AGREEMENT AND PLAN OF REORGANIZATION 1.6
Exhibit
2.1
This
AGREEMENT AND PLAN OF REORGANIZATION dated as of 19 February, 2007 (the
“Agreement”), between Magnitude
Information Systems, Inc.,
a
Delaware corporation (“Magnitude”), Kiwibox
Media, Inc.
,
a
Delaware corporation (“Kiwibox”) and Magnitude
Operations, Inc.,
a
wholly-owned Subsidiary of Magnitude (in organization) (“Subsidiary”) and the
shareholders of Kiwibox, Lin Dai, Xxxx Xxxxxxx, and Xxxxxxx Xxxxxx (the “Kiwibox
Shareholders”) Kiwibox. Magnitude and Subsidiary may also be referred to herein
as the “Constituent Corporations” or the “Parties.”
WHEREAS,
the Parties acknowledge and affirm the following:
|
|
A.
|
Magnitude
is a corporation duly organized and existing under the laws of the
State
of Delaware.
|
|
|
B.
|
Kiwibox
is a corporation duly organized and existing under the laws of the
State
of Delaware.
|
|
|
C.
|
Subsidiary
is a corporation which is 100% owned by Magnitude and is duly organized
and existing under the laws of the State of
Delaware.
|
|
|
D.
|
The
Delaware General Corporation Law (the “DGCL”) permits the merger of two
domestic business corporations of the State of Delaware with and
into each
other.
|
|
|
||
|
|
E.
|
Magnitude
and Kiwibox and their respective Boards of Directors declare it advisable
and to the advantage, welfare, and best interests of said corporations
and
their respective stockholders to merge Subsidiary with and into Kiwibox
pursuant to the provisions of the DGCL upon the terms and conditions
hereinafter set forth.
|
|
|
F.
|
The
respective Boards of Directors of Magnitude and Kiwibox have approved
this
Agreement; and the shareholders of Kiwibox have approved the
merger.
|
|
|
G.
|
For
federal income tax purposes, it is intended that the merger qualify
as a
tax free reorganization under Section 368(a) of the Internal Revenue
Code
of 1986, as amended (the “IRC”).
|
ARTICLE
1
THE
MERGER
1.1 Merger.
In
accordance with the provisions of this Agreement and applicable provisions
of
the DGCL, Subsidiary shall be merged with and into Kiwibox (the “Merger”).
Following the Merger, the separate existence of Subsidiary shall cease and
Kiwibox shall be, and is herein sometimes referred to as, the “Surviving
Corporation.” For the purposes of this Agreement, this form of transaction may
also be referred to herein as a “reverse triangular merger.”
1.2 Filing
and
Effectiveness.
The
Merger shall become effective when the following actions shall have been
completed:
|
|
(a)
|
This
Agreement and the Merger shall have been adopted and approved by
the
shareholders of Kiwibox in accordance with the requirements of the
DGCL;
|
|
|
(b)
|
Magnitude
shall have formed a wholly-owned subsidiary for the purposes of this
Merger in accordance with the requirements of the DGCL (the
“Subsidiary”);
|
|
|
(c)
|
All
of the conditions precedent to the consummation of the Merger specified
in
this Agreement shall have been satisfied or duly waived, in writing,
by
the Party entitled to satisfaction
thereof;
|
|
|
(d)
|
As
soon as practicable following the Closing, the Parties shall execute
a
Certificate of Merger meeting the requirements of the DGCL and file
same
with the Secretary of State of the State of Delaware in substantially
the
form attached hereto as Exhibit A; the time the Certificate of Merger
is
filed with the Secretary of State of the State of Delaware is the
“Effective Time”; and
|
|
(e)
|
The
closing of the transactions described in this Agreement is herein
called
the “Closing.” The Parties agree that the Closing of the transactions
identified in this Agreement shall take place at the offices of Xxxxxx
X.
Xxxxxxx, Esq., or at such other place as the Parties may mutually
determine, on or before March 31,
2007.
|
|
|
(f)
|
The
audit of the financial statements of Kiwibox for the calendar years
ended
December 31, 2006 and 2005 shall have been completed with all necessary
data and materials delivered by Kiwibox to
Magnitude.
|
1.3 Effect
of the Merger.
Upon
the
Effective Time, hereinafter defined, and upon the terms and subject to the
conditions of this Agreement and in accordance with the DGCL, the separate
existence of Subsidiary shall cease and, Kiwibox, as the Surviving Corporation,:
(i) shall continue to possess all of the assets, rights, powers and property
of
Kiwibox and Subsidiary as constituted immediately prior to the Effective Time,
and all debts, liabilities and duties of Kiwibox and Subsidiary shall become
the
debts, liabilities and duties of the Surviving Corporation, all as more fully
provided under the applicable provisions of the DGCL.
ARTICLE
2
CHARTER
DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate
of
Incorporation: Kiwibox.
Attached
hereto as Exhibit B and made a part hereof is a copy of the Certificate of
Incorporation of Kiwibox as in effect in the State of Delaware immediately
prior
to the Closing; and at the Effective Time said Certificate of Incorporation
shall continue in full force and effect as the Certificate of Incorporation
of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 Subsidiary.
Attached
hereto as Exhibit C and made a part hereof is a copy of the Articles of
Incorporation of Subsidiary as in effect immediately prior to the
Closing.
2.3 Bylaws.
Attached
hereto as Exhibit D and made a part hereof is a copy of the Bylaws of Kiwibox
as
in effect immediately prior to the Closing; and at the Effective Time said
Bylaws shall continue in full force and effect as the Bylaws of the Surviving
Corporation until duly amended in accordance with the provisions thereof and
applicable law.
2.4 Directors
and
Officers.
The
directors and officers of Kiwibox immediately prior to the Closing shall be
the
directors and officers of the Surviving Corporation until their successors
shall
have been duly elected and qualified or until as otherwise provided by law,
the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of
the
Surviving Corporation.
2.5 Employment
Agreements
All
Parties shall each execute the employment agreements between Magnitude and
each
of the three Kiwibox Shareholders, the form of which is attached hereto as
Exhibit E .
ARTICLE
3
TERMS
OF MERGER, PAYMENT, EXCHANGE OF STOCK AND INVESTMENT
COMMITMENTS
3.1 Magnitude
Payment.
In
addition to the Magnitude shares being issued in the exchange and as partial
consideration therefor, Magnitude shall pay an aggregate cash payment of
$300,000 to the Kiwibox Shareholders, in proportion to their respective stock
ownership positions in Kiwibox at the Closing.
3.2 Conversion
of Kiwibox Shares.
|
(a)
|
Conversion
of Subsidiary Common Stock. At the Effective Time, each outstanding
share
of the common stock no par value per share, of Subsidiary shall,
by virtue
of the Merger and without any action on the part of Magnitude,
Subsidiary
or Kiwibox, be converted into one fully paid and non-assessable
share of
common stock of the Surviving Corporation.
|
|
|
(b)
|
Each
share of the common stock, $.01 par value per share, of Kiwibox
(“Kiwibox
Common Stock”) issued and outstanding prior to the Effective Time shall by
virtue of the Merger and without any action on the part of Magnitude,
Subsidiary, Kiwibox or any holder thereof, be converted into and
be
exchangeable for the right to receive newly issued , fully paid
and
non-assessable voting common shares, par value $.0001 per share,
of
Magnitude ("Magnitude Shares"), based upon an exchange ratio (“Exchange
Ratio”) determined in accordance with the provisions below.
|
|
|
(c)
|
Amount
of Magnitude Shares o be Exchanged:
Upon the Closing, Magnitude shall issue and exchange for the Kiwibox
Common Stock with the Kiwibox Shareholders an amount of Magnitude
common
shares valued at $1,500,000. The number of Magnitude common shares
to be
issued shall be determined by dividing $1,500,000 by their “Market Price”.
Market Price shall mean the average sales price of a Magnitude
common
share for the ten (10) successive trading days immediately preceding
the
Closing, as recorded by the Electronic Bulletin Board, over-the-counter
market. For example, if the Market Price is $.05 per share, then
Magnitude
shall issue 30,000,000 common shares, in exchange for the Kiwibox
Common
Stock with the Kiwibox Shareholders; if the Market Price is $.025
per
share, then Magnitude shall issue 60,000,000 shares to the Kiwibox
Shareholders, in exchange for their Kiwibox Common Stock Notwithstanding
anything to the contrary implied or set forth herein and for all
purposes
under this Section 3.2, the Market Price shall never exceed $.05
per
share, so that the amount of Magnitude common shares payable hereunder
shall never be less than 30,000,000 common shares.
|
|
|
(d)
|
Exchange
Ratio: shall be determined by dividing the amount of the Magnitude
Shares
determined in accordance with Article 3.2 (c) above by the shares
of
outstanding Kiwibox Common Stock.
|
|
|
(e)
|
At
the Effective Time, each share of the Kiwibox Common Stock held
by the
Kiwibox immediately prior to the Effective Time shall, by virtue
of the
Merger and without any action on the part of Merger Sub or the
Company, be
canceled, retired and cease to exist and no payment shall be made
with
respect thereto.
|
|
|
(f)
|
No
Further Ownership Rights in Kiwibox Common Stock. All Magnitude
Shares
issued and exchanged in accordance with the terms of this Article
3 shall
be deemed to have been issued in full satisfaction of all rights
pertaining to the Kiwibox Common Stock.
|
|
|
(g)
|
Appraisal Rights: This executed Agreement shall constitute each of the Kiwibox Stockholders' acknowledgment to decline any appraisal rights under section 262 of DGCL. | |
|
|
|
By
executing this Agreement, each Kiwibox Stockholder acknowledges
receipt of
written notice of appraisal rights and a copy of Section 262 of
DGCL at
least 20 days prior to the date of executing this Agreement.
|
3.3 Magnitude
Preferred
|
At
the Closing, Magnitude shall issue an aggregate 43,610 shares of
its
Series G Preferred Stock to the Kiwibox Shareholders in proportion
to
their respective stock ownership positions in Kiwibox at the Closing
which
shares shall be subject to the automatic conversion
At
the Closing,
|
3.4 Status
of Magnitude Preferred and Common Shares.
|
|
(a)
|
The
Magnitude Series G Preferred Stock and Common Shares to be issued
to the
Kiwibox Shareholders in the reorganization will
not be registered under the Securities Act of 1933, as amended (the
"1933
Act") and may not be sold, transferred or otherwise disposed of except
in
compliance with the 1933 Act or pursuant to an exemption from the
registration provisions thereof and the Securities Exchange Act of
1934,
as amended (the "1934 Act").
|
|
|
(b)
|
Each
Certificate representing the Magnitude Preferred Shares and the Common
Shares shall bear the following or substantially similar
legend:
"The
Shares represented by this Certificate have not been registered
under
the Securities Act of 1933, as amended. These Shares have been
acquired
for investment purposes and not with a view to
distribution or
resale, and may not be sold, assigned, pledged, hypothecated or
otherwise
transferred without an effective Registration Statement for such
Shares under the Securities Act of 1933, as amended, or an opinion
of counsel to the effect that registration is not required under
such
Act."
|
3.5 Magnitude
Investment and Commitment.
Magnitude
shall invest no less than $3.5 million in accordance with the Kiwibox Business
Plan and Budget attached hereto as Exhibit G. Such funds shall be maintained
in
a separate bank account and
Magnitude shall be keep them free from the claims of creditors, secured or
unsecured, and
which
claims arise out of transactions, past or present, that are not associated
with
the Kiwibox Business Plan.
3.6 Kiwibox
Legal
Fees
Magnitude
agrees to pay the legal fees of Xxxxxx, Xxxxxx & Xxxxxxx, LLP, counsel for
Kiwibox, at or before the Closing, provided that such counsel provide to
Magnitude current weekly statements, on Friday of each week prior to the
Closing, and provided further that the the maximum amount Magnitude shall pay
under this Article 3.6 is $42,500
which
shall be paid by bank or certified check or wire transferred in accordance
with
such instructions by such
counsel. Notwithstanding anything set forth herein to the contrary, Magnitude
shall not be responsible for the aforesaid payment of legal fees if this
Agreement is terminated by Magnitude and Kiwibox pursuant to Article 10 (a)
or
by Magnitude pursuant to Article 10 (b) or by Kiwibox and/or the Kiwibox
Shareholders for any reason other than pursuant to Article 10(c).
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF KIWIBOX AND THE KIWIBOX SHAREHOLDERS
Kiwibox
and the Kiwibox Shareholders represent and warrant to Magnitude that the
statements contained in this Article 4 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing as though
made then and as though the Closing were substituted for the date of this
Agreement throughout this Article 4, with respect to itself.
4.1 Organization
of
Kiwibox.
Kiwibox
is duly organized, validly existing, and in good standing under the laws of
Delaware.
4.2 Authorization
of Transaction.
| (a) |
Kiwibox
has full corporate power and authority to execute and deliver this
Agreement and to perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Kiwibox,
enforceable in accordance with its terms and conditions. Except as
expressly contemplated hereby, Kiwibox need not give any notice to,
make
any filing with, or obtain any authorization, consent, or approval
of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
|
|
| (b) |
The
Kiwibox Shareholders, individually
represent and warrant to Magnitude that: this Agreement constitutes
the
legal, valid and binding obligation of each of the Kiwibox Shareholders
and is enforceable against each of them in accordance with the terms
hereof; each of them own their respective Kiwibox Common Shares free
and
clear of any and all liens, claims, pledges, restrictions, obligations,
security interests and encumbrances of any kind; Attached hereto
as
Exhibit H is an accurate and complete list of the Kiwibox Common
Shares
owned by each Kiwibox Shareholder; none of the Kiwibox Shareholders
have
issued any calls, puts, options and/or any other rights in favor
of any
third party whatsoever with respect to their Kiwibox Common Shares,
and;
none of their respective Kiwibox Common Shares are subject to any
voting
agreements, voting trusts, stockholder agreements and/or any other
agreements, obligations or
understandings.
|
4.3 Non-contravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Kiwibox
is
subject or any provision of its charter or bylaws; or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
or
require any notice under any agreement, contract, lease, license, instrument,
or
other arrangement to which Kiwibox is a party or by which it is bound or to
which any of its assets is subject, except for such notices or consents which
have been given or obtained by Kiwibox on or prior to the Closing.
4.4 Capitalization.
The
authorized capital stock of Kiwibox consists of 100,000,000 shares of Common
Stock, $.01 par value per share. As of the date of this Agreement, there are
43,610 shares of Common Stock issued and outstanding. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that
could
require Kiwibox to issue, sell, or otherwise cause to become outstanding any
of
its capital stock. There is no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Kiwibox’s
Common Stock. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of
Kiwibox.
4.5 Investment.
The
Kiwibox Shareholders are not acquiring the Preferred Shares and the Common
Shares of Magnitude with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933. Kiwibox
and the Kiwibox Shareholders have had access to all information concerning
Magnitude and its operations which it required to make its investment
decision.
4.6 Brokers'
Fees.
Other
than their obligation (i) to transfer to Southridge Investment Group, LLC
(“Southridge”), two and one-half (2.5%) percent of the Magnitude Common Stock
transferable to the Kiwibox Shareholders pursuant to Article 3.2 and (ii) the
obligation of each of the Kiwibox Shareholders to make arrangements with
Southridge to pay $7,000 each, or as may be otherwise expressly set forth in
this Agreement, Kiwibox has incurred no obligation to pay any commission,
finder’s fee or other charge in connection with the transactions contemplated in
this Agreement for which Magnitude could become liable or obligated. Kiwibox
and
the Kiwibox Shareholders, jointly and severally, will indemnify and hold
Magnitude, and the Subsidiary, their respective officers, directors, employees,
accountants and lawyers harmless from and against any and all liabilities and
claims of any nature whatsoever arising out of or in connection with any
commission, fee or charge so far as any arises by reason of services alleged
to
have been rendered to, or at the instance of, Kiwibox and/or the Kiwibox
Shareholders. This
indemnification shall survive the Closing and shall be included in the terms
of
indemnification set forth in Article 4.7 of this Agreement.
4.7 Events
Subsequent to
Year End.
Since
the
most recent calendar-fiscal year end of Kiwibox there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of Kiwibox taken as a whole. Kiwibox and the
Kiwibox Shareholders, jointly and severally, shall indemnify, defend and hold
Magnitude and Subsidiary, their successors and assigns, harmless from and
against any order, action, cost, claim, damage, disbursement, expense,
liability, loss, deficiency, obligation, penalty, fine, assessment or settlement
of any kid or nature, whether foreseeable or unforeseeable, including, but
not
limited to, any and all attorney’s fees, costs, and other expenses, directly or
indirectly, as a result of, or upon or arising from (i) any inaccuracy or breach
or non-performance of any of the representations, warranties, covenants or
agreements made by Kiwibox or the Kiwibox Shareholders in or pursuant to this
Agreement, (ii) any order, action, cost, claim, damage, liability or lien
arising out of Kiwibox’s or Kiwibox Shareholder’s conduct before or after the
Closing, (iii) any third party claims against Kiwibox or the Kiwibox
Shareholders, before or after the Closing that arise from Kiwibox’s or Kiwibox
Shareholder’s conduct, or (iv) any loss or liability the proximate cause of
which is determined to be the result of Kiwibox’s or Kiwibox Shareholder’s
negligence or failure to comply with their respective obligations under this
Agreement. Magnitude and/or Subsidiary, as the case may be, their successors
and
assigns, shall notify Kiwibox and/or the Kiwibox Shareholders of any claim
for
indemnification with reasonable promptness, and Kiwibox’s or Kiwibox’s legal
representatives or Kiwibox Shareholder’s or their legal representatives shall
have, at their election, the right to compromise or defend any such matter
involving such asserted liability of Kiwibox and/or the Kiwibox Shareholders
through counsel of their own choosing, at the expense of Kiwibox and the Kiwibox
Shareholders. Kiwibox and the Kiwibox Shareholders shall notify Magnitude and
the Subsidiary, or their successors or assigns, in writing promptly of their
intention to compromise or defend any claim and Magnitude and/or the Subsidiary,
or their successors or assigns, shall cooperate with Kiwibox and the Kiwibox
Shareholders, their respective counsel in compromising or defending any such
claim, in accordance with Article 8 hereof. The terms of this Article 4.7 shall
survive Closing.
4.8 Undisclosed
Liabilities.
Kiwibox
has no material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or un-accrued,
whether liquidated or un-liquidated, and whether due or to become due, including
any liability for taxes), except for (i) liabilities set forth on the Kiwibox
Financial Statements; and (ii) liabilities which have arisen after the date
of
the Kiwibox Financial Statements in the ordinary course of business. As used
herein, “Kiwibox Financial Statements” consist of the financial statements of
Kiwibox previously delivered to Magnitude in the form attached hereto as Exhibit
I.
4.9 Legal
Compliance.
Kiwibox
has complied with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all agencies thereof),
and no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against Kiwibox alleging
any failure so to comply, except where the failure to comply would not have
a
material adverse effect on the business, financial condition, operations,
results of operations, or future prospects of Kiwibox.
4.10 Tax
Matters.
|
|
(a)
|
Kiwibox
has filed all income tax returns that it has been required to file.
All
such income tax returns were correct and complete in all material
respects. All income taxes owed by Kiwibox (whether or not shown
on any
income tax return) have been paid. Kiwibox is not currently the
beneficiary of any extension of time within which to file any income
tax
return.
|
|
|
(b)
|
There
is no material dispute or claim concerning any income tax liability
of
Kiwibox either (i) claimed or raised by any authority in writing;
or (ii)
as to which Kiwibox has knowledge based upon personal contact with
any
agent of such authority.
|
4.11 Contracts.
The
Kiwibox Financial Statements disclose all material contracts of Kiwibox. Each
contract or legal obligation of Kiwibox which is to be assumed by Kiwibox in
connection with the Merger is listed on Exhibit J hereto. To the extent
requested, true and correct copies of such contracts have been delivered to
Kiwibox for due diligence purposes.
4.12 Environmental,
Health and Safety Matters.
Kiwibox
and its predecessors and affiliates have complied and are in compliance, in
each
case in all material respects, with all Environmental, Health, and Safety
Requirements. As used herein “Environmental, Health & Safety Requirements”
means any Environmental, Health & Safety law or regulation including air and
water quality laws and regulations and other similar requirements.
4.13 Disclosure.
The
representations and warranties contained in this Article 4 do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements and information contained in this Article 4
not
misleading.
4.14 Financial
Statements.
The
Kiwibox Financial Statements are true and correct in all material respects,
have
been prepared on a consistent basis, and fairly represent the business,
financial condition, assets and liabilities of Kiwibox.
4.15 Litigation.
There
is
no claim, suit, action, proceeding or investigation pending or, to the knowledge
of Kiwibox, pending against Kiwibox or any of its subsidiaries or assets which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on Kiwibox.
4.16 Materials
Required for Audit.
To
the
best of its knowledge, Kiwibox has maintained its records, data and materials
related to the financial accounting of the business, and have all such data
and
materials immediately available, such that an audit may be completed per
regulatory requirements.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF MAGNITUDE
Magnitude
represents and warrants to Kiwibox and to the Kiwibox Shareholders that the
statements contained in this Article 5 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing (as though
made then and as though the Closing were substituted for the date of this
Agreement throughout this Article 5).
5.1 Organization
of
Magnitude
Magnitude
is a corporation duly organized, validly existing, and in good standing under
the laws of Delaware Magnitude has two subsidiaries, Magnitude, Inc., and the
Subsidiary.
5.2 Authorization
of Transaction.
Magnitude
has full corporate power and authority to execute and deliver this Agreement
and
to perform its obligations hereunder, and no approval of Magnitude’s
shareholders is required under the DGCL to consummate the Merger and other
transactions contemplated in this Agreement. This Agreement constitutes the
valid and legally binding obligation of Magnitude, enforceable in accordance
with its terms and conditions. Except as expressly contemplated hereby,
Magnitude need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency
in
order to consummate the transactions contemplated by this
Agreement.
5.3 Non-contravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Magnitude
is subject or any provision of its charter or bylaws; or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Magnitude is a party or by which it is bound
or to
which any of its assets is subject, except for such notices or consents which
have been given or obtained by Magnitude on or prior to the
Closing.
5.4 Capitalization.
The
authorized capital stock of Magnitude consists of 300,000,000 shares of Common
Stock, $.001 par value per share, and 10,000,000 shares of Preferred Stock.
As
of the date of this Agreement, there were 227,379,014 shares of Common Stock
and
109,857 shares of Preferred Stock, convertible into 2,423,865 common shares,
are
issued and outstanding. There are 12,357,408 outstanding options, and 52,273,333
outstanding warrants, and no other outstanding purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Magnitude to issue, sell, or otherwise cause to become
outstanding any of its capital stock except as may be set forth in one or more
of the material agreements identified in Exhibit L hereto. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Magnitude’s Common Stock. There
are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of Magnitude.
5.5 Mandatory
Conversion of Magnitude Preferred Stock
Upon
the
Closing, Magnitude shall issue 43,610 Shares of its Series G Preferred Stock
(the “Preferred Stock”) to the Kiwibox Shareholders on the basis of one Common
Share of the Surviving Corporation for each Kiwibox Common Share owned of record
at the Effective Time. All 43,610 Shares of the Preferred Stock shall be
non-transferable and shall be subject to automatic conversion upon the second
anniversary of this Agreement in accordance to the terms set forth below. The
Kiwibox Shareholders shall not dispose of or encumber the Preferred Shares.
For
all purposes under this Agreement, the 43,610 Preferred Shares shall have an
aggregate conversion value of $500,000
(the “Conversion Value”), convertible into shares of the common stock of
Magnitude, based upon “Market Price”. The number of Magnitude common shares to
be issued in the automatic conversion shall be determined by dividing the
Conversion Value of $500,000 by the Market Price of the common shares of
Magnitude. Market Price shall mean the average sales price of a Magnitude common
share during the twenty (20) successive trading days immediately preceding
the
second anniversary of this Agreement as recorded by the Electronic Bulletin
Board, over-the-counter stock market maintained by the NASD or such other stock
market where the common shares of Magnitude are then traded. For example, if
the
Market Price is $.025 per share, then the Conversion Value would be 20,000,000
Magnitude common shares which Magnitude would issue to the Kiwibox Shareholders
in proportion to their ownership of the 43,610 Preferred Shares. For all
purposes under this Section 6.5, the amount of shares representing the
Conversion Value shall not be less than 10,000,000 common shares notwithstanding
the fact that the Market Price is above $.05 per share. The Magnitude common
shares issuable based upon the Conversion Value shall be issued by Magnitude
to
the Kiwibox Shareholders within thirty days following the second anniversary
of
this Agreement, in proportion to their ownership of the 43,610 Preferred
Shares.
The
certificate or certificates representing the 43,610 shares of Preferred Stock
issued to the Kiwibox Shareholders pursuant to this Section 5.5 shall be held
in
escrow by counsel for Magnitude pending their automatic conversion as set forth
above.
5.6 Brokers'
Fees.
Other
than its obligation (i) to issue to Southridge Investment Group, LLC
(“Southridge”), newly issued common shares in an amount equal to two and
one-half (2.5%) percent of the Magnitude Common Stock transferable to the
Kiwibox Shareholders pursuant to Article 3.2; (ii) to pay Southridge an
investment banking fee of $15,000 on behalk of Kiwibox and the Kiwibox
Shareholders, and; (iii) to execute an investment banking agreement between
Magnitude and Southridge at the Closing, or as may be otherwise expressely
set
forth in this Agreement, Magnitude has incurred no obligation to pay any
commission, finder’s fee or other charge in connection with the transactions
contemplated in this Agreement for which Magnitude could become liable or
obligated. Magnitude will indemnify and hold Kiwibox, and the Kiwibox
Shareholders, their respective officers, directors, employees, accountants
and
lawyers harmless from and against any and all liabilities and claims of any
nature whatsoever arising out of or in connection with any commission, fee
or
charge so far as any arises by reason of services alleged to have been rendered
to, or at the instance of, Magnitude or Subsidiary, including any liability
or
claim arising from the Parties’ dealings with Southridge, as described herein.
This indemnification shall survive the Closing and shall be included in the
terms of indemnification set forth in Article 5.7 of this Agreement.
5.7 Events
Subsequent to Year End.
Since
the
most recent calendar-fiscal year end of Magnitude, there has not been any
material adverse change in the business, financial condition, operations,
results of operations, or future prospects of Magnitude taken as a
whole.
Magnitude
shall indemnify, defend and hold Kiwibox, Kiwibox Shareholders, their successors
and assigns, harmless from and against any order, action, cost, claim, damage,
disbursement, expense, liability, loss, deficiency, obligation, penalty, fine,
assessment or settlement of any kid or nature, whether foreseeable or
unforeseeable, including, but not limited to, any and all attorney’s fees,
costs, and other expenses, directly or indirectly, as a result of, or upon
or
arising from (i) any inaccuracy or breach or non-performance of any of the
representations, warranties, covenants or agreements made by Magnitude or
Subsidiary in or pursuant to this Agreement, (ii) any order, action, cost,
claim, damage, liability or lien arising out of Magnitude’s conduct before or
after the Closing, (iii) any third party claims against Magnitude, Subsidiary
before or after the Closing that arise from Magnitude’s conduct, or (iv) any
loss or liability the proximate cause of which is determined to be the result
of
Magnitude’s negligence or failure to comply with its obligations under this
Agreement. Kiwibox and Kiwibox’s Shareholders, their successors and assigns,
shall notify Magnitude of any claim for indemnification with reasonable
promptness, and Magnitude or Magnitude’s legal representatives shall have, at
their election, the right to compromise or defend any such matter involving
such
asserted liability of Magnitude through counsel of their own choosing, at the
expense of Magnitude. Magnitude shall notify Kiwibox, Kiwibox’s Shareholders, or
their successors or assigns, in writing promptly of their intention to
compromise or defend any claim and Kiwibox, Kiwibox’s Shareholders, or their
successors or assigns, shall cooperate with Magnitude and Magnitude’s counsel in
compromising or defending any such claim, in accordance with Article 8 hereof.
The terms of this Article 5.7 shall survive Closing.
5.8 Undisclosed
Liabilities.
Magnitude
has no material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or un-accrued,
whether liquidated or un-liquidated, and whether due or to become due, including
any liability for taxes), except for (i) liabilities set forth on the Magnitude
Financial Statements; and (ii) liabilities which have arisen after the date
of
the Magnitude Financial Statements in the ordinary course of business. As used
herein, “Magnitude Financial Statements” consist of the financial statements of
Magnitude previously delivered to Kiwibox in the form attached hereto as Exhibit
K.
5.9 Legal
Compliance.
Magnitude
has complied with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all agencies thereof),
and no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against Magnitude alleging
any failure so to comply, except where the failure to comply would not have
a
material adverse effect on the business, financial condition, operations,
results of operations, or future prospects of Magnitude.
5.10 Tax
Matters.
|
|
(a)
|
Magnitude
has filed all income tax returns that it has been required to file.
All
such income tax returns were correct and complete in all material
respects. All income taxes owed by Magnitude (whether or not shown
on any
income tax return) have been paid. Magnitude is not currently the
beneficiary of any extension of time within which to file any income
tax
return.
|
|
|
(b)
|
There
is no material dispute or claim concerning any income tax liability
of
Magnitude either (i) claimed or raised by any authority in writing;
or
(ii) as to which Magnitude has knowledge based upon personal contact
with
any agent of such authority.
|
5.11 Contracts.
The
Magnitude Financial Statements disclose all material contracts of Magnitude.
Each contract or legal obligation of Magnitude to which Magnitude shall remain
subject after the Merger is listed on Exhibit L hereto. To the extent requested,
true and correct copies of such contracts have been delivered to Kiwibox for
due
diligence purposes.
5.12 Environmental,
Health and Safety Matters.
Magnitude
and its predecessors and affiliates have complied and are in compliance, in
each
case in all material respects, with all Environmental, Health, and Safety
Requirements. As used herein “Environmental, Health & Safety Requirements”
means any Environmental, Health & Safety law or regulation including air and
water quality laws and regulations and other similar requirements.
5.13 Disclosure.
The
representations and warranties contained in this Article 5 do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements and information contained in this Article 5
not
misleading.
5.14 Financial
Statements.
The
Magnitude Financial Statements are true and correct in all material respects,
have been prepared on a consistent basis, and fairly represent the business,
financial condition, assets and liabilities of Magnitude.
5.15 Litigation.
There
is
no claim, suit, action, proceeding or investigation pending or, to the knowledge
of Magnitude, pending against Magnitude or any of its subsidiaries or assets
which, individually or in the aggregate, could reasonably be expected to have
a
material adverse effect on Magnitude.
5.16 Materials
Required for Audit.
To
the
best of its knowledge, Magnitude has maintained its records, data and materials
related to the financial accounting of the business, and has all such data
and
materials immediately available, such that an audit may be completed per
regulatory requirements.
ARTICLE
6
REPRESENTATIONS
AND WARRANTIES OF SUBSIDIARY
Magnitude
represents and warrants to Kiwibox that Subsidiary has been formed solely for
the purpose of this Merger and that no contract, liabilities or other
obligations exist in Subsidiary.
6.1 Organization
of
Subsidiary.
Subsidiary
is a corporation duly organized, validly existing, and in good standing under
the laws of Delaware and 100% owned by Magnitude.
6.2 Authorization
of
Transaction.
Magnitude
has full corporate power and authority to execute and deliver Subsidiary with
regard to this Agreement and to perform its obligations hereunder, including
shareholder approval as may be required by the DGCL.
6.3 Non-contravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Magnitude
or Subsidiary is subject or any provision of its charter or bylaws; or (ii)
conflict with, result in a breach of, constitute a default under, result in
the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Magnitude or Subsidiary is a party
or
by which it is bound or to which any of its assets is subject, except for such
notices or consents which have been given or obtained by Kiwibox on or prior
to
the Closing.
6.4 Capitalization.
The
authorized capital stock of Subsidiary consists of two hundred (200) shares
of
Common Stock, $.01 par value per share, and no shares of Preferred Stock. As
of
the date of the Closing, there shall be 160 shares issued and outstanding and
owned by Magnitude. There are not now nor shall there be any outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Subsidiary to issue, sell, or otherwise cause to become outstanding any of
its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to
Subsidiary’s Common Stock. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock
of
Subsidiary.
ARTICLE
7
PRE-CLOSING
COVENANTS
The
Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:
7.1 General.
Each
of
the Parties will use its reasonable best efforts to take all action and to
do
all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Article
9
below).
7.2 Notices
and Consents.
Each
of
the Parties will give any notices to, make any filings with, and use its
reasonable best efforts to obtain any and all authorizations, consents, and
approvals of governments and governmental agencies in connection with the
transactions contemplated hereby.
7.3 Operation
of
Business.
Kiwibox,
Magnitude, including Subsidiary, will not engage in any practice, take any
action, or enter into any transaction outside the ordinary course of business,
including, but not limited to declaration of dividends or distributions,
redemptions, splits, recapitalizations, or similar events respecting its capital
stock prior to Closing except, however, Magnitude shall prepare and file all
documents necessary to increase its authorized common shares and enter into
employment and consulting agreements pursuant to which it may issue its
securities.
7.4 Full
Access For Due Diligence.
The
Parties shall permit their respective representatives to have full access at
all
reasonable times, and in a manner so as not to interfere with their respective
normal business operations, to all premises, properties, personnel, books,
records (including tax records), contracts, and documents. The Parties shall
treat and hold as such any Confidential Information they receive from Kiwibox,
will not use any of the Confidential Information except in connection with
this
Agreement, and, if this Agreement is terminated for any reason whatsoever,
will
return to Kiwibox all tangible embodiments (and all copies) of the Confidential
Information which are in their possession.
7.5 No
Shop Promises.
Each
of
Magnitude, Kiwibox and the Kiwibox Shareholders have promised to each other
that
they shall utilize their respective best efforts to undertake any and all
measures and deliver any and all documents necessary to consummate the
transactions contemplated in this Agreement. The Parties make the following
covenants to each other:
(a)
Except in the case that it terminates this Agreement pursuant to Article 10(c)
or in the event of an automatic termination pursuant to Article 10(d), the
Kiwibox Shareholders shall
not
solicit or seek to acquire any assets or stock of any third party, nor shall
they accept any offer to purchase or exchange any assets or securities of
Kiwibox from the date of this Agreement to the Closing or through the date
they
terminate this Agreement pursuant to the Articles set forth in this Article
10(a).
(b)
Except
in
the case that it terminates this Agreement pursuant to Article 10(b) or in
the
event of an automatic termination pursuant to Article 10(d),
Magnitude
shall
not solicit or seek to acquire any assets or stock of any third party from
the
date of this Agreement to the Closing or through the date it terminates this
Agreement pursuant to the Articles set forth in this Article 10(b).
ARTICLE
8
POST-CLOSING
COVENANTS
The
Parties agree as follows with respect to the period following the
Closing.
8.1 General.
In
case
at any time after the Closing any further action is necessary to carry out
the
purposes of this Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments and documents)
as any other Party reasonably may request, all at the sole cost and expense
of
the requesting Party. Kiwibox acknowledges and agrees that from and after the
Closing, Magnitude will be entitled to possession of all documents, books,
records (including tax records), agreements, and financial data of any sort
relating to Kiwibox.
8.2 No
Material
Acquisition.
During
the two year period following the Closing, neither Magnitude nor Subsidiary
shall (i) undertake a material acquisition nor (ii) sell all or any material
portion of the business of Kiwibox without the prior written consent of no
less
than two of the three Kiwibox Shareholders.
8.3 Litigation
Support.
In
the
event and for so long as Magnitude or Kiwibox actively are contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction contemplated
under this Agreement; or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving
Kiwibox, then Kiwibox and its affiliates will cooperate with Magnitude or
Kiwibox in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be necessary
in
connection with the contest or defense, all at the sole cost and expense of
the
contesting or defending Party.
ARTICLE
9
CONDITIONS
TO OBLIGATION TO CLOSE
9.1 Assumption
of Kiwibox
Liabilities by Magnitude.
Magnitude shall pay for only
such
liabilities as defined in Exhibit M hereto.
9.2 Conditions
to
Obligation of Magnitude and Subsidiary.
The
obligations of Magnitude and Subsidiary to consummate the transactions to be
performed by them in connection with the Closing are subject to satisfaction
of
the following conditions:
|
|
(a)
|
the
representations and warranties set forth in Article 4 above shall
be true
and correct in all material respects at and as of the Closing
Date;
|
|
|
(b)
|
Kiwibox
shall have performed and complied with all of its covenants hereunder
in
all material respects through the Closing, including Article 4
hereby;
|
|
|
||
|
|
(c)
|
no
action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local,
or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i)
prevent
consummation of any of the transactions contemplated by this Agreement;
(ii) cause any of the transactions contemplated by this Agreement
to be
rescinded following consummation; or (iii) affect materially and
adversely
the right of Kiwibox to own its assets and to operate its businesses
(and
no such injunction, judgment, order, decree, ruling, or charge shall
be in
effect);
|
|
|
(d)
|
Kiwibox
shall have delivered to Magnitude a certificate to the effect that
each of
the conditions specified above in paragraphs 9.2 (a) through (c)
is
satisfied in all respects;
|
|
|
(e)
|
all
actions to be taken by Kiwibox in connection with consummation of
the
transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to Magnitude.
|
|
|
(f)
|
Kiwibox
shall have delivered to Magnitude its audited financial statements
for the
fiscal years ended December 31, 2006 and 2005.
|
|
(g)
|
Kiwibox
and/or the Kiwibox Shareholders shall pay the fees and transfer the
Magnitude Common Shares to Southridge in satisfaction of their commitment
set forth in Article 4.6.
|
9.3 Conditions
to Obligation of Kiwibox and the Kiwibox Shareholders.
The
obligation of Kiwibox and the Kiwibox Shareholders to consummate the
transactions to be performed by them in connection with the Closing is subject
to satisfaction of the following conditions:
|
|
(a)
|
the
representations and
warranties set forth in Articles 5 and 6 above shall be true and
correct
in all material respects at and as of the Closing
Date;
|
|
|
(b)
|
Magnitude
shall have performed and complied with all of their covenants hereunder
in
all material respects through the Closing;
|
|
|
||
|
|
(c)
|
no
action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local,
or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i)
prevent
consummation of any of the transactions contemplated by this Agreement;
or
(ii) cause any of the transactions contemplated by this Agreement
to be
rescinded following consummation (and no such injunction, judgment,
order,
decree, ruling, or charge shall be in
effect);
|
|
|
(d)
|
Magnitude
shall have delivered to Kiwibox a certificate to the effect that
each of
the conditions specified above in paragraphs 9.3 (a) through (c)
is
satisfied in all respects;
|
|
|
(e)
|
all
actions to be taken by Magnitude in connection with consummation
of the
transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to Kiwibox.
|
| (f) |
Magnitude
shall have provided documentary
evidence that it has the sum of $3.5 million in a bank account
in satisfaction of its commitment set forth in Article 3.5, including
the
commitment to show
that such amount is not subject to any claims of creditors of Magnitude
or
any of its affiliates.
|
| (g) | The representations, warranties and covenants of the parties contained in Articles 4, 5, 6, 7 and 8 of this Agreement shall survive the Closing hereunder. | |
| (h) | Magnitude shall have paid the legal fees incurred by Kiwibox and the Kiwibox Shareholders in satisfaction of its commitment set forth in Article 3.6. | |
| (i) | Magnitude shall pay the fees and issue the Magnitude Common Shares to Southridge in satisfaction of its commitment set forth in Article 5.6. |
ARTICLE
10
TERMINATION
This
Agreement may be terminated:
(a)
by
the mutual written consent of Magnitude and Kiwibox;
(b)
by
Magnitude, in the event that any of the conditions to obligation to close
enumerated in Section 9.2
have
not
been satisfied or waived by Magnitude in writing at or prior to the
Closing;
(c)
by
Kiwibox and the Kiwibox Shareholders, in the event that any of the conditions
to
obligation to close enumerated in Section 9.3 have not been satisfied or waived
by Kiwibox and the Kiwibox Shareholders, in writing, at or prior to the
Closing;
(d)
automatically, in the event that the Closing has not occurred on or before
March
31, 2007 unless extended by mutual agreement of the parties.
In
the
event of the termination of this Agreement in accordance with the provisions
of
this Article 10: this Agreement shall forthwith become null and void and there
shall be no liability or obligation on the part of Magnitude, Kiwibox or the
Kiwibox Shareholders or their respective officers and directors, and; the
parties shall cooperate to rescind any corporate filings made with the Secretary
of State, State of Delaware, if filed.
ARTICLE
11
MISCELLANEOUS
11.1 Further
Assurances
From
time
to time, as and when required by Magnitude, Kiwibox and/or the Kiwibox
Shareholders shall execute and deliver on behalf of Kiwibox such deeds and
other
instruments, and shall take or cause to be taken by it such further and other
actions, as shall be appropriate or necessary in order to vest or perfect in
or
conform of record the title to and possession of all the property, interests,
assets, rights, privileges, immunities, powers, franchises and authority of
Kiwibox and to otherwise carry out the purposes of this Agreement. The officers
and directors of Kiwibox are fully authorized in the name and on behalf of
Kiwibox to take any and all such action and to execute and deliver any and
all
such deeds and other instruments.
11.2 Agreement
Executed
copies of this Agreement will be on file at the principal place of business
of
Magnitude at 1250 Xxxxx 00, Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000, xxd copies
thereof will be furnished to any stockholder of a Constituent Corporation,
upon
request at such shareholder’s cost. Magnitude shall be responsible for all
post-closing filings with any and all state and federal agencies.
11.3 No
Third-Party
Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any Person other than
the
Parties and their respective successors and permitted assigns.
11.4 Entire
Agreement.
This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements,
Letter of Intent, or representations by or among the Parties, written or oral,
to the extent they related in any way to the subject matter hereof.
11.5 Succession
and
Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the other
Parties.
11.6 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
instrument.
11.7 Headings.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
11.8 Notices.
All
notices, requests, demands, claims, and other communications hereunder will
be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two business days after) it is sent
by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
|
|
If
to Magnitude:
|
Magnitude
Information Systems, Inc.
1250
Xxxxx 00
Xxxxx
000
|
|
|
Xxxxxxxxxx,
Xxx Xxxxxx 00000
With
a copy to:
Xxxxxx
X. Xxxxxxx, Esq.
77
Nxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
|
|
|
|
|
|
|
|
To
Kiwibox:
|
Kiwi
Media, Inc.
|
|
|
|
330
Xxxx 00xx
Xxxxxx
|
|
|
|
Xxxxx
0000
Xxx
Xxxx, XX 00000
With
a copy to:
Xxxx
Xxxxxxx, Esq.
Xxxxxx
Xxxxxx & Xxxxxxx, LLP
420
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
Any
Party
may send any notice, request, demand, claim, or other communication hereunder
to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless
and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
11.9 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict
of
law provision or rule (whether of the State of New York or any other
jurisdiction).
11.10 Amendments
and
Waivers.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each of the Parties. No waiver by any Party
of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.11
Severability.
Any
term
or provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of
the
offending term or provision in any other situation or in any other
jurisdiction.
11.12
Expenses.
Each
of
the Parties will bear its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, except, however,
Magnitude agrees to pay Kiwibox’s legal fees and consultant fees in accordance
with Articles 3.6 and 5.6, respectively. Any sales tax, filing or recording
fees
or similar expense shall be paid by Magnitude.
11.13
Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
11.14
Status.
Nothing
contained in this Agreement shall cause a Party to be deemed an agent, employee,
franchisee, joint venture, partner or legal representative of any other Party,
and no Party shall purport to act in any such capacity for any other
Party.
11.15
Arbitration.
Any
and
all disputes arising out of or relating to this Agreement shall be resolved
by
arbitration. All arbitration hereunder will be conducted by the American
Arbitration Association (“AAA”). If the AAA is dissolved, disbanded or becomes
subject to any state or federal bankruptcy or insolvency proceeding, the parties
will remain subject to binding arbitration which will be conducted by a mutually
agreeable arbitral forum. The parties agree that all arbitrator(s) selected
will
be attorneys with at least five (5) years securities and corporate
reorganization experience. The arbitrator(s) will decide if any inconsistency
exists between the rules of any applicable arbitral forum and the arbitration
provisions contained herein. If such inconsistency exists, the arbitration
provisions contained herein will control and supersede such rules. The site
of
all arbitration proceedings will be in the State, City and County of New York
in
which AAA maintains a regional office. Any arbitration award rendered shall
be
final, conclusive and binding upon the Parties hereto, and a judgment thereon
may be entered in any court of competent jurisdiction. Notwithstanding anything
set forth in this Article 11.15 to the contrary, the Parties shall have the
right to seek injunctive or similar relief in any Federal or State Court in
the
City and State of New York.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
Merger to be signed by their respective officers thereunto duly authorized
as of
the date first written above.
|
ATTEST:
|
MAGNITUDE
INFORMATION SYSTEMS, INC.
|
||
|
|
|
||
|
/s/
Xxxxx X. Xxxxxx
|
By:/s/
Xxxxxx X. Xxxxxx
|
||
| Xxxxx X. Xxxxxx, Secretary | Xxxxxx X. Xxxxxx, CEO and President | ||
|
ATTEST:
|
MAGNITUDE
OPERATIONS, INC.
(In
Organization)
By:
/s/
Xxxxxx X. Xxxxxx
|
||
| Xxxxxx X. Xxxxxx, CEO and President | |||
|
/s/
Xxxxx X. Xxxxxx
|
|||
| Xxxxx X. Xxxxxx, Secretary |
|
||
|
ATTEST:
|
KIWIBOX
MEDIA, INC.
|
||
|
|
|
||
|
/s/
Xxxx Xxxxxxx
|
By:
/s/
Lin Dai
|
||
|
Xxxx
Xxxxxxx, Secretary
|
Lin
Dai, President
|
||
|
|
|||
|
WITNESS:
|
KIWIBOX SHAREHOLDERS: | ||
|
/s/
Xxxx Xxxxxxx
|
/s/ Lin Dai | ||
|
WITNESS:
|
Lin Dai, Shareholder | ||
|
/s/
Lin Dai
|
/s/ Xxxx Xxxxxxx | ||
|
WITNESS:
|
Xxxx
Xxxxxxx, Shareholder
|
||
|
/s/
Lin Dai
|
/s/ Xxxxxxx Xxxxxx | ||
|
WITNESS:
|
Xxxxxxx
Xxxxxx, Shareholder
|
||
EXHIBIT
A
CERTIFICATE
OF MERGER
(TO
BE PROVIDED PRIOR TO CLOSING)
EXHIBIT
B
CERTIFICATE
OF INCORPORATION OF KIWIBOX MEDIA INC.
EXHIBIT
C
ARTICLES
OF INCORPORATION OF SUBSIDIARY
EXHIBIT
D
BYLAWS
OF KIWIBOX MEDIA INC.
EXHIBIT
E
FORM
OF KIWIBOX SHAREHOLDER EMPLOYMENT AGREEMENT
EXHIBIT
F
CERTIFICATE
OF DESIGNATION FOR SERIES G PREFERRED STOCK
(TO
BE DELIVERED PRIOR TO CLOSING)
EXHIBIT
G
KIWIBOX
BUSINESS PLAN
EXHIBIT
H
SHAREHOLDERS
AND THEIR OWNERSHIP OF KIWIBOX SHARES
EXHIBIT
I
KIWIBOX
FINANCIAL STATEMENTS
EXHIBIT
J
KIWIBOX
MATERIAL CONTRACTS
EXHIBIT
K
MAGNITUDE
FINANCIAL STATEMENTS
FOR
THE QUARTER ENDED SEPTEMBER 30, 2006 AND
FOR
THE YEAR ENDED DECEMBER 31, 2005.
EXHIBIT
L
MAGNITUDE
MATERIAL CONTRACTS
EXHIBIT
M
LIST
OF KIWIBOX LIABILITIES TO BE PAID BY MAGNITUDE
