Exhibit 2.1
REORGANIZATION AND MERGER AGREEMENT
THIS REORGANIZATION AND MERGER AGREEMENT, made and entered into on
February __, 1999, by and between Systems Communications, Inc., a Florida
corporation, ("SCI") and Xxxxxxxxxx.xxx, Inc., a Nevada corporation,
("Xxxxxxxxxx.xxx").
W I T N E S S E T H :
WHEREAS, SCI desires to reorganize its business and affairs and to
acquire Xxxxxxxxxx.xxx by statutory merger; and
WHEREAS, Xxxxxxxxxx.xxx desires to be merged into SCI for the purpose of
becoming a publicly traded company;
NOW, THEREFORE, in consideration of the premises herein before set
forth, reorganization of SCI as provided herein in reliance hereon and the
mutual promises and respective representations and warranties of the parties,
one to another made herein, and the reliance of each party upon the other(s)
based hereon and other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties agree, for purposes
of consummating the plan of reorganization and merger, as follows:
ARTICLE I
PRELIMINARY MATTERS
Section 1.01. Recitals. The parties acknowledge the recitals herein
above set forth in the preamble are correct, are, by this reference,
incorporated herein and are made a part of this Agreement.
Section 1.02. Exhibits and Schedules. Exhibits (which are documents to
be executed and delivered at the Closing by the party identified therein or in
the provision requiring its delivery) and Schedules (which are statements
setting forth information about Xxxxxxxxxx.xxx) referred to herein and annexed
hereto are, by this reference, incorporated herein and made a part of this
Agreement, as if set forth fully herein.
Section 1.03. Use of words and phrases. Natural persons may be
identified by last name, with such additional descriptors as may be desirable.
The words "herein," "hereby," "hereunder," "hereof," "herein before,"
"hereinafter" and any other equivalent words refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision hereof.
The words, terms and phrases defined herein and any pronoun used herein shall
include the singular, plural and all genders. The word "and" shall be
construed as a coordinating conjunction unless the context clearly indicates
that it should be construed as a copulative conjunction.
Section 1.04. Accounting terms. All accounting terms not otherwise
defined herein shall have the meanings assigned to them under generally
accepted accounting principles unless specifically referenced to regulatory
accounting principles.
Section 1.05. Calculation of time lapse or passage; Action required on
holidays. When a provision of this Agreement requires or provides for the
calculation of the lapse or passage of a time period, such period shall be
calculated by treating the event which starts the lapse or passage as zero;
provided, that this provision shall not apply to any provision which specifies
a certain day for action or payment, e.g. the first day of each calendar
month. Unless otherwise provided, the term "month" shall mean a period of
thirty days and the term "year" shall mean a period of 360 days, except that
the term "calendar year" shall mean the actual calendar year period. If any
calendar day on which action is required to be taken or payment is required to
be made under this Agreement is not a Business Day (Business Day being a day
on which national banks are open for business where the actor or payor is
located), then such action or payment shall be taken or made on the next
succeeding Business Day.
Section 1.06. Use of titles, headings and captions. The titles,
headings and captions of articles, sections, paragraphs and other subdivisions
contained herein are for the purpose of convenience only and are not intended
to define or limit the contents of said articles, sections, paragraphs and
other subdivisions.
ARTICLE II
TERMS OF THE TRANSACTIONS
Section 2.01. Reorganization of SCI. Prior to the merger of
Xxxxxxxxxx.xxx into SCI (the "Merger"), and as a condition precedent to the
Merger, SCI shall accomplish a reorganization of its business and affairs:
(a) SCI will reverse split its issued and outstanding common stock and
the common stock underlying all issued, outstanding and unexpired common stock
purchase options, warrants and other rights to purchase its common stock such
that the aggregate of the issued and outstanding shares and shares to be
issued and outstanding upon exercise of such options, warrants and other
rights is eight million shares.
(b) SCI will transfer all of its business, property and assets,
tangible and intangible, to International Healthcare Solutions, Inc. ("IHSI")
in exchange for twenty million shares of IHSI"s common stock.
(c) IHSI will assume all of the debts, liabilities and obligations of
SCI, fixed, contingent and unknown, will advise all such claim holders against
SCI regarding such assumption and obtain a release of SCI from its debts,
liabilities and obligations by the holders thereof and will unconditionally
and irrevocably indemnify SCI against all, any and every such debt, liability
and obligation, whether fixed, contingent or unknown; provided, that SCI shall
pay at the Closing, from the proceeds, if any, from the exercise of common
stock purchase options and warrants outstanding on the date hereof, all such
debts, liabilities and obligations of which SCI is not released.
(d) SCI will transfer into an escrow or a trust for the benefit of
SCI's stockholders of record on a record date which will be the Business Day
next preceding the Closing of the Merger of Xxxxxxxxxx.xxx into SCI, as
provided in Section 2.02, all of the IHSI shares which SCI owns (consisting of
twenty million shares) which shares shall be restricted and represented by a
single, global certificate, subject to an irrevocable resolution by SCI's
board of directors declaring a dividend in kind in the IHSI shares to SCI's
stockholders of record on such record date, subject as to delivery to such
stockholders out of such escrow or trust to the effectiveness of a
registration statement to be filed by IHSI under the Securities Act of 1933,
as amended, to cover the distribution of such dividend.
(e) Xxxxxxxxxx.xxx shall have no liability or obligation to see to SCI
or IHSI's performance of their respective obligations under Section 2.01.
Section 2.02. Merger transaction. Immediately following the
reorganization provided in Section 2.01, Xxxxxxxxxx.xxx will be merged into
SCI in the Merger, and the parties shall file articles of merger, containing a
plan of merger, in their respective jurisdictions, which plan of merger will
provide for a statutory merger of Xxxxxxxxxx.xxx (the disappearing
corporation) into SCI (the surviving corporation), the conversion of the
issued and outstanding common stock of Xxxxxxxxxx.xxx into thirty-seven
million six hundred seventy five thousand shares of common stock of SCI, the
continuation of SCI's articles of incorporation and bylaws, as amended
respectively, as the articles of incorporation and bylaws of the surviving
corporation, the directors approved by Xxxxxxxxxx.xxx as the directors of the
surviving corporation, and such other provisions consistent with the terms and
intents of this Agreement as may be required by the laws of the respective
jurisdictions for the consummation of the Merger.
Section 2.03. Change of SCI's name to Xxxxxxxxxx.xxx, Inc.; Foreign
qualification or change of state of incorporation. On the Business Day
following the Business Day on which the articles of merger provided in Section
2.02 are filed, SCI will file articles of amendment to its articles of
incorporation changing the name of SCI to "Xxxxxxxxxx.xxx, Inc." SCI shall
qualify to do business as a foreign corporation in the state of California or,
in the alternative, change its state of incorporation by further statutory
merger for that purpose to the state of California.
Section 2.04. Press releases. At the date SCI is required to file and
does file a report pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, reporting the proposed transactions contemplated by this
Agreement, SCI will issue a press release approved by Xxxxxxxxxx.xxx
announcing the transactions, summarizing their pertinent terms and providing
such other information as the parties may mutually agree. Following the
Closing, SCI will issue a press release announcing the consummation of the
transactions contemplated by this Agreement.
Section 2.05. Stock compensation. Except as otherwise approved by
Xxxxxxxxxx.xxx, SCI will file a registration statement on Form S-8 covering
the issue of up to two million shares to be used as compensation pursuant to
exercise of options, approved by Xxxxxxxxxx.xxx, for consultants and
professionals rendering services to SCI and Xxxxxxxxxx.xxx.
Section 2.06. Transaction costs. Each party shall pay all costs and
expenses which it incurs in connection with this Agreement. Xxxxx Xxxxx
shall receive 2,000,000 shares of SCI following the Merger as compensation for
his services in arranging the Merger.
ARTICLE III
CLOSING OF THE TRANSACTION
Section 3.01. Location, date and time of the Closing. The Closing of
the Merger shall take place as soon as practicable following a hearing on
SCI's involuntary bankruptcy case now scheduled for March 12, 1999, at such
place designated by Xxxxxxxxxx.xxx, or by exchange of signature pages by
telephone facsimile between the offices of the parties (which facsimile
signature pages shall be promptly replaced by manually executed original
signature pages) subject to the satisfaction of the conditions to Closing set
forth in Section 3.02.
Section 3.02. Xxxxxxxxxx.xxx's obligations at Closing. At the
Closing, Xxxxxxxxxx.xxx will deliver to SCI:
(a) Articles of Merger for both Florida and Nevada executed by
Xxxxxxxxxx.xxx;
(b) Officers' Certificates and Secretary's Certificates of
Xxxxxxxxxx.xxx, in the respective forms of Exhibit "A" and Exhibit "B".
(c) An acknowledgment and agreement by Xxxxxxxxxx.xxx's stockholders
with respect to those matters set forth in Article VI.
Section 3.03. SCI's Obligations at Closing. At the Closing, SCI
will deliver to Xxxxxxxxxx.xxx:
(a) Articles of Merger for both Florida and Nevada executed by SCI;
(b) Certificates for SCI's common stock issued in conversion of
Xxxxxxxxxx.xxx common stock, in such names and such denominations as advised
by Xxxxxxxxxx.xxx not less than two Business Days prior to the Closing of the
Merger.
(c) Officers' Certificates and Secretary's Certificates of SCI, in the
respective forms of Exhibit "A" and Exhibit "B".
(d) SCI's corporate record book, corporate seal, stock ledger and other
pertinent corporate records.
Section 3.04. Closing memorandum and receipts. As evidence that all
parties deemed the Closing to have been completed and the transaction
contemplated by this Agreement to have been consummated, the parties jointly
will execute and deliver a memorandum acknowledging such completion and
consummation. The party receiving any consideration or stock under this
Agreement will execute and deliver a receipt therefore to the party giving the
consideration or stock.
Section 3.05. Waiver of conditions. Notwithstanding Section 11.03, any
condition to the Closing to the benefit of any party which is not satisfied
prior to or at the Closing will be deemed to be waived by that party or
satisfied by virtue of that party executing the Closing memorandum.
Section 3.06. Further Assurances. At any time and from time to time
after the Closing of the Merger, at the reasonable request of any party and
without further consideration, any other part(ies) shall execute and deliver
such other instruments and documents as such party may deem reasonably
desirable or necessary to complete the transactions contemplated by this
Agreement.
Section 3.07. Conditions Precedent to SCI's Obligations. All
obligations of SCI hereunder are subject, at the option of SCI, to the
fulfillment of each of the following conditions at or prior to the Closing,
and Xxxxxxxxxx.xxx shall exert its best efforts to cause each such condition
to be so fulfilled:
(a) All representations and warranties of Xxxxxxxxxx.xxx contained
herein or in any document delivered pursuant hereto shall be true and correct
in all material respects when made and shall be deemed to have been made again
at and as of the date of the Closing of the Merger, and shall then be true and
correct in all material respects except for changes in the ordinary course of
business after the date hereof in conformity with the covenants and agreements
contained herein.
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Xxxxxxxxxx.xxx at or before the Closing
shall have been duly and properly performed in all material respects.
(c) Since the date of this Agreement there shall not have occurred any
material adverse change in the condition or prospects (financial or
otherwise), business, properties or assets of Xxxxxxxxxx.xxx.
(d) There shall be delivered to SCI a certificate executed by
Xxxxxxxxxx.xxx's President and Secretary dated the date of the Closing,
certifying that the conditions set forth in paragraphs (a), (b) and (c) of
this Section 3.07 have been fulfilled.
(e) All documents required to be delivered to SCI at or prior to the
Closing shall have been so delivered.
(f) Xxxxxxxxxx.xxx shall have obtained written consents to the Merger
where the consent of any other party may, in the opinion of the SCI's counsel,
be required for such assignment or transfer.
(g) None of the assets or business of Xxxxxxxxxx.xxx shall have
suffered or incurred a material damage, destruction or loss not fully covered
by insurance and which has a materially adverse affect on their respective
business and operations.
(h) SCI shall have received a certificate of good standing for
Xxxxxxxxxx.xxx issued by the secretary of state of its state of incorporation
and of each state in which it is qualified to do business as a foreign
corporation.
(i) SCI shall have received the acknowledgments and agreements from
Xxxxxxxxxx.xxx's stockholders specified in Article VI.
Section 3.08. Conditions Precedent to
Xxxxxxxxxx.xxx's Obligations. All obligations of Xxxxxxxxxx.xxx at the Closing
are subject, at the option of Xxxxxxxxxx.xxx in its sole discretion, to the
fulfillment, as determined by Xxxxxxxxxx.xxx in its sole discretion, of each
of the following conditions at or prior to the Closing, and SCI shall cause
each such condition to be so fulfilled.
(a) All representations and warranties of SCI contained herein or in
any document delivered pursuant hereto shall be true and correct in all
material respects when made and as of the Closing.
(b) All obligations required by the terms of this Agreement to be
performed by SCI at or before the Closing shall have been duly and properly
performed in all material respects.
(c) All requirements to the reorganization of SCI pursuant to Section
2.01 shall have been completed to Xxxxxxxxxx.xxx's satisfaction, including but
not limited to the assumption and indemnification by IHSI.
(d) The retiring management of SCI and management of IHSI shall have obtained
a voluntary, enforceable agreement from each holder of more than 160,000
shares of SCI's common stock, and such other shareholders following the
Closing as requested by Xxxxxxxxxx.xxx, to hold such shares off the public
market until such time as the market price for SCI's common stock has reached
an average minimum of $5.00 per share for not less than five trading days
within a period of twenty trading days (consecutive or non consecutive) and
thereafter to offer for sale in the public market each week not more than the
greater of 20,000 shares or one percent of the aggregate trading volume for
the prior week, and to make such offers in such a prudent manner that the
market price is not adversely affected.
(e) Holders of SCI common stock purchase options, warrants and other rights
to purchase its common stock shall have exercised before or concurrently with
the Closing enough such options, warrants and other rights sufficient to
infuse at least one million dollars more than the amount needed by SCI to pay
each and every debt, liability and obligation accruing to or owed by SCI.
(f) The involuntary bankruptcy proceeding involving SCI shall have been
resolved to the satisfaction of Xxxxxxxxxx.xxx in its sole discretion.
(g) There shall be delivered to Xxxxxxxxxx.xxx a certificate executed
by the President and Secretary of SCI, dated the date of the Closing,
certifying that the conditions set forth in paragraphs (a) through (f) of this
Section 3.08 have been fulfilled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Section 4.01. Xxxxxxxxxx.xxx's representations and warranties.
Xxxxxxxxxx.xxx will represent and warrant to SCI at the Closing:
(a) Xxxxxxxxxx.xxx is a duly incorporated and existing corporation in
good standing under the laws of its state of incorporation, has full corporate
power to execute and deliver this Agreement, is qualified and in good standing
as a foreign corporation in every jurisdiction where the conduct of its
business or the nature of its properties require it to be qualified and has
delivered to SCI true copies of its articles of incorporation, bylaws and the
records of proceeding of its board of directors and stockholders for the past
five years or since inception, whichever is less.
(b) Xxxxxxxxxx.xxx has the power to conduct business its business as it
is now being conducted and to own and lease its properties shown on its most
recent balance sheet and used in the conduct of its business.
(c) This Agreement has been duly and validly authorized, executed and
delivered by Xxxxxxxxxx.xxx and constitutes the legal, valid and binding
obligation of Xxxxxxxxxx.xxx enforceable against it in accordance with its
terms subject, as to enforceability, to bankruptcy, insolvency, reorganization
and other laws of, relating to or affecting shareholders and creditors rights
generally and to general equitable principles.
(d) The execution of this Agreement and consummation of the transaction
contemplated hereby does not conflict with and will not result in any adverse
consequences to or breach of any agreement, mortgage, instrument, judgment,
decree, law or governmental regulation, permit or authorization by
Xxxxxxxxxx.xxx or in the loss, forfeiture or waiver of any rights or franchise
owned by Xxxxxxxxxx.xxx, from which Xxxxxxxxxx.xxx benefits or which is
desirable in the conduct of Xxxxxxxxxx.xxx's business.
(e) Xxxxxxxxxx.xxx's authorized capital is as set forth in its most
recent balance sheet and Xxxxxxxxxx.xxx's outstanding shares have been duly
and validly authorized, are validly issued and fully paid and nonassessable,
all of which are legally and beneficially owned by the holders set forth on
Xxxxxxxxxx.xxx's stock records.
(f) Except for such actions as may have been taken, no further action
by or before any governmental body or authority of the United States of
America or any state or subdivision thereof or any self-regulatory body to
which Xxxxxxxxxx.xxx is subject is required in connection with the execution
and delivery of this Agreement by Xxxxxxxxxx.xxx and the consummation of the
transactions contemplated hereby.
(g) The information Xxxxxxxxxx.xxx has delivered to SCI relating to
Xxxxxxxxxx.xxx, its business, its operations and its prospects (financial and
otherwise) was on the date reflected in each such item of information accurate
in all material respects and such information at the date hereof taken as a
whole provides full and fair disclosure of all material information relating
to Xxxxxxxxxx.xxx, its business, its operations, its financial condition and
its prospects (financial and otherwise) and does not contain any untrue
statement of material fact (which is not corrected by subsequent information)
or omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(h) Xxxxxxxxxx.xxx has conducted its business in the ordinary course
for the last three years or since inception, whichever is less.
(i) Neither Xxxxxxxxxx.xxx nor any employee, to Xxxxxxxxxx.xxx's
knowledge, has within the past five years given or agreed to give any gift or
similar benefit valued at more than $20 annually to any customer, supplier,
governmental employee or other person who is or may be or have been in a
position to help or hinder Xxxxxxxxxx.xxx's business which might subject any
of Xxxxxxxxxx.xxx to damage or penalty in civil, criminal or governmental
litigation or proceedings.
(j) Xxxxxxxxxx.xxx's outstanding shares are the only equity securities
of Xxxxxxxxxx.xxx issued and outstanding, there being no other equity
securities of Xxxxxxxxxx.xxx issued and outstanding, no authorizations in
effect or, upon a specified event, with the lapse of time or otherwise, to
take effect for the issue of additional shares of Xxxxxxxxxx.xxx's equity
securities, no obligations outstanding convertible into equity securities of
Xxxxxxxxxx.xxx, no options, warrants, rights similar instruments outstanding
pursuant to which the holder has a right to demand and receive the issuance of
Xxxxxxxxxx.xxx's equity securities and no stock appreciation rights or phantom
stock of Xxxxxxxxxx.xxx held by any person or to which any person has a claim.
(k) Xxxxxxxxxx.xxx's financial statements at and for the periods ended
December 31, 1998 delivered SCI and been audited by certified public
accountants in accordance with generally accepted auditing standards with a
report thereon issued in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods
indicated, fairly present the financial condition of Xxxxxxxxxx.xxx at the
dates and the results of operations for the periods indicated and except as
disclosed in the notes thereto Xxxxxxxxxx.xxx does not have any contingent,
undisclosed or hidden liabilities. Xxxxxxxxxx.xxx's financial statements at
and for the period subsequent to Xxxxxxxxxx.xxx's audited financial
statements, if any, fairly present the financial condition of Xxxxxxxxxx.xxx
at the date and the results of operations for the period indicated, contain
all normally recurring adjustments and do not omit to disclose any contingent,
undisclosed or hidden liabilities.
(l) Xxxxxxxxxx.xxx has good, marketable and insurable title to all of
the properties and assets which it owns or uses in its business or purports to
own, including, without limitation, those reflected in its books and records
and in the balance sheet, both tangible and intangible, trademarks, trade
names, copyrights and other intellectual properties (excluding inventory sold
after the most recent balance sheet date in the ordinary course of business),
excepting only those properties and assets subject to operating leases
disclosed in Schedule ___. None of the properties and assets are subject to
any mortgage, pledge, lien, charge, security interest, encumbrance,
restriction, lease, license, easement, liability or adverse claim of any
nature whatsoever, direct or indirect, whether accrued, absolute, contingent
or otherwise, except (i) as expressly set forth in the notes to
Xxxxxxxxxx.xxx's financial statements as securing specific liabilities or
subject to specific capital leases or (ii) those imperfections of title and
encumbrances, if any, which (A) are not substantial in character, amount or
extent and do not materially detract from the value of the properties or
assets subject thereto, (B) do not interfere with either the present or
continued use of such property or assets or the conduct of Xxxxxxxxxx.xxx's
normal business operations and (C) have arisen only in the ordinary course of
business. All of the properties and assets owned, leased or used by
Xxxxxxxxxx.xxx are in good operating condition and repair, are suitable for
the purposes used, are adequate and sufficient for all current operations of
Xxxxxxxxxx.xxx and are directly related to Xxxxxxxxxx.xxx's business.
(m) All of the contracts, agreements, leases, licenses and commitments
of Xxxxxxxxxx.xxx (other than those which have been fully performed), copies
of all of which have been delivered to SCI, are valid and binding, enforceable
in accordance with their respective terms, in full force and effect and there
is not thereunder any existing default or event, which after the giving of
notice or lapse of time or both, would constitute a default or result in a
right to accelerate or loss of rights and none of such contracts, agreements,
leases, licenses and commitments is, either when considered singly or in the
aggregate with others, unduly burdensome, onerous or materially adverse to
Xxxxxxxxxx.xxx's business, properties, assets, earnings or prospects or either
before or after the Closing, to result in any material loss or liability.
(n) Except as set forth in Schedule ___, there is no claim, legal
action, suit, arbitration, governmental investigation, or other legal or
administrative proceeding, nor any order, decree or judgment in progress,
pending or in effect or to Xxxxxxxxxx.xxx's knowledge threatened, against or
relating to Xxxxxxxxxx.xxx, its directors, officers or employees it
properties, assets or business or the transaction contemplated by this
Agreement and Xxxxxxxxxx.xxx does not know or have any reason to be aware of
any basis for the same, including any basis for a claim of sexual harassment
or racial or age discrimination.
(o) All taxes, including without limitation, income, property, special
assessments, sales, use, franchise, intangibles, employees' income withholding
and social security taxes, imposed by the United States or any state,
municipality, subdivision, authority, which are due and payable, and all
interest and penalties thereon, unless disputed in good faith in proper
proceedings and reserved for or set aside, have been paid in full and all tax
returns required to be filed in connection therewith have been accurately
prepared and timely filed and all deposits required by law to be made by
Xxxxxxxxxx.xxx with respect to employees' withholding and social security
taxes have been made. Xxxxxxxxxx.xxx is not and has no reason to believe that
it will be the subject of an audit by any taxing authority. There is not now
in force any extension of time with respect to the date when tax return was or
is due to be filed, or any waiver or agreement by Xxxxxxxxxx.xxx for the
extension of time for the assessment of any tax and Xxxxxxxxxx.xxx is not a
"consenting corporation" within the meaning of Section 341(f)(1) of the
Internal Revenue Code of 1986, as amended; and no shareholder of
Xxxxxxxxxx.xxx is entitled to the distribution of previously taxed
undistributed S corporation earnings and profits. All workers' compensation,
disability and similar items due and payable under any governmental program
have been paid.
(p) Xxxxxxxxxx.xxx does not have any employee benefit, pension or
profit sharing plans subject to ERISA and no such plans to which
Xxxxxxxxxx.xxx is obligated or required to make contributions.
(q) None of Xxxxxxxxxx.xxx's employees are represented by a collective
bargaining agent or subject to a collective bargaining agreement and
Xxxxxxxxxx.xxx considers its relations with its employees as a whole to be
good. Xxxxxxxxxx.xxx has disclosed to SCI all employee salary, compensation
and benefit agreements and no employee has a written employment agreement.
(r) All offers and sales of securities by Xxxxxxxxxx.xxx during the
most recent two years have been made in compliance with the requirements of
federal and applicable state securities laws.
Section 4.02. SCI's representations and warranties. SCI represents and
warrants to Xxxxxxxxxx.xxx that:
(a) SCI is a duly incorporated and existing corporation in good
standing under the laws of its state of incorporation, has full corporate
power to execute and deliver this Agreement, is qualified and in good standing
as a foreign corporation in every jurisdiction where the conduct of its
business or the nature of its properties require it to be qualified and has
delivered to SCI true copies of its articles of incorporation, bylaws and the
records of proceeding of its board of directors and stockholders for the past
five years.
(b) This Agreement has been duly and validly authorized, executed and
delivered by SCI and constitutes the legal, valid and binding obligation of
SCI enforceable against SCI in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of,
relating to or affecting shareholders and creditors rights generally and to
general equitable principles.
(c) The execution of this Agreement and consummation of the transaction
contemplated hereby does not conflict with and will not result in any adverse
consequences to or breach of any agreement, mortgage, instrument, judgment,
decree, law or governmental regulation, permit or authorization by SCI or in
the loss, forfeiture or waiver of any rights or franchise owned by SCI, from
which SCI benefits or which is desirable in the conduct of SCI's business.
(d) SCI's shares, when issued by SCI and authenticated and delivered by
its transfer agent, in conversion of the Xxxxxxxxxx.xxx shares will be duly
and validly authorized, are validly issued and fully paid and nonassessable.
(e) Except for such actions as may have been taken, no further action
by or before any governmental body or authority of the United States of
America or any state thereof is required in connection with the execution and
delivery of this Agreement by SCI and the consummation of the transactions
contemplated hereby.
(f) The information SCI has delivered to Xxxxxxxxxx.xxx was on the date
reflected in each such item of information accurate in all material respects
and such information at the date hereof as a whole did not contain any untrue
statement of material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(g) SCI is obligated to file reports pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended, and is current in its reporting
obligations thereunder.
(h) At the Closing of the Merger, SCI will not have any business,
properties or assets, other than the shares of IHSI held in escrow or trust,
and will not have any debts, liabilities or obligations which have not been
paid or assumed by IHSI with the full release of SCI.
Section 4.03. Nature and Survival of
Representation and Warranties. All statements of fact contained in this
Agreement, any certificate delivered pursuant to this Agreement, or any
letter, document or other instrument delivered by or on behalf of
Xxxxxxxxxx.xxx or SCI and their respective officers, pursuant to the terms of
this Agreement shall be deemed representations and warranties made by
Xxxxxxxxxx.xxx and SCI, respectively, to each other under this Agreement. For
purposes of this Section 4.03 and Section 10.01 only, any party or other
person seeking to enforce, or claiming the benefit of, any representation and
warranty under this Agreement is called a Claimant, and any party or other
person against whom a right is claimed is called a Defendant. All
representations and warranties of the parties shall survive the Closing and
all inspections, examinations or audits on behalf of the parties; provided,
however, that all representations and warranties shall terminate and expire,
and be without further force and effect whatever from and after the one year
from the date hereof, and neither SCI nor Xxxxxxxxxx.xxx shall have any
liability whatsoever on account of any inaccurate representation or warranty
or for any breach of warranty, unless a Claimant shall, on or prior to the
expiration of such one year period, serve written notice on a Defendant, with
a copy to the Defendant's counsel, setting forth in reasonable detail the
breach and any direct, incidental or consequential damages (including amounts)
the Claimant may have suffered as a result of such breach.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of Business Prior to Closing.
(a) From the date hereof to the Closing, Xxxxxxxxxx.xxx will conduct
its business and affairs only in the ordinary course and consistent with its
prior practice and shall maintain, keep and preserve its assets and properties
in good condition and repair and maintain insurance thereon in accordance with
present practices, it will use its best efforts (i) to preserve its business
and organization intact, (ii) to keep available to SCI the services of
Xxxxxxxxxx.xxx's present employees, agents and independent contractors, (iii)
to preserve for the benefit of SCI the goodwill of suppliers, customers,
distributors, landlords and others having business relations with it, and (iv)
to cooperate and use reasonable efforts to assist SCI in obtaining the consent
of any landlord or other party to any lease or contract with Xxxxxxxxxx.xxx
where the consent of such landlord or other party may be required by reason of
the transactions contemplated hereby.
(b) From the date hereof to the Closing, SCI shall not, other than as
disclosed to Xxxxxxxxxx.xxx and approved by it in its sole discretion, (i)
dispose of any material assets, (ii) engage in any extraordinary transactions,
including but not limited to, directly or indirectly, soliciting,
entertaining, encouraging inquiries or proposals or entering into negotiation
or agreement with any third party for sale of assets by SCI, sale of equity
securities or merger, consolidation or combination with any company, (iii)
grant any salary or compensation increase to any employee, or (iv) make any
commitment for capital expenditures.
Section 5.02. Notice of changes in information. Each party
shall give the other party prompt written notice of any change in any of the
information contained in their respective representations and warranties made
in Article IV, or elsewhere in this Agreement, or the exhibits and schedules
referred to herein or any written statements made or given in connection
herewith which occurs prior to the Closing.
Section 5.03. Notice of extraordinary changes. SCI shall
advise Xxxxxxxxxx.xxx with respect to any of the following outside of ordinary
course of business or which are materially adverse: (i) the entering into and
cancellation or breach of contracts, agreements, commitments or other
understandings or arrangements to which SCI is a party, including, without
limitation, purchase orders for any item of inventory and commitments for
capital expenditures or improvements, orderly and gradual discontinuance or
particular items or (ii) any changes in purchasing, pricing or selling policy
(including, without limitation, selling merchandise at discounts); provided,
however, that not withstanding anything contained in this subsection SCI will
not take or fail to take any action that, in Xxxxxxxxxx.xxx's judgment, is
likely to give rise to a substantial penalty or a claim for damages by any
third party against SCI, or is likely to result in losses to either
corporation, or is otherwise likely to prejudice in any material respect or
unduly interfere with the conduct of its business and operations in the
ordinary course consistent with prior practice, or is likely to result in a
breach by SCI of any of its representations, warranties or covenants contained
in this Agreement (unless any such breach is first waived in writing by
Xxxxxxxxxx.xxx).
Section 5.04. Access to Information and Documents. Upon
reasonable notice and during regular business hours, each party will give the
other party, its attorneys, accountants and other representatives full access
to its personnel (subject to reasonable approval as to the time thereof) and
all properties, documents, contracts, books and records and will furnish
copies of such documents (certified by officers, if so requested) and with
such information with respect to its business, operations, affairs and
prospects (financial and otherwise) as it may from time to time request, and
the party to whom the information is provided will not improperly disclose the
same prior to the Closing. Any such furnishing of such information or any
investigation shall not affect that party's right to rely on the other party's
representations and warranties made in this Agreement or in connection
herewith or pursuant hereto.
Section 5.05. Cooperation by the parties. Each party hereto shall
cooperate and shall take such further action as may be reasonably requested by
any other party in order to carry out the provisions and purposes of this
Agreement.
ARTICLE VI
SECURITIES LAW MATTERS AND STATUS OF SHARES
Section 6.01. Unregistered Shares. The Xxxxxxxxxx.xxx stockholders
will acknowledge that SCI's common stock issued in conversion of the
Xxxxxxxxxx.xxx shares in the Merger is not being registered under the federal
Securities Act of 1933, as amended, ("1933 Act") and the securities laws of
Xxxxxxxxxx.xxx's stockholders' states of residence, and that it is not
transferable, except as permitted under various exemptions contained in the
1933 Act and applicable state securities law. The provisions contained in the
following sections are intended to ensure compliance with the 1933 Act and
applicable state securities law.
Section 6.02. No Transfers in Violation of 1933 Act. The
Xxxxxxxxxx.xxx stockholders will agree not to offer, sell, assign, pledge,
hypothecate, transfer or otherwise dispose of the SCI shares, except after
full compliance with all of the applicable provisions of the 1933 Act and
applicable state securities law.
Section 6.03. Investment intent. Each of Xxxxxxxxxx.xxx
stockholders will represent and warrant to and covenant with SCI that he is
acquiring SCI shares for his own account for investment, and not with a view
to resale or other distribution; that he currently has no intention of
selling, assigning, transferring, pledging, hypothecating or otherwise
disposing of all or any part thereof at any particular time, for any
particular price, or on the happening of any particular event or circumstance;
and he acknowledges that SCI is relying on the truth and accuracy of the
covenants, warranties and representations of Xxxxxxxxxx.xxx in issuing SCI's
shares without first registering it under the 1933 Act.
Section 6.04. Conditions to sale and investment legend on
certificates. Each of Xxxxxxxxxx.xxx's stockholders will agree not to sell,
assign, transfer, pledge, hypothecate or otherwise dispose of any of the SCI
shares for two years following the Closing, unless and until he (i) has
delivered to SCI a written legal opinion in form and substance satisfactory to
counsel for SCI to the effect that the disposition is permissible under the
terms of the 1933 Act; (ii) has complied with the registration and prospectus
delivery requirements of the 1933 Act; or (iii) has presented SCI satisfactory
evidence that the transfer will comply with Rule 144 under the 1933 Act. The
Xxxxxxxxxx.xxx stockholders will further agrees that the certificates
evidencing the SCI's shares shall contain the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND IS A "RESTRICTED SECURITY" AS DEFINED UNDER SAID ACT.
ACCORDINGLY, NEITHER THIS SECURITY NOR ANY INTEREST THEREIN MAY BE
SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED OR
HYPOTHECATED, EXCEPT BY BONA FIDE GIFT OR INHERITANCE, IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS SECURITY
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO HITS THAT
SUCH REGISTRATION IS NOT REQUIRED.
Xxxxxxxxxx.xxx's stockholders will acknowledge SCI will also place a "stop
transfer" order against any transfer of SCI's shares until one of the
conditions set forth in this section has been met.
Section 6.05. Indemnification by Xxxxxxxxxx.xxx. If at any
time in the future, a Xxxxxxxxxx.xxx stockholder should offer, sell, assign,
pledge, hypothecate, transfer or otherwise dispose of any of SCI's shares
without registration under the 1933 Act, unless an exemption from registration
is available, such stockholder agrees to indemnify and hold harmless SCI
against and from any and all claims, liabilities, penalties, costs and
expenses which may be asserted against or suffered by SCI as a result of the
disposition.
Section 6.06. State securities law. The Closing is
subject to any and all requirements of the laws of Xxxxxxxxxx.xxx's
stockholders respective states of residence applying to the offer and sale of
securities therein. In no event shall any party be liable to anyone for
failure to sell or issue its securities pursuant to this Agreement, unless and
until all applicable requirements of the law of the applicable state of the
recipient's residence relating to the offer and sale have been satisfied.
ARTICLE VII
FEDERAL INCOME TAX MATTERS AND ELECTIONS
Section 7.01. Each party shall be responsible for obtaining it own tax
advice with respect to the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
Section 8.01. Termination For Default.
(a) SCI may, by notice to Xxxxxxxxxx.xxx given in the manner provided
below on or at any time prior to the Closing Date, terminate this Agreement if
default shall be made by Xxxxxxxxxx.xxx in the observance or in the due and
timely performance of any of the covenants and agreements contained, made by
or imposed upon it, in this Agreement, if the default has not been fully cured
within fifteen days after receipt of the notice specifying the default.
(b) Xxxxxxxxxx.xxx may, by notice to SCI given in the manner provided
below on or at any time prior to the Closing Date, terminate this Agreement if
default shall be made by SCI in the observance or in the due and timely
performance of any of its covenants and agreements contained in this
Agreement, if the default has not been fully cured within fifteen days after
receipt of the notice specifying the default.
(c) Notwithstanding Section 2.06, the party giving notice of the other
party's default, if the default is not cured as provided in subsection (a) or
(b), above, will be entitled to recover its costs incurred in connection with
this Agreement.
Section 8.02. Termination. If the Closing does not occur
by March 13, 1999 Xxxxxxxxxx.xxx may at any time terminate this Agreement by
giving written notice to SCI.
Section 8.03. Termination. SCI may, at its option,
terminate this Agreement prior to the Closing if the business or assets of
Xxxxxxxxxx.xxx have suffered any material damage, destruction or loss (whether
or not covered by insurance).
ARTICLE IX
NOTICES
Section 9.01. Procedure for giving notices. Any and all notices or
other communications required or permitted to be given under any of the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered (excluding telephone facsimile and
including receipted express courier and overnight delivery service) or mailed
by first class certified U.S. mail, return receipt requested showing name of
recipient, addressed to the proper party.
Section 9.02. Addresses for notices. For purposes of sending notices
under this Agreement, the addresses of the parties are as follows:
As to Xxxxxxxxxx.xxx: Xxxxx Xxxxxxxx, Chief Executive Officer
Suite J, 00000 Xxxxx Xxxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Copy To: Name/title_____________
Address________________
_______________________
As to SCI: Xxxxx X. Xxxxxx, Xx., Chairman
Suite 107, 0000 000xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Copy to: Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxx Xxxxx X Xxxxxx
Xxxxx, Xxxxxxx 00000
Section 9.03. Change of address. A party may change its address for
notices by sending a notice of such change to all other parties by the means
provided in Section 9.01.
ARTICLE X
LEGAL AND OTHER COSTS
Section 10.01. Party entitled to recover. In the event that any party
(the "Defaulting Party") defaults in his or its obligation under this
Agreement and, as a result thereof, the other party (the "Non-Defaulting
Party") seeks to legally enforce his or its rights hereunder against the
Defaulting Party (whether in an action at law, in equity or in arbitration),
then, in addition to all damages and other remedies to which the Non-
Defaulting Party is entitled by reason of such default, the Defaulting Party
shall promptly pay to the Non-Defaulting Party an amount equal to all costs
and expenses (including reasonable attorneys' fees and expert witness fees)
paid or incurred by the Non-Defaulting Party in connection with such
enforcement.
Section 10.02. Interest. In the event the Non-Defaulting Party is
entitled to receive an amount of money by reason of the Defaulting Party's
default hereunder, then, in addition to such amount of money, the Defaulting
Party shall promptly pay to the Non-Defaulting Party a sum equal to interest
on such amount of money accruing at the rate of 1.5% per month during the
period between the date such payment should have been made hereunder and the
date of the actual payments thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Effective date. The effective date of this Agreement
shall be February ___, 1999, subject to any conditions set forth herein.
Section 11.02. Entire agreement. This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof,
superseding all prior agreements, understandings, representations and
warranties.
Section 11.03. Waivers. No waiver of any provision, requirement,
obligation, condition, breach or default hereunder, or consent to any
departure from the provisions hereof, shall be considered valid unless in
writing and signed by the party giving such waiver, and no such waiver shall
be deemed a waiver of any subsequent breach or default of the same or similar
nature.
Section 11.04. Amendments. This Agreement may not be modified, amended
or terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto and amendment, modification or
alteration of, addition to or termination of this Agreement or any provision
of this Agreement shall not be effective unless it is made in writing and
signed by the parties.
Section 11.05. Construction. This Agreement has been negotiated by the
parties, section by section, and no provision hereof shall be construed more
strictly against one party than against the another party by reason of such
party having drafted such provision. The order in which the provisions of
this Agreement appear are solely for convenience of organization; and later
appearing provisions shall not be construed to control earlier appearing
provisions.
Section 11.06. Invalidity. It is the intent of the parties that each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision hereof shall be
prohibited, invalid, illegal or unenforceable, in any respect, under
applicable law, such provision shall be ineffective to the extent of such
prohibition, invalidity or non enforceability only, without invalidating the
remainder of such provision or the remaining provisions of this Agreement;
and, there shall be substituted in place of such prohibited, invalid, illegal
or unenforceable provision a provision which nearly as practicable carries out
the intent of the parties with respect thereto and which is not prohibited and
is valid, legal and enforceable.
Section 11.07. Multiple counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be an original and, taken
together, shall be deemed one and the same instrument.
Section 11.08. Assignment, parties and binding effect. This Agreement,
and the duties and obligations of any party shall not be assigned without the
prior written consent of the other party(ies). This Agreement shall benefit
solely the named parties and no other person shall claim, directly or
indirectly, benefit hereunder, express or implied, as a third-party
beneficiary, or otherwise. Wherever in this Agreement a party is named or
referred to, the successors (including heirs and personal representative of
individual parties) and permitted assigns of such party shall be deemed to be
included, and all agreements, promises, covenants and stipulations in this
Agreement shall be binding upon and inure to the benefit of their respective
successors and permitted assigns.
Section 11.09. Survival of representations and warranties. The
representations and warranties made herein shall survive the execution and
delivery of this Agreement and full performance hereunder of the obligations
of the representing and warranting party.
Section 11.10. Arbitration. Unless a court of competent jurisdiction
shall find that a particular dispute or controversy cannot, as a matter of
law, be the subject of arbitration, any dispute or controversy arising
hereunder, other than suit for injunctive relief which can be granted only by
a court of competent jurisdiction, shall be settled by binding arbitration in
Tampa, Florida by a panel of three arbitrators in accordance with the rules of
the American Arbitration Association; provided, that the rules of discovery of
the U.S. District Court with jurisdiction of the situs of the arbitration
shall apply. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The parties may pursue all
other remedies with respect to any claim that is not subject to arbitration.
Section 11.11. Jurisdiction and venue. Any action or proceeding for
enforcement of this Agreement and the instruments and documents executed and
delivered in connection herewith which is determined by a court of competent
jurisdiction not, as a matter of law, to be subject to arbitration as
provided in Section 11.10 or which seeks injunctive relief shall be brought
and enforced in the courts of the State of Florida in and for Pinellas County
and in the United States District Court for the Middle District of Florida,
Tampa Division, and the parties irrevocably submit to the jurisdiction of each
such court in respect of any such action or proceeding.
Section 11.12. Applicable law. This Agreement and all amendments
thereof shall be governed by and construed in accordance with the law of the
State of Florida applicable to contracts made and to be performed therein (not
including the choice of law rules thereof).
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, the day and year first
above written
[Corporate Seal] Systems Communications, Inc.
Attest: By:
_____________________________
Xxxxx X. Xxxxxx, Xx.,
Chairman
_____________________________
Secretary
[Corporate Seal] Xxxxxxxxxx.xxx
Attest: By:
_____________________________
Xxxxx Xxxxxxxx, President
_____________________________
Secretary
EXHIBIT "A"
OFFICERS' CERTIFICATE
Pursuant to Section 3.0__ of the Stock Purchase and Sale Agreement identified
within
The undersigned, ____________, President, and __________, Treasurer, of
________________, a ___________ corporation (the "Corporation"), hereby each
certifies that he is familiar with the Merger Agreement, dated February ___,
1999 (the "Agreement"), between the Corporation and ____________ and, to the
best of his knowledge, based on reasonable investigation:
(a) All representations and warranties of the _____________ (as defined
in the Agreement) contained in the Agreement, and in all Exhibits and
Schedules attached thereto containing information delivered by ___________,
were true and correct in all material respects when made and when deemed to
have been made and are true and correct at the date hereof, except for changes
in the ordinary course of business between the date of the Agreement, in
conformity with the covenants and agreements contained in the Agreement.
(b) All covenants, agreements and obligations required by the terms of
the Agreement to be performed by _______________ at or before the Closing have
been duly and properly performed in all material respects.
(c) Since the date of the Agreement there have not occurred any
material adverse change in the condition or prospects (financial or
otherwise), business, properties or assets of the ____________________.
IN WITNESS WHEREOF, each of the undersigned has executed this
certificate this ___________________, 1999.
________________________________
_______________, President
________________________________
_______________, Treasurer
EXHIBIT "B"
SECRETARY'S CERTIFICATE
Pursuant to Section 3.0__ of the Merger Agreement identified within.
I, ___________, the duly elected, qualified and acting Secretary of
_________________, a corporation duly organized, existing and in good standing
under the laws of ____________, (the "Corporation") do hereby certify that:
(i) The following is a true and complete copy of Resolution of the
Board of Directors of the Corporation taken and adopted on February ___, 1999,
approving the Merger Agreement dated February ___, 1999, by and among the
Corporation and _____________, and that said Resolution has not been
rescinded, revoked or modified and is in full force and effect at the date
hereof:
(ii) The persons whose names, titles and signatures appear below are
each the duly elected, qualified and acting officers of the Corporation, hold
on the date hereof the offices set forth opposite their respective names and
the signatures appearing opposite said names are the genuine signatures of
said persons:
Name Title Signature
_________________ President ___________________________
_________________ Secretary ___________________________
_________________ Treasurer ___________________________
(iii) I am authorized by the Corporation to make the within
certifications.
IN WITNESS WHEREOF, I have executed this Certificate on ___________,
1999.
(CORPORATE SEAL)
________________________________
_________________, Secretary
I, ______________, President of _______________, a __________
corporation, hereby certify that ______________ is the duly elected, qualified
and acting Secretary of ______________ and that the signature appearing above
is his genuine signature.
IN WITNESS WHEREOF, I have executed this Certificate on
__________, 1999.
________________________________
__________________, President
