4 ICE AND ICE SUB OFFICERS' CERTIFICATES. ICE and ICE Sub shall
each have delivered to NEOS certificates, dated as of the Closing Date and
executed by the Chief Executive Officer and Chief Financial Officer of each of
ICE and ICE Sub, as to the fulfillment of each of the conditions set forth in
Section 7.1, Section 7.2 and Section 7.3 of this Agreement.
SECTION 7.5 ICE AND ICE SUB SECRETARY'S CERTIFICATES. ICE and ICE Sub shall
each have delivered to NEOS certificates, dated as of the Closing Date and
executed by the Secretary of each of ICE and ICE Sub, certifying each of ICE and
ICE Sub's respective organizational documents and the resolutions adopted by ICE
and ICE Sub's board of directors and, if applicable, stockholders relating to
the transaction contemplated by this Agreement and the Ancillary Agreement.
SECTION 7.6 LEGAL OPINION. ICE and ICE Sub shall have delivered the written
opinion of Xxxxxx X. Xxxxxxx, Inc., ICE and ICE Sub's outside counsel, dated as
of the Closing Date, substantially in the form attached hereto as EXHIBIT C.
SECTION 7.7 NEOS STOCKHOLDERS' APPROVAL. NEOS shall have obtained the
written consent of the majority of the holders of all outstanding shares of NEOS
Capital Stock entitled to vote thereat, wherein said stockholders shall have
voted in favor of approving and ratifying the transactions contemplated by this
Agreement.
24
SECTION 7.8 LOCK-UP AGREEMENT. The number of shares of ICE Common Stock
owned by the officers and directors of ICE (the "ICE INSIDER SHARES") equal to
the aggregate total number of shares of Stock Consideration shall be subject to
restrictions on transfers and alienation pursuant to the terms of a lock-up
agreement acceptable to ICE and NEOS and Stockholders. Each officer and director
of ICE shall have entered into such lock-up agreement, in substantially the form
attached hereto as EXHIBIT D (the "LOCK-UP AGREEMENT"), covering such officer's
or director's pro-rata share of the ICE Insider Shares. An ICE officer's or
director's pro rata share of the ICE Insider Shares shall be determined by
multiplying such officer's or director's ICE Insider Shares by a fraction, the
numerator of which is such officer's or director's ICE Insider Shares and the
denominator of which is the total aggregate amount of ICE Insider Shares. In the
event that the aggregate number of ICE Insider Shares is less than the aggregate
total number of shares of Stock Consideration, one hundred percent (100%) of all
ICE Insider Shares held by ICE's officers and directors shall be subject to the
Lock-Up Agreement.
SECTION 7.9 ICE BOARD OF DIRECTORS. At the Effective Time, ICE and
Stockholders shall have entered into a Proxy Agreement, in substantially the
form attached hereto as EXHIBIT E (the "PROXY AGREEMENT"), pursuant to which
Xxxx Xxxx Xxxxx shall be appointed as the proxy holder of the Proxy Agreement
(the "PROXY HOLDER"), (ii) one (1) Person designated by NEOS (initially the
Proxy Holder) shall be appointed as a director of the Board of Directors of ICE
and (iii) ICE Common Shares subject to the Proxy Agreement (the "PROXY SHARES")
shall vote as a director of ICE a Person nominated by holders of a majority of
the Proxy Shares.
SECTION 7.10 LICENSE AGREEMENT. ICE and the Trust shall have entered into a
License Agreement, in substantially the form attached hereto as EXHIBIT F (the
"LICENSE AGREEMENT"), pursuant to which ICE and the Surviving Corporation will
grant to the Trust a perpetual, royalty-free and fully paid license to all
intellectual properties owned by NEOS as of the Effective Time. The Trust shall
be entitled, subject to certain restrictions in the License Agreement, to
sublicense any of the intellectual property thereunder to third parties.
SECTION 7.11 PIGGYBACK REGISTRATION RIGHTS AGREEMENT. ICE and Stockholders
shall have entered into a Piggyback Registration Rights Agreement, in
substantially the form attached hereto as EXHIBIT G (the "PIGGYBACK REGISTRATION
RIGHTS AGREEMENT"), pursuant to which Stockholders shall be entitled to
"piggyback" registration rights with any registration statement filed by ICE
within twelve (12) months of the Closing Date in which: (i) an existing ICE
director or officer is a selling stockholder (exclusive of any registration
statement on Form S-8); or (ii) any former stockholder of any company acquired
by ICE is a selling stockholder.
ARTICLE 8
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time:
25
Section 8.1.1 by mutual written consent of ICE, ICE Sub and NEOS;
Section 8.1.2 by ICE and ICE Sub or NEOS if (i) any court of competent
jurisdiction or other Governmental Authority shall have issued a final
order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action is or shall have become nonappealable or (ii) the
Merger has not been consummated by September 10, 2004; PROVIDED, HOWEVER,
that no party may terminate this Agreement pursuant to this clause (ii) if
such party's willful failure to fulfill any of its obligations under this
Agreement shall have been the reason that the Effective Time shall not have
occurred on or before said date;
Section 8.1.3 by ICE and ICE Sub if there shall have been (i) a breach
by NEOS of any of its representations or warranties contained in this
Agreement, or if any such representation or warranty shall have become
untrue, or (ii) a breach or nonperformance by NEOS of any of its covenants
or agreements contained in this Agreement, such that, in the case of either
(i) or (ii) above, the conditions set forth in Section 6.1 and Section 6.2
would not be satisfied; PROVIDED, HOWEVER, that if such breach, inaccuracy
or nonperformance is curable by NEOS through the exercise of its
commercially reasonable efforts within fifteen (15) Business Days after
notice to ICE (the "NEOS CURE PERIOD"), then ICE and ICE Sub may not
terminate this Agreement pursuant to this Section 8.1.3 prior to the
expiration of NEOS Cure Period (it being understood and agreed that NEOS
shall promptly notify ICE of any such breach, inaccuracy or nonperformance
of which NEOS has Knowledge and shall continue to exercise commercially
reasonable efforts to cure such breach, inaccuracy or nonperformance during
NEOS Cure Period) and PROVIDED further that ICE and ICE Sub may not
terminate the Agreement pursuant to this Section 8.1.3 if ICE and ICE Sub
are in material breach of their obligations under this Agreement,
including, but not limited to that the conditions in Section 7.1 and
Section 7.2 could not be satisfied by ICE and ICE Sub at such time;
Section 8.1.4 by ICE and ICE Sub if the approval by the Stockholders
required for the consummation of the Merger or the other transactions
contemplated hereby or by the Ancillary Agreements shall not have been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of the Stockholders or at any adjournment thereof due to the
existence of any negotiations or discussions with respect to any offer or
proposal (formal or informal, oral, written or otherwise) to acquire all or
any part of NEOS, whether by purchase of assets, exclusive license, joint
venture formation, purchase of stock, business combination or otherwise
(other than the Merger);
Section 8.1.5 by NEOS if there shall have been (i) a breach by ICE or
ICE Sub of any of their representations or warranties contained in this
Agreement, or if any such representation or warranty shall have become
untrue, or (ii) a breach or nonperformance by ICE or ICE Sub of any of
their covenants or agreements contained in this Agreement, such that, in
the case of either (i) or (ii) above, the conditions set forth in Section
7.1 and Section 7.2 would not be satisfied; PROVIDED, HOWEVER, that if such
breach, inaccuracy or nonperformance is curable by ICE or ICE Sub through
the exercise of its commercially reasonable efforts within fifteen (15)
Business Days after notice to NEOS (the "ICE CURE PERIOD"), then NEOS may
not terminate this Agreement pursuant to this Section 8.1.5 prior to the
expiration of the ICE Cure Period (it being understood and agreed that ICE
26
shall promptly notify NEOS of any such breach, inaccuracy or nonperformance
of which ICE has Knowledge and shall continue to exercise commercially
reasonable efforts to cure such breach, inaccuracy or nonperformance during
the ICE Cure Period) and PROVIDED FURTHER that NEOS may not terminate the
Agreement pursuant to this Section 8.1.5 if NEOS is in material breach of
its obligations under this Agreement, including, but not limited to that
the conditions in Section 6.1 and Section 6.2 could not be satisfied by
NEOS at such time;
Section 8.1.6 by ICE and ICE Sub if (i) the board of directors of NEOS
shall not have recommended, or shall have resolved not to recommend, or
shall have qualified, modified or withdrawn its recommendation of the
Merger, or shall have resolved to do so, or (ii) the board of directors of
NEOS shall have recommended to the Stockholders any offer or proposal
(formal or informal, oral, written or otherwise) to acquire all or any part
of NEOS, whether by purchase of assets, exclusive license, joint venture
formation, purchase of stock, business combination or otherwise (other than
the Merger), or shall have resolved to do so.
Section 8.1.7 by ICE or NEOS if NEOS enters into a merger, acquisition
or other agreement (including an agreement in principle) to effect a
Superior Proposal or the board of directors of NEOS resolves to do so;
PROVIDED, HOWEVER, that NEOS may not terminate this Agreement pursuant to
this Section 8.1.7 unless (i) NEOS has delivered to ICE a written notice of
NEOS's intent to enter into such and agreement to effect such Superior
Proposal, (ii) five (5) Business Days have elapsed following delivery to
ICE of such written notice by NEOS and (iii) during such five-day period
NEOS has fully cooperated with ICE, including informing ICE of the terms
and conditions of such Superior Proposal (including providing a copy of any
written proposal) and the identity of the person making such Superior
Proposal, with the intent of enabling ICE to agree to a modification of the
terms and conditions of this Agreement so that the transactions
contemplated hereby may be effected; PROVIDED, FURTHER, that NEOS may not
terminate this Agreement pursuant to this Section 8.1.7 unless at the end
of such five-day period, the board of directors of NEOS continues to
reasonably believe that such acquisition proposal still constitutes a
Superior Proposal when compared to the Merger (taking into account any such
modification as may be proposed by ICE) and concurrently with such
termination NEOS pays to ICE the amounts specified in Section 8.2.2.
SECTION 8.2 EFFECT OF TERMINATION.
Section 8.2.1 In the event of the termination and abandonment of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and have no effect and there shall be no liability on the part of any
party hereto or its Affiliates, directors, officers or stockholders except
as set forth in this Section 8.2 and Article 10 hereof, each of which shall
survive the termination of this Agreement. Nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement.
Section 8.2.2 In the event that this Agreement is terminated pursuant
to Section 8.1.4, Section 8.1.6 or Section 8.1.7, then NEOS shall pay to
ICE a termination fee of one hundred fifty thousand dollars ($150,000) no
later than sixty (60) Business Days after such termination.
27
ARTICLE 9
PAYMENT OF EXPENSES
SECTION 9.1 EXPENSES. Each party shall bear its own expenses relating to
the Merger.
ARTICLE 10
GENERAL
SECTION 10.1 PARTIAL INVALIDITY. If any term or provision of this Agreement
or the application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable the remainder of this Agreement or the application
of such term or provision to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
SECTION 10.2 WAIVER. No waiver of any breach of any covenant or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed and extension of
the time for performance of any other obligation or act.
SECTION 10.3 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing, and shall be sent by registered or
certified mail, postage prepaid, return receipt requested, and shall be deemed
received upon mailing thereof, to the addresses below:
If to ICE: International Card Establishment, Inc.
000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
If to NEOS: NEOS Merchant Solutions, Inc.
00 Xxxxxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Pillsbury Winthrop LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Notice of change of address shall be given by written notice in the manner
detailed in this Section 10.3.
28
SECTION 10.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the permitted successors and assigns of the
parties hereto.
SECTION 10.5 PROFESSIONAL FEES. In the event of the bringing of any action
or suit by a party hereto against another party hereunder by reason of any
breach of any of the covenants, agreements or provisions on the part of the
other party arising out of this Agreement, then in that event the prevailing
party shall be entitled to have and recover of and from the other party all
costs and expenses of the action or suit, including actual attorney's fees,
accounting fees, and other professional fees resulting therefrom.
SECTION 10.6 ENTIRE AGREEMENT. This Agreement is the final expression of,
and contains the entire agreement between, the parties with respect to the
subject matter hereof and supersedes all prior understandings with respect
thereto. This Agreement may not be modified, changed, supplemented or
terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by his agent duly authorized in
writing or as otherwise expressly permitted herein. The parties do not intend to
confer any benefit hereunder on any person, firm or corporation other than the
parties hereto.
SECTION 10.7 TIME OF ESSENCE. The parties hereto hereby acknowledge and
agree that time is strictly of the essence with respect to each and every term,
condition, obligation and provision hereof and that failure to timely perform
any of the terms, conditions, obligations or provisions hereof by either party
shall constitute a material breach of and non-curable (but waivable) default
under this Agreement by the party so failing to perform.
SECTION 10.8 CONSTRUCTION. Headings at the beginning of each paragraph and
subparagraph are solely for the convenience of the parties and are not a part of
this Agreement. Whenever required by the context of this Agreement, the singular
shall include the plural and the masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to paragraphs and subparagraphs are to this Agreement.
In the event the date on which any party is required to take any action under
the terms of this Agreement is not a Business Day, the action shall be taken on
the next immediate Business Day.
SECTION 10.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which taken together
shall constitute one instrument.
SECTION 10.10 GOVERNING LAW. The parties hereto expressly agree that this
Agreement shall be governed by, interpreted under, and construed and enforced in
accordance with the laws of the State of California.
[SIGNATURE PAGE FOLLOWS]
29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day first above here written.
INTERNATIONAL CARD ESTABLISHMENT, INC.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
ICE SUB INC.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
NEOS MERCHANT SOLUTIONS, INC.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
INTERNATIONAL CARD ESTABLISHMENT, INC.
NEOS MERCHANT SOLUTIONS, INC.
AGREEMENT AND PLAN OF REORGANIZATION
SIGNATURE PAGE
SCHEDULE A
STOCKHOLDER MERGER CONSIDERATION
PERCENTAGE STOCK
NAME OF STOCKHOLDER OWNERSHIP CONSIDERATION CASH CONSIDERATION
Xxxxxx Viscount III 3.7394% 180,648 $ 18,697.00
Xxxx Xxxx Xxxxx 16.8035% 811,764 84,017.50
Xxxxxxx X.X. Xxxxxxxxxxxx 9.4205% 455,097 47,102.50
Pardiss LLC 3.4747% 167,860 17,373.50
Xxxx X. Xxxxxx 2.3190% 112,029 11,595.00
Xxxxxxxx Xxxxxxxx 1.5460% 74,686 7,730.00
Will Xxxxxxxxx 1.5968% 77,141 7,984.00
Binoye Xxx 1.8630% 90,000 9,315.00
Xxxxxxxx Xxxxx 0.3146% 15,199 1,573.00
Xxxxx Xxxxxxxxx 46.0532% 2,224,793 230,266.00
Xxx XxXxxx 4.5962% 222,039 22,981.00
Xxxx Xxxxxxx 4.5962% 222,039 22,981.00
Xxxxx Xxxxxxxxx and Xxxxxx X. Xxxxxxx JTWROS 3.6769% 177,629 18,384.50
Total: 100.00% 4,830,924 $500,000.00
SA-1
SCHEDULE B
LIST OF ASSUMED LIABILITIES
Debit Credit
___________ __________
_________________________________________________
ANTICIPATED LIABILITIES OF NEOS
_________________________________________________
Accounts Payable $ 300,000
Accrued Expenses
Swapp Expenses $ 30,000
Less Unsubstantiated Advances Issued $ (30,000)
Swapp Deferred Compensation $ 63,000
Xxxxxxxxx Deferred Compensation $ 37,000
Interest on Deff Comp $ 8,000
P/R Tax on Deferred Comp $ 8,000
General Manager Overrides $ 20,000
Interest on Notes to Xxxx Xxxxx $ 2,000
Interest on Note to Xxxxx Xxxxxxxxx $ 4,000
Interest Due to ICRD $ 10,000
PR Tax Manual Checks $ 20,000
P/R Tax / Garnishment Liabilities $ 7,000
Sales Tax $ 20,000
Note Payable ICRD $ 505,000
Note Payable Xxxxx Xxxxxxxxx $ 200,000
Note Payable Kotzbach / Xxxxxx $ 250,000
Dell Notes $ 4,000
Future Lease Payments $ 44,000
O/S Card Liability (Cards billed but not
Delivered) $ 7,500
Pillsbury Anticipated to Close $ 50,000
Less Retainer $ (5,000)
__________
TOTAL ANTICIPATED LIABILITIES OF NEOS $ 1,554,500
ANTICIPATED OFFSETS AGAINST LIABILITIES OF NEOS
_________________________________________________
Cash $ 60,000
Accounts Receivable/Prepaid Commissions/Advances: $ 220,000
Credit Against Attorney Fees $ 20,000
Credit for Audit Fees $ 25,500
__________ __________
TOTAL ANTICIPATED OFFSETS AGAINST LIABILITIES
OF NEOS $ (325,500) $ 325,500
ANTICIPATED NET LIABILITIES ATTRIBUTABLE
TO 1,000,000 CAP $ 1,229,000
LESS LIABILITY ASSUMPTION CAP $(1,000,000) $1,000,000
===========
ANTICIPATED NET LIABILITIES TO BE OFFSET $ 229,0001
__________________
(1) Not a final figure.
SB-1
EXHIBIT A
FORM OF CONVERTIBLE PROMISSORY NOTE DUE JANUARY 1, 2005
A-1
EXHIBIT B
FORM OF CONVERTIBLE PROMISSORY NOTE DUE JANUARY 1, 2006
B-1
EXHIBIT C
FORM OF LEGAL OPINION OF XXXXXX X. XXXXXXX, INC.
C-1
EXHIBIT D
FORM OF LOCK-UP AGREEMENT
D-1
EXHIBIT E
FORM OF PROXY AGREEMENT
E-1
EXHIBIT F
FORM OF LICENSE AGREEMENT
F-1
EXHIBIT G
FORM OF PIGGYBACK REGISTRATION RIGHTS AGREEMENT
G-1
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS..................................................................................2
Section 1.1 Certain Defined Terms........................................................................2
ARTICLE 2 THE MERGER...................................................................................8
Section 2.1 The Merger...................................................................................8
Section 2.2 Effective Time...............................................................................9
Section 2.3 Effect of the Merger.........................................................................9
Section 2.4 Charter and Bylaws...........................................................................9
Section 2.5 Directors and Officers of the Surviving Corporation..........................................9
Section 2.6 Conversion of Preferred Stock into Common Stock..............................................9
Section 2.7 Conversion of Securities....................................................................10
Section 2.8 Distribution of the Merger Consideration....................................................11
Section 2.9 No Further Ownership Rights in Shares of NEOS Capital Stock.................................12
Section 2.10 Lost, Stolen or Destroyed Certificates......................................................12
Section 2.11 Dissenting Shares...........................................................................12
Section 2.12 Withholding.................................................................................13
Section 2.13 Exemption From Registration.................................................................13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ICE.......................................................13
Section 3.1 Organization................................................................................14
Section 3.2 Capitalization..............................................................................14
Section 3.3 Financial Statements........................................................................14
Section 3.4 Changes in Financial Condition..............................................................14
Section 3.5 Authority; No Violation.....................................................................14
Section 3.6 Consents and Approvals......................................................................15
Section 3.7 Minute Book.................................................................................15
Section 3.8 Litigation; Claims..........................................................................15
Section 3.9 Taxes and Reports...........................................................................16
Section 3.10 Compliance with Laws and Regulations........................................................16
Section 3.11 No Broker...................................................................................16
Section 3.12 Valid Issuance of ICE Common Shares.........................................................16
Section 3.13 SEC Filings.................................................................................16
Section 3.14 Information Supplied by ICE and ICE Sub.....................................................17
Section 3.15 Material Misstatements and Omissions........................................................17
Section 3.16 Reorganization Treatment....................................................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF NEOS......................................................19
Section 4.1 Organization................................................................................19
Section 4.2 Capitalization..............................................................................19
Section 4.3 Authority...................................................................................20
Section 4.4 NEOS Financial Statements...................................................................20
Section 4.5 NEOS Material Adverse Effect................................................................20
Section 4.6 Title to Assets.............................................................................20
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Section 4.7 All Patent/License Rights...................................................................20
Section 4.8 Contracts/Other Rights......................................................................20
Section 4.9 Effect of Agreement.........................................................................21
Section 4.10 Personal Property...........................................................................21
Section 4.11 Minute Book.................................................................................21
Section 4.12 Litigation; Claims..........................................................................21
Section 4.13 Taxes and Reports...........................................................................21
Section 4.14 Personnel...................................................................................21
Section 4.15 Compliance with Laws and Regulations........................................................22
Section 4.16 Leases......................................................................................22
Section 4.17 Nature of Representation....................................................................22
ARTICLE 5 COVENANTS AND ADDITIONAL AGREEMENTS.........................................................22
Section 5.1 Access to Information.......................................................................22
Section 5.2 Effect of Investigations....................................................................22
Section 5.3 Further Assurances..........................................................................22
Section 5.4 Assumption of Liabilities...................................................................23
Section 5.5 Payment of NEOS Transaction Costs...........................................................23
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF ICE AND ICE SUB................................................23
Section 6.1 Fulfillment of Covenants....................................................................23
Section 6.2 Accuracy of Representations and Warranties..................................................23
Section 6.3 No Litigation...............................................................................24
Section 6.4 NEOS Dissenting Shares......................................................................24
ARTICLE 7 CONDITIONS TO OBLIGATIONS OF NEOS...........................................................24
Section 7.1 Fulfillment of Covenants....................................................................24
Section 7.2 Accuracy of Representations and Warranties..................................................24
Section 7.3 No Litigation...............................................................................24
Section 7.4 ICE and ICE Sub Officers' Certificates......................................................24
Section 7.5 ICE and ICE Sub Secretary's Certificates....................................................24
Section 7.6 Legal Opinion...............................................................................24
Section 7.7 NEOS Stockholders' Approval.................................................................24
Section 7.8 Lock-Up Agreement...........................................................................25
Section 7.9 ICE Board of Directors......................................................................25
Section 7.10 License Agreement...........................................................................25
Section 7.11 Piggyback Registration Rights Agreement.....................................................25
ARTICLE 8 TERMINATION.................................................................................25
Section 8.1 Termination.................................................................................25
Section 8.2 Effect of Termination.......................................................................27
ARTICLE 9 PAYMENT OF EXPENSES.........................................................................28
Section 9.1 Expenses....................................................................................28
ARTICLE 10 GENERAL.....................................................................................28
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Section 10.1 Partial Invalidity..........................................................................28
Section 10.2 Waiver......................................................................................28
Section 10.3 Notices.....................................................................................28
Section 10.4 Successors and Assigns......................................................................29
Section 10.5 Professional Fees...........................................................................29
Section 10.6 Entire Agreement............................................................................29
Section 10.7 Time of Essence.............................................................................29
Section 10.8 Construction................................................................................29
Section 10.9 Counterparts................................................................................29
Section 10.10 Governing Law...............................................................................29
SCHEDULES
Schedule A - Stockholder Merger Consideration
Schedule B - List of Assumed Liabilities
EXHIBITS
Exhibit A - Form of Convertible Promissory Note due January 1, 2005
Exhibit B - Form of Convertible Promissory Note due January 1, 2006
Exhibit C - Form of Opinion of Xxxxxx X. Xxxxxxx, Inc.
Exhibit D - From of Lock-Up Agreement
Exhibit E - Form of Proxy Agreement
Exhibit F - Form of License Agreement
Exhibit G - Form of Piggyback Registration Rights Agreement
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