EXECUTION COPY
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is entered into this 6 day of
February, 2004, by and among NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation
("Parent"), [NEOMEDIA ACQUISITION CO.,] a Nevada corporation and a wholly-owned
subsidiary of the Parent and a ("Merger Sub"), CSI INTERNATIONAL, INC., a
corporation organized under the laws of the Province of Alberta, Canada (the
"Company"), and each of Xxxxxxx X. Xxxx, Xxxxx Xxxxxx Xxxx, Xxx Xxxxxx, Xxxxx
Xxxx, Xxxxx Xxxx, Xxxxx Xxxx and Xxxxx Xxxx Xxxx (individually, a "Shareholder"
and collectively, the "Shareholders").
RECITALS:
A. The authorized capital stock of the Company consists of 20,000
shares of common stock, no par value, 100 of which are issued and outstanding
(the "Company Common Stock"). The Shareholders own all of the outstanding
Company Common Stock as provided in Schedule A.
B. The Shareholders desire to exchange the Company Common Stock for
newly-issued shares of common stock, par value $0.01 per share of Parent (the
"Parent Common Stock"), on the terms and conditions set forth herein.
C. Upon the terms and subject to the conditions set forth in this
Agreement, the Company shall merge with and into Merger Sub (the "Merger") with
Merger Sub surviving, in accordance with the Nevada Revised Statutes (the
"NRS").
D. For the purposes hereof, references to the Company shall mean CSI
International, Inc. up to and including the Closing Date and thereafter shall
mean Merger Sub, which shall include the operations of the Company.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual premises herein set
forth and certain other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. THE MERGER AND RELATED TRANSACTIONS.
1.1. Merger. In accordance with the provisions of this Agreement, the NRS
and other applicable law, on the Closing Date (as defined below), the Company
shall be merged with and into the Merger Sub, which shall be the surviving
corporation (hereinafter sometimes referred to as the "Surviving Corporation")
and shall continue its corporate existence under the laws of the State of Nevada
as a wholly-owned subsidiary of Parent. As of the Closing, the name of the
Merger Sub shall be NeoMedia Micro Paint Repair, Inc., and the separate
existence of Merger Sub shall cease. On the Closing Date and by virtue of the
Merger and without any action on the part of the Shareholders, all of the then
issued and outstanding shares of capital stock of the Company shall be
automatically canceled and shall entitle the Shareholders to receive the Merger
Consideration set forth in Section 1.2 hereof.
1.2. Merger Consideration and Payment.
1.2.1. Merger Consideration. In consideration of the Merger,
Parent shall (a) issue an aggregate amount of cash equal to Two Million Five
Hundred Thousand Dollars (US $2,500,000) to the Shareholders' Representative and
Disbursement Agent; and (b) issue newly-issued shares of Parent Common Stock to
the Shareholders' Representative and Disbursement Agent (the "Parent Shares,"
also hereinafter sometimes referred to as the "Merger Consideration"). The total
number of shares of Parent's Common Stock issued to Shareholders' Representative
and Disbursement Agent shall be equal to a total of seven million (7,000,000)
shares.
1.2.2. Manner of Payment. The Merger Consideration shall be
payable as follows: (a) at Closing, an aggregate of Two Million Five Hundred
Thousand Dollars (US $2,500,000) shall be paid to the Shareholders'
Representative and Disbursement Agent; and (b) after Closing, the Parent Shares
shall be issued and delivered to the Shareholders' Representative and
Disbursement Agent.
1.3. Closing. The parties to this Agreement shall file Articles of
Merger (as defined below) pursuant to the NRS, cause the Merger to become
effective and consummate the other transactions contemplated by this Agreement
(the "Closing") no later than January 30, 2004; provided, in no event shall the
Closing occur prior to the satisfaction of the conditions precedent set forth in
Sections 6, 7 and 8 hereof. The date of the Closing is referred to herein as the
"Closing Date." The Closing shall take place at the offices of counsel to
Parent, or at such other place as may be mutually agreed upon by Parent and the
Shareholders' Representative and Disbursement Agent. At the Closing, (i) the
Shareholders' Representative and Disbursement Agent shall deliver to Parent the
original stock certificates representing the Company Common Stock, together with
stock powers duly executed in blank; and (ii) Parent shall deliver to Parent's
transfer agent instructions with respect to issuing stock certificates
representing the Parent Shares.
1.4. Plan of Merger; Articles of Merger. The parties to this
Agreement shall cause the Company and Merger Sub to enter into a Plan of Merger
on the date hereof, a copy of which is attached hereto as Exhibit "B" (the "Plan
of Merger"), and, at the Closing, to execute the Articles of Merger in the form
attached hereof as Exhibit "C" (the "Articles of Merger"). The Articles of
Merger shall be filed with the Secretary of State of Nevada on the Closing Date
in accordance with the NRS.
1.5. Approval of Merger. By his execution of this Agreement, each
Shareholder hereby ratifies, approves and adopts the Plan of Merger for all
purposes under the NRS. On or before the execution of this Agreement, the
respective Boards of Directors of Parent, Merger Sub and the Company shall have
approved this Agreement, the Plan of Merger and the transactions contemplated
hereby and thereby.
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2. ADDITIONAL AGREEMENTS.
2.1. Access and Inspection, Etc. The Company and the Shareholders'
Representative and Disbursement Agent have allowed and shall allow Parent and
its authorized representatives full access during normal business hours from and
after the date hereof and prior to the Closing Date to all of the properties,
books, contracts, commitments and records of the Company for the purpose of
making such investigations as Parent may reasonably request in connection with
the transactions contemplated hereby, and shall cause the Company to furnish
Parent such information concerning its affairs as Parent may reasonably request.
The Company and the Shareholders' Representative and Disbursement Agent have
caused and shall cause the personnel of the Company to assist Parent in making
such investigation and shall use his best efforts to cause the counsel,
accountants, and other non-employee representatives of the Company to be
reasonably available to Parent for such purposes. The Shareholders shall cause
the Company to comply with all obligations of the Company under this Agreement.
2.2. Confidential Treatment of Information. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Exhibits and Schedules hereto), all
matters relating hereto and all data and information obtained with respect to
the other parties or their business, except such data or information as is
published or is a matter of public record, or as compelled by legal process. In
the event this Agreement is terminated pursuant to Section 10 hereof, each party
shall promptly return to the other(s) any statements, documents, schedules,
exhibits or other written information obtained from them in connection with this
Agreement, and shall not retain any copies thereof.
2.3. Public Announcements. After the date hereof and prior to the Closing,
none of the parties hereto shall make any press release, statement to employees
or other disclosure of this Agreement or the transactions contemplated hereby
without the prior written consent of the other parties, except as may be
required by law. Neither the Company nor the Shareholders nor the Shareholders'
Representative and Disbursement Agent shall make any such disclosure unless
Parent shall have received prior notice of the contemplated disclosure and has
had adequate time and opportunity to comment on such disclosure, which shall be
satisfactory in form and content to Parent and its counsel.
2.4. Securities Law Compliance. The issuance of the Parent Shares to the
Shareholders hereunder shall not be registered under the Securities Act of 1933,
as amended, by reason of the exemption provided by Section 4(2) thereof, and
such shares may not be further transferred unless such transfer is registered
under applicable securities laws or, in the opinion of Parent's counsel, such
transfer complies with an exemption from such registration. All certificates
evidencing the Parent Shares to be issued to the Shareholders shall be legended
to reflect the foregoing restriction.
2.5. Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use its best efforts in good faith to take
or cause to be taken as promptly as practicable all reasonable actions that are
within its power to cause to be fulfilled those conditions precedent to its
obligations or the obligations of the other parties to consummate the
transactions contemplated by this Agreement that are dependent upon its actions.
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2.6. Further Assurances. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including,
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the Company
Common Stock and to consummate the transactions contemplated by this Agreement.
2.7. Noncompetition.
2.7.1. Competitive Business. From and after the Closing Date and for
a period four (4) years thereafter (the "Restricted Period"), no Shareholder
shall directly or indirectly compete with Parent and/or the Surviving
Corporation by owning, managing, controlling or participating in the ownership,
management or control of or be employed by or engaged in any Competitive
Business (as defined herein) in any location worldwide in which Parent and/or
the Surviving Corporation are doing business. The Shareholders acknowledge and
agree that the Company's contracts are on a global basis and each Shareholder
hereby agrees that he/she shall not compete in the core business of Parent
and/or the Surviving Corporation. As used herein, a "Competitive Business" is
any other corporation, partnership, proprietorship, firm or other business
entity which is engaged in a "core business of Parent and/or the Surviving
Corporation." A "core business of Parent and/or the Surviving Corporation" is
the development of technology and products in the micro paint industry.
Notwithstanding the above, any Shareholder may become employed by or
engaged by a "Competitive Business" so long as the Shareholder (a) was not
directly involved with or participating in the areas of "core business of Parent
and/or the Surviving Corporation" which makes the other business a "Competitive
Business," or (b) if the Shareholder is not involved directly in that part of
the Competitive Business which is competitive with the "core business of Parent
and/or the Surviving Corporation." In addition, a Shareholder may be employed by
or engaged by any business which after the Closing Date becomes a "Competitive
Business," if such employment or engagement occurred prior to Parent and/or the
Surviving Corporation entering into a new "core business of Parent and/or the
Surviving Corporation" (whether by acquisition or through Parent and/or the
Surviving Corporation's own initiative), which caused such other business to
become a Competitive Business. Also, this Section is not violated if a
Shareholder owns no more than five percent (5%) of the stock of any publicly
traded Competitive Business.
2.7.2. Non-Interference. From and after the date hereof and during
the Restricted Period, no Shareholder shall induce or solicit any employee of
Parent and/or the Surviving Corporation or any person doing business with Parent
and/or the Surviving Corporation to terminate his or her employment or business
relationship with Parent and/or the Surviving Corporation or otherwise interfere
with any such relationship.
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2.7.3. Confidentiality. The Shareholders and the Shareholders'
Representative and Disbursement Agent agree and acknowledge that, by reason of
the nature of the Shareholders' ownership interest in Parent and/or the
Surviving Corporation, each Shareholder will have or may have access to and
become informed of confidential and secret information which is a competitive
asset of Parent and/or the Surviving Corporation ("Confidential Information"),
including, without limitation, technology, any lists of customers, financial
statistics, research data or any other statistics and plans contained in profit
plans, capital plans, critical issue plans, strategic plans or marketing or
operation plans or other trade secrets of Parent and/or the Surviving
Corporation and any of the foregoing which belong to any person or company but
to which the Shareholders have had access by reason of their relationship with
Parent and/or the Surviving Corporation. The Shareholders agree faithfully to
keep in strict confidence, and not, either directly or indirectly, to make
known, divulge, reveal, furnish, make available or use any such Confidential
Information. The Shareholders acknowledge that all manuals, instruction books,
price lists, information and records and other information and aids relating to
Parent and/or the Surviving Corporation's business, and any and all other
documents containing Confidential Information furnished to the Shareholders by
Parent and/or the Surviving Corporation or otherwise acquired or developed by
the Shareholders, shall at all times be the property of Parent and/or the
Surviving Corporation. Upon the termination of this Agreement, each Shareholder
shall return to Parent and/or the Surviving Corporation any such property or
documents which are in their possession, custody or control, but the
Shareholders' obligation of confidentiality shall survive such termination and
unless any such Confidential Information shall have become, through no fault of
the Shareholder, generally known to the trade. The obligations of the
Shareholders under this subsection are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which each Shareholder
may have to Parent and/or the Surviving Corporation under general legal or
equitable principles. Notwithstanding the above, however, Parent and/or the
Surviving Corporation acknowledges that each Shareholder may have extensive
experience in the general industry in which Parent and/or the Surviving
Corporation operate, and these restrictions are not intended to prevent a
Shareholder from using his knowledge of the industry. These restrictions only
apply to Confidential Information which is owned by Parent and/or the Surviving
Corporation, or was learned by a Shareholder as a shareholder of Parent.
2.7.4. Remedies. It is expressly agreed by the Shareholders and the
Shareholders' Representative and Disbursement Agent and Parent that the
provisions in this Section 2 are reasonable for purposes of preserving for
Parent and/or the Surviving Corporation its business, goodwill and Confidential
Information. It is also agreed that if any provision is found by a court having
jurisdiction to be unreasonable because of scope, area or time, then that
provision shall be amended to correspond in scope, area and time to that
considered reasonable by a court and as amended shall be enforced and the
remaining provisions shall remain effective. In the event any breach of these
provisions by any Shareholder, the parties recognize and acknowledge that a
remedy at law will be inadequate and Parent and/or the Surviving Corporation may
suffer irreparable injury. The Shareholders and the Shareholders' Representative
and Disbursement Agent consent to injunctive and other appropriate equitable
relief without the posting of a bond upon the institution of proceedings
therefor by Parent and/or the Surviving Corporation in order to protect Parent
and/or the Surviving Corporation 's rights. Such relief shall be in addition to
any other relief to which Parent and/or the Surviving Corporation may be
entitled at law, in equity, or under any other agreement between each
Shareholder and Parent and/or the Surviving Corporation. The provisions of this
Section 2.7 (including the subsections) shall survive the termination of this
Agreement.
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2.8. Certain Tax Matters.
(a) Section 338(h)(10) Election. The Company and the Shareholders
will join with Parent in making an election under Code ss.338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code") (and any corresponding
election under state, local, and foreign tax law) with respect to the Merger (a
"Section 338(h)(10) Election").
(b) Allocation of Merger Consideration. Parent and the Shareholders
agree that the Merger Consideration and the liabilities of the Company (plus
other relevant items) will be allocated to the assets of the Company for all
purposes (including tax and financial accounting) in a manner consistent with
the fair market values set forth on Schedule 2.8 hereto. Parent, the Company and
the Shareholders shall file all tax returns (including amended returns and
claims for refund) and information reports in a manner consistent with such
values).
(c) Tax Periods Ending on or before the Closing Date. Parent shall
prepare or cause to be prepared and filed or cause to be filed all tax returns
for the Company for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. To the extent permitted by applicable law, the
Shareholders shall include any income, gain, loss, deduction or other tax items
for such periods on their tax returns in a manner consistent with the tax
documents furnished by the Company to the Shareholders for such periods. The
Shareholders shall reimburse Parent for any taxes of the Company with respect to
such period within fifteen (15) days after payment by Parent or the Company.
(d) Cooperation on Tax Matters.
(i) Parent, the Company and the Shareholders shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of tax returns pursuant to this Section 2.8 and any
audit, litigation or other proceeding with respect to taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and the Shareholders agree (A) to
retain all books and records with respect to tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by
Parent or any Shareholder, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, the Company or any Shareholder, as the case may
be, shall allow the other party to take possession of such books and records.
(ii) Parent and the Shareholders further agree, upon request,
to use their best efforts to obtain any certificate or other document from any
governmental authority or any other person as may be necessary to mitigate,
reduce or eliminate any tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
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2.9. Release of Claims By Each Shareholder. Effective as of the Closing
Date, and except for any obligations arising out of this Agreement, each
Shareholder, and his successors, predecessors, assigns, agents, advisors, legal
representatives, partners and all persons acting by, through or under him,
hereby release the Company and each of its successors, predecessors, assigns,
agents, advisors, officers, directors, employees, legal representatives,
partners and all persons acting by, through or under each of them, from any and
all claims, obligations, causes of action, actions, suits, contracts,
controversies, agreements, promises, damages, demands, costs, attorneys' fees
and liabilities of any nature whatsoever from the beginning of time up to and
including the Closing Date, in law or at equity, whether known now or on the
Closing Date, anticipated or unanticipated, suspected or claimed, fixed or
contingent, liquidated or unliquidated, arising out of, in connection with or
relating to any matter, cause or thing whatsoever.
2.10. No-Shop. From the date hereof until the termination of this
Agreement, neither the Company nor any Shareholder shall, directly or
indirectly, make, solicit, initiate or encourage submission of proposals or
offers from any persons (including any of their employees or officers) relating
to an Acquisition Proposal. As used herein, "Acquisition Proposal" means any
proposal or offer involving a liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or substantially all of
the assets of, or equity interest in, the Company or other similar transaction
or business combination involving the Company. Each of the Company and each
Shareholder shall immediately cease and cause to be terminated all discussions
or negotiations with third parties with respect to any Acquisition Proposal, if
any, exiting on the date hereof.
2.11. Shareholders' Representative and Disbursement Agent
(a) Each of the Shareholders herby irrevocably appoints 3980716
Manitoba Ltd., as his or her agent and attorney-in-fact, as "the Shareholders'
Representative and Disbursement Agent" for and on behalf of the Shareholders to
determine and direct the disbursement of the Share Purchase Consideration on
behalf of the shareholders, give and receive notices and communications, to
assert, negotiate, enter into settlements and compromises of, and comply with
orders of courts with respect to, any matters arising under Article 6 of this
Agreement, in each case relating to this Agreement or the transactions
contemplated hereby, and to take all other actions that are either (i) necessary
or appropriate in the judgment of the Shareholders' Representative and
Disbursement Agent for the accomplishment of the foregoing or (ii) specifically
mandated by the terms of this Agreement. A vacancy in the position of
Shareholders' Representative and Disbursement Agent may be filled by the holders
of a majority in interest of the Shareholders. No bond shall be required of the
Shareholders' Representative and Disbursement Agent, and the Shareholders'
Representative and Disbursement Agent shall not receive any compensation for its
services. Notices or communications to or from the Shareholders' Representative
and Disbursement Agent shall constitute notice to or from the Shareholders.
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(b) The Shareholders' Representative and Disbursement Agent shall
not be liable for any act done or omitted hereunder as Shareholders'
Representative and Disbursement Agent while acting in good faith and in the
exercise of reasonable judgment. The Shareholders shall indemnify the
Shareholders' Representative and Disbursement Agent and hold the Shareholders'
Representative and Disbursement Agent harmless against any loss, liability, or
expense incurred without gross negligence or bad faith on the part of the
Shareholders' Representative and Disbursement Agent and arising out of or in
connection with the acceptance or administration of the Shareholders'
Representative and Disbursement Agent's hereunder, including the reasonable fees
and expenses of any legal counsel retained by the Shareholders' Representative
and Disbursement Agent. A decision, act, consent or instruction of the
Shareholders' Representative and Disbursement Agent, including but not limited
to a waiver under this Agreement pursuant to Section 11.7 hereof, shall
constitute a decision of the Shareholders and shall be final, binding and
conclusive upon the Shareholders; and Parent may rely upon any such decision,
act, consent or instruction of the Shareholders' Representative and Disbursement
Agent as being the decision, act, consent, or instruction of the Shareholders.
The Parent is hereby relieved from any of liability to any person for any acts
done by them in accordance with such decision, act, consent, or instruction of
the Shareholders' Representative and Disbursement Agent.
2.12 Consultant. Company is entering into this merger, in part, to
have a continuing working relationship with Xxxxxxxxx Capital. Company believes
that Xxxxxxxxx Capital is essential in the process of enhancing shareholder
value. To this extent Company requires that Parent continues its relationship
with Xxxxxxxxx Capital for a minimum period of two years from the signing of
this Agreement.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SHAREHOLDERS.
To induce Parent and Merger Sub to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company and the
Shareholders jointly and severally represent and warrant to and covenant with
Parent and Merger Sub as follows:
3.1. Organization; Compliance. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Alberta, Canada. The Company is: (a) entitled to own or lease its properties
and to carry on its business as and in the places where such business is now
conducted, and (b) duly licensed and qualified in all jurisdictions where the
character of the property owned by it or the nature of the business transacted
by it makes such license or qualification necessary, except where the failure to
do so would not result in a material adverse effect on the Company. Schedule 3.1
lists all locations where the Company has an office or place of business and the
nature of the ownership interest in such property (fee, lease, or other).
3.2. Capitalization and Related Matters.
(a) The Company has an authorized capital consisting of 20,000
shares of common stock, no par value per share, 100 of which are issued and
outstanding at the date hereof. All shares of Company Common Stock are duly and
validly issued, fully paid and nonassessable. No shares of Company Common Stock
(i) were issued in violation of the preemptive rights of any shareholder, or
(ii) are held as treasury stock.
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(b) There are not outstanding any securities convertible into
capital stock of the Company nor any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, such capital stock or securities convertible into such
capital stock. The Company: (i) is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its capital
stock; or (ii) has no liability for dividends or other distributions declared or
accrued, but unpaid, with respect to any capital stock.
(c) The Shareholders are, and will be at Closing, the record and
beneficial owner of 100 shares of Company Common Stock, free and clear of all
claims, liens, options, agreements, restrictions, and encumbrances whatsoever
and no Shareholder is a party to any agreement, understanding or arrangement,
direct or indirect, relating to the Company Common Stock, including, without
limitation, agreements, understandings or arrangements regarding voting or sale
of such stock.
3.3. Subsidiaries. The Company owns (a) no shares of capital stock of any
other corporation, including any joint stock company, and (b) no other
proprietary interest in any company, partnership, trust or other entity,
including any limited liability company.
3.4. Execution; No Inconsistent Agreements; Etc.
(a) This Agreement is a valid and binding agreement of the Company
and the Shareholders, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy or similar laws affecting the
enforcement of creditors' rights generally, and the availability of equitable
remedies. The Company and the Shareholders have the absolute and unrestricted
right, power, authority, and capacity to execute and deliver this Agreement and
the documents to be delivered by them in connection with the Closing and to
perform their obligations under this Agreement.
(b) Except as set forth in Schedule 3.4, the execution and delivery
of this Agreement by the Company and the Shareholders does not, and the
consummation of the transactions contemplated hereby will not, constitute a
breach or violation of the charter or bylaws of the Company, or a default under
any of the terms, conditions or provisions of (or an act or omission that would
give rise to any right of termination, cancellation or acceleration under) any
note, bond, mortgage, lease, indenture, agreement or obligation to which the
Company or any Shareholder is a party, pursuant to which the Company or any
Shareholder otherwise receives benefits, or to which any of the properties of
the Company or any Shareholder is subject, or violate any judgment, order,
decree, statute or regulation applicable to the Company or any Shareholder or by
which any of them may be subject.
3.5. Corporate Records. The statutory records, including the stock
register and minute books of the Company, fully reflect all issuances, transfers
and redemptions of its capital stock, currently show and will correctly show the
total number of shares of its capital stock issued and outstanding on the date
hereof and on the Closing Date, the charter or other organizational documents
and all amendments thereto, the bylaws as amended and currently in force. To the
knowledge of the Shareholders, the books of account, minute books, stock record,
books, and other records of the Company, all of which have been made available
to Parent, are complete and correct and have been maintained in accordance with
sound business practices. The minute books of the Company contain accurate and
complete records of all meetings held of, and corporate action taken by, the
Shareholders, the Board of Directors, and committees of the Boards of Directors
of the Company, and no meeting of any such Shareholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Company.
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3.6. Financial Statements.
(a) The Company and the Shareholders have delivered to Parent (i)
the audited balance sheet of the Company as of August 31, 2003, and the related
statements of income, shareholders' equity and cash flows of the Company for the
fiscal year ended August 31, 2003 and the independent auditors' report thereon
and (ii) the audited balance sheet of the Company as of August 31, 2003 (the
balance sheet as of August 31, 3003 is herein referred to as the "Balance
Sheet") and the related statements of income, shareholders' equity and cash
flows of the Company for the period ending August 31, 2003. All the foregoing
financial statements, and any financial statements delivered pursuant to Section
3.6(c) below, are referred to herein collectively as the "Company Financial
Statements."
(b) The Company Financial Statements have been and will be prepared
in accordance with applicable GAAP throughout the periods involved, subject, in
the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Balance Sheet), applied on a
consistent basis, and fairly reflect and will reflect in all material respects
the financial condition of the Company as at the dates thereof and the results
of the operations of the Company for the periods then ended, and are true and
complete and are consistent with the books and records of the Company.
(c) At Closing, the Company will furnish Parent interim financial
statements of the Company for each month subsequent to August 31, 2003.
3.7. Liabilities. The Company has no debt, liability or obligation of any
kind, whether accrued, absolute, contingent or otherwise, except: (a) those
reflected on the Balance Sheet, including the notes thereto, and (b) liabilities
incurred in the ordinary course of business since August 31, 2003, none of which
have had or will have a material adverse effect on the financial condition of
the Company.
3.8. Absence of Changes. Except as described in Schedule 3.8, from August
31, 3003 to the date of this Agreement:
(a) there has not been any adverse change in the business, assets,
liabilities, results of operations or financial condition of the Company or in
its relationships with suppliers, customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which, singularly or in
the aggregate, have had or will have a material adverse effect on the business,
properties or financial condition of the Company;
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(b) there has not been any: (i) change in the Company's authorized
or issued capital stock, retirement, or other acquisition by the Company of any
shares of any such capital stock; (ii) a declaration or payment of any dividend
or other distribution or payment in respect of shares of capital stock, except
as set forth on Schedule 3.28; (iii) amendment to the Articles of Incorporation
or Bylaws of the Company; (iv) increase by the Company of any bonuses, salaries,
or other compensation to any shareholder, director, officer, or (except in the
ordinary course of business) employee or entry into any employment, severance,
or similar agreement with any director, officer, or employee; (v) adoption of,
or increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company; (vi) sale (other
than sales of inventory in the ordinary course of business), lease, or other
disposition of any asset or property of the Company or mortgage, pledge, or
imposition of any lien or other encumbrance on any material asset or property of
the Company; (vii) cancellation or waiver of any claims or rights with a value
to the Company in excess of $10,000; (viii) material change in the accounting
methods used by the Company; or (ix) agreement, whether oral or written, by the
Company to do any of the foregoing; and
(c) the Company has complied with the covenants and restrictions set
forth in Section 5 to the same extent as if this Agreement had been executed on,
and had been in effect since, August 31, 2003.
3.9. Title to Properties. The Company has good and marketable title to all
of its properties and assets, real and personal, including, but not limited to,
those reflected in the Balance Sheet (except as since sold or otherwise disposed
of in the ordinary course of business, or as expressly provided for in this
Agreement), free and clear of all encumbrances, liens or charges of any kind or
character except: (a) those securing liabilities of the Company incurred in the
ordinary course (with respect to which no default exists); (b) liens of 2003
real estate and personal property taxes; and (c) imperfections of title and
encumbrances, if any, which, in the aggregate (i) are not substantial in amount;
(ii) do not detract from the value of the property subject thereto or impair the
operations of the Company; and (iii) do not have a material adverse effect on
the business, properties or assets of the Company.
3.10. Compliance With Law. The business and activities of the Company has
at all times been conducted in accordance with its Articles of Incorporation and
Bylaws and any applicable law, regulation, ordinance, order, License (as defined
below), permit, rule, injunction or other restriction or ruling of any court or
administrative or governmental agency, ministry, or body, except where the
failure to do so would not result in a material adverse effect on the Company.
3.11. Taxes. The Company has duly filed all federal, provincial, and
material local and foreign tax returns and reports, and all returns and reports
of all other governmental units having jurisdiction with respect to taxes
imposed on it or on its income, properties, sales, franchises, operations or
employee benefit plans or trusts, all such returns were complete and accurate
when filed, and all taxes and assessments payable by the Company have been paid
to the extent that such taxes have become due. All taxes accrued or payable by
the Company for all periods through August 31, 2003 have been accrued or paid in
full, whether or not due and payable and whether or not disputed. The Company
has withheld proper and accurate amounts from its employees for all periods in
full compliance with the tax withholding provisions of applicable foreign,
federal, state and local tax laws. There are no waivers or agreements by the
Company for the extension of time for the assessment of any taxes. There are not
now any examinations of the income tax returns of the Company pending, or any
proposed deficiencies or assessments against the Company of additional taxes of
any kind.
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3.12. Real Properties. The Company does not have an interest in any real
property, except for the Leases (as defined below).
3.13. Leases of Real Property. All leases pursuant to which the Company is
a lessee of any real property (the "Leases") are listed in Schedule 3.13 and are
valid and enforceable in accordance with their terms. There is not under any of
such Leases any material default or any claimed material default by the Company
or any event of default or event which with notice or lapse of time, or both,
would constitute a material default by the Company and in respect to which the
Company has not taken adequate steps to prevent a default on its part from
occurring. The copies of the Leases heretofore furnished to Parent are true,
correct and complete, and such Leases have not been modified in any respect
since the date they were so furnished, and are in full force and effect in
accordance with their terms. The Company is lawfully in possession of all real
properties of which they are a lessee (the "Leased Properties").
3.14. Contingencies. Except as disclosed on Schedule 3.14, there are no
actions, suits, claims or proceedings pending, or to the knowledge of the
Shareholders threatened against, by or affecting, the Company in any court or
before any arbitrator or governmental agency that may have a material adverse
effect on the Company or which could materially and adversely affect the right
or ability of any Shareholder to consummate the transactions contemplated
hereby. To the knowledge of the Shareholders, there is no valid basis upon which
any such action, suit, claim, or proceeding may be commenced or asserted against
the Company. There are no unsatisfied judgments against the Company and no
consent decrees or similar agreements to which the Company is subject and which
could have a material adverse effect on the Company.
3.15. Intellectual Property Rights. The Company has: (a) the exclusive
right to use the name CSI International, Inc., and the use of such name does not
conflict with or infringe upon the rights of any other person, and (b) made all
material filings and publications required to register and perfect such
exclusive right. The Company is not, and will not be, subject to any liability,
direct or indirect, for infringement damages, royalties, or otherwise, by reason
of (a) the use of the name "CSI International" in or outside the United States
or Canada or (b) the business operations of the Company, at any time prior to
the Closing Date. The Company has good and marketable title to its trade
secrets, free and clear of all encumbrances, liens, or charges of any kind or
character.
3.16. Material Contracts. Schedule 3.16 contains a complete list of all
contracts of the Company which involve consideration in excess of the equivalent
of $10,000 or have a term of one (1) year or more (the "Material Contracts").
The Company has delivered to Parent a true, correct and complete copy of each of
the written contracts, and a summary of each oral contract, listed on Schedule
3.16. Except as disclosed in Schedule 3.16: (a) the Company has performed all
material obligations to be performed by it under all such contracts, and is not
in material default thereof, and (b) no condition exists or has occurred which
with the giving of notice or the lapse of time, or both, would constitute a
material default by the Company or accelerate the maturity of, or otherwise
modify, any such contract, and (c) all such contracts are in full force and
effect. No material default by any other party to any of such contracts is known
or claimed by the Company or any Shareholder to exist.
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3.17. Insurance. Schedule 3.17 contains a complete list of all policies of
insurance presently maintained by the Company all of which are, and will be
maintained through the Closing Date, in full force and effect; and all premiums
due thereon have been paid and the Company has not received any notice of
cancellation with respect thereto. The Company has heretofore delivered to
Parent or its representatives a true, correct and complete copy of each such
insurance policy.
3.18. Employment and Labor Matters. Schedule 3.18 sets forth the name,
position, employment date, and 2002 compensation (base and bonus) of each
employee of the Company who earned $25,000 or more in 2002 or is anticipated to
earn $25,000 or more in 2003. The Company is not a party to any collective
bargaining agreement (whether industry wide or on a company level) or agreement
of any kind with any union or labor organization. There has not been any attempt
by any union or other labor organization to organize the employees of the
Company at any time in the past five (5) years. Except as disclosed in Schedule
3.18, the Company is not a party to or bound by any employment contract,
consulting agreement, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement. The Company is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing.
3.19. Employee Benefit Matters.
(a) Except as disclosed in Schedule 3.19, the Company does not
provide, nor is it obligated to provide, directly or indirectly, any benefits
for employees other than salaries, sales commissions and bonuses, including, but
not limited to, any pension, profit sharing, stock option, retirement, bonus,
hospitalization, insurance, severance, vacation or other employee benefits
(including any housing or social fund contributions) under any practice,
agreement or understanding.
(b) Each employee benefit plan maintained by or on behalf of the
Company or any other party (including any terminated pension plans) which covers
or covered any employees or former employees of the Company (collectively, the
"Employee Benefit Plan") is listed in Schedule 3.19. The Company has delivered
to Parent true and complete copies of all such plans and any related documents.
With respect to each such plan: (i) no litigation, administrative or other
proceeding or claim is pending, or to the knowledge of the Shareholders,
threatened or anticipated involving such plan; (ii) there are no outstanding
requests for information by participants or beneficiaries of such plan; and
(iii) such plan has been administered in compliance in all material respects
with all applicable laws and regulations.
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(c) The Company has timely made payment in full of all contributions
to all of the Employee Benefit Plans which the Company was obligated to make
prior to the date hereof; and there are no contributions declared or payable by
the Company to any Employee Benefit Plan which, as of the date hereof, has not
been paid in full.
3.20. Possession of Franchises, Licenses, Etc. The Company: (a) possess
all material franchises, certificates, licenses, permits and other
authorizations (collectively, the "Licenses") from governmental authorities,
political subdivisions or regulatory authorities that are necessary for the
ownership, maintenance and operation of its business in the manner presently
conducted; (b) are not in violation of any provisions thereof; and (c) have
maintained and amended, as necessary, all Licenses and duly completed all
filings and notifications in connection therewith.
3.21. Environmental Matters. Except as disclosed in Schedule 3.21: (i) the
Company is not in violation, in any material respect, of any Environmental Law
(as defined below); (ii) the Company has received all permits and approvals with
respect to emissions into the environment and the proper collection, storage,
transport, distribution or disposal of Wastes (as defined below) and other
materials required for the operation of its business at present operating
levels; and (iii) the Company is not liable or responsible for any material
clean up, fines, liability or expense arising under any Environmental Law, as a
result of the disposal of Wastes or other materials in or on the property of the
Company (whether owned or leased), or in or on any other property, including
property no longer owned, leased or used by the Company. As used herein, (a)
"Environmental Laws" means, collectively, any federal, or applicable provincial
or local statute, law, ordinance, code, rule, regulation, order or decree
(foreign or domestic) regulating, relating to, or imposing liability or
standards of conduct concerning, Wastes, or the environment; and (b) "Wastes"
means and includes any hazardous, toxic or dangerous waste, liquid, substance or
material (including petroleum products and derivatives), the generation,
handling, storage, disposal, treatment or emission of which is subject to any
Environmental Law.
3.22. Inventories. At Closing, the Company and the Shareholders will
deliver to Parent a complete and accurate list, as of a date not more than five
(5) business days prior to the Closing Date, of the products, materials and
supplies and spare parts (the "Inventory") then owned by the Company. Except as
otherwise provided on Schedule 3.22, the Inventory, as of the Closing Date: (a)
will represent items of a quality and quantity usable and saleable in the
ordinary course of business at the book value reflected as of the Closing Date,
(b) will be free from defects, (c) will not be obsolete, (d) will conform in all
material respects to customary trade standards for such inventory in the
Company's current markets and (e) will be sold, subject to any applicable
reserves for inventory obsolescence shown on the Company's books and records
(which reserves are adequate and calculated consistent with past practice),
within two hundred forty (240) days of the Closing Date for an amount at least
equal to its book value. There are no express or implied warranty obligations of
the Company which, singularly or in the aggregate, will have a material adverse
effect on the business, properties or financial condition of the Company.
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3.23. Accounts Receivable. On the Closing Date, the Company and the
Shareholders will deliver to Parent a complete and accurate list, as of a date
not more than five (5) business days prior to the Closing Date, of the accounts
and notes receivable due to the Company (including, without limitation,
receivables from advances to employees and the Shareholders), which includes an
aging of all accounts and notes receivable showing amounts due in thirty (30)
day aging categories (collectively, the "Accounts Receivables"). As of the
Closing Date, the Accounts Receivables: (a) will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business; (b) will be current and collectible net of any applicable
reserves shown on the Company's books and records (which reserves are adequate
and calculated consistently with past practice); (c) subject to such reserves,
will be collected in full, without any set-off, within one hundred fifty (150)
days after the Closing Date; and (d) are not and will not be subject to any
contest, claim, defense or right of set-off, other than rebates and returns in
the ordinary course of business.
3.24. Agreements and Transactions with Related Parties. Except as
disclosed on Schedule 3.24, and except as disclosed in the Company Financial
Statements, the Company is not a party to any contract, agreement, lease or
transaction with, or any other commitment to, (a) any Shareholder, (b) any
person related by blood, adoption or marriage to any Shareholder, (c) any
director or officer of the Company, (d) any corporation or other entity in which
any of the foregoing parties has, directly or indirectly, at least five percent
(5.0%) beneficial interest in the capital stock or other type of equity interest
in such corporation or other entity, or (e) any partnership in which any such
party is a general partner or a limited partner having a five percent (5%) or
more interest therein (any or all of the foregoing being herein referred to as a
"Related Party" and, collectively, as the "Related Parties"). Without limiting
the generality of the foregoing, except as set forth in Schedule 3.24, and
except as disclosed in the Company Financial Statements no Related Party,
directly or indirectly, owns or controls any assets or properties which are used
in the business of the Company.
3.25. Business Practices. Except as disclosed on Schedule 3.25, the
Company has not, at any time, directly or indirectly, made any contributions or
payment, or provided any compensation or benefit of any kind, to any municipal,
county, state, federal or foreign governmental officer or official, or any other
person charged with similar public or quasi-public duties, or any candidate for
political office. The Company's books, accounts and records (including, without
limitation, customer files, product packaging and invoices) accurately describe
and reflect, in all material respects, the nature and amount of the Company's
products, purchases, sales and other transactions. Without limiting the
generality of the foregoing, the Company has not engaged, directly or
indirectly, in: (a) the practice known as "double-invoicing;" or (b) the
incorrect or misleading labeling, marketing or sale of refurbished goods as new
goods or the sale of rebuilt goods as original manufactured equipment.
3.26. Condition and Sufficiency of Assets. The buildings and equipment
leased or owned by the Company are generally in good operating condition and
repair, and are adequate for the uses to which they are being put. The buildings
and equipment of the Company are sufficient for the continued conduct of the
Company's business after the Closing in substantially the same manner as
conducted prior to the Closing.
3.27. Accounting System. The Company's accounting software is owned or
licensed by the Company, free and clear of all claims, liens and encumbrances,
and the transactions contemplated hereby will not result in a breach of any
license or other agreement with respect to the accounting software. The
Company's accounting software is in good working order and condition, free from
defects (latent and patent), has been maintained in accordance with the
manufacturer's recommended maintenance program, if any, and is suitable for
maintaining the books and records of the Company and all other purposes for
which it is intended.
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3.28. Dividends and Other Distributions. Schedule 3.28 sets forth the
dates and amounts of all dividends and other distributions declared, paid or
payable by the Company to the Shareholders between January 1, 2000 and the date
hereof, which Schedule 3.28 shall be updated as of the Closing Date to set forth
all dividends and other distributions through the Closing Date.
3.29. Litigation. There is no suit, action or proceeding pending, and no
person has overtly-threatened in a writing delivered to the Company or the
Shareholders to commence any suit, action or proceeding, against or affecting
the Company that would, individually or in the aggregate, have a material
adverse effect on the Company, nor is there any judgment, decree, injunction, or
order of any governmental entity or arbitrator outstanding against, or, to the
knowledge of the Company, pending investigation by any governmental entity
involving, the Company or any Shareholders that individually or in the aggregate
would have a material adverse effect on the Company.
3.30. Full Disclosure. No representation or warranty of the Shareholders
contained in this Agreement, and none of the statements or information
concerning the Company contained in this Agreement and the Schedules, contains
or will contain as of the date hereof and as of the Closing Date any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
To induce the Shareholders to enter into this Agreement and to consummate
the transactions contemplated hereby, each of Parent and Merger Sub represent
and warrant to and covenants with the Shareholders as follows:
4.1. Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada. Parent and each of its subsidiaries is entitled
to own or lease its properties and to carry on its business as and in the places
where such business is now conducted, and Parent and each of its subsidiaries is
duly licensed and qualified in all jurisdictions where the character of the
property owned by it or the nature of the business transacted by it makes such
license or qualification necessary, except where such failure would not result
in a material adverse effect on Parent or its subsidiaries.
4.2. Capitalization and Related Matters.
(a) Parent has authorized capital stock consisting of one billion
shares of common stock, par value $0.01 per share, of which 259,527,268 shares
were issued and outstanding as of the date hereof, and 25 million shares of
preferred stock, 452,489 of which are issued and converted into common stock.
Parent owns all of the outstanding capital stock of Merger Sub. The Parent
Shares will be, when issued, duly and validly authorized and fully paid and
non-assessable, and will be issued to the Shareholder free of all encumbrances,
claims and liens whatsoever.
16
(b) Except as disclosed in documents filed by Parent with the
Securities and Exchange Commission (the "SEC Documents"), and except for
employee stock options to purchase shares of the Parent's Common Stock, Parent
does not have outstanding any securities convertible into capital stock, nor any
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock.
4.3. Execution; No Inconsistent Agreements; Etc.
(a) Subject to Parent's Board of Directors approval contemplated by
Section 7.6 hereof, the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly and validly
authorized and approved by Parent, Merger Sub and this Agreement is a valid and
binding agreement of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms, except as such enforcement may be
limited by bankruptcy or similar laws affecting the enforcement of creditors'
rights generally, and the availability of equitable remedies.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the consummation of the transactions contemplated
hereby will not, constitute a breach or violation of the charter or bylaws of
Parent or Merger Sub, or a default under any of the terms, conditions or
provisions of (or an act or omission that would give rise to any right of
termination, cancellation or acceleration under) any material note, bond,
mortgage, lease, indenture, agreement or obligation to which Parent or any of
its subsidiaries is a party, pursuant to which any of them otherwise receive
benefits, or by which any of their properties may be bound.
4.4. Financial Statements. Parent has delivered to the Company the
consolidated audited balance sheets of Parent as of December 31, 2002, the
consolidated unaudited balance sheet as of September 30, 2003, the consolidated
audited statement of income for the two fiscal years ended December 31, 2002,
and the unaudited statement of income for the nine (9) months ended September
30, 2003 (collectively, the "Parent Financial Statements"). The Parent Financial
Statements have been prepared in accordance with GAAP, applied on a consistent
basis (except that the unaudited statements do not contain all the disclosures
required by GAAP), and fairly reflect in all material respects the consolidated
financial condition of Parent and its subsidiaries as at the dates thereof and
the consolidated results of Parent's operations for the periods then ended.
Since September 30, 2003, or as disclosed in the SEC Documents or press releases
issued by Parent, there has been no material adverse change in the assets or
liabilities, in the business or condition, financial or otherwise, of Parent, or
in its results of operations.
4.5. Liabilities. Except as disclosed in the SEC Documents or press
releases issued by Parent, Parent nor any of its subsidiaries has any material
debt, liability or obligation of any kind, whether accrued, absolute, contingent
or otherwise, except (a) those reflected on the Parent Financial Statements,
including the notes thereto, and (b) liabilities incurred in the ordinary course
of business since December 31, 2002, none of which have had or will have a
material adverse affect on the financial condition of Parent and its
subsidiaries taken as a whole.
17
4.6. Contingencies. Except as disclosed in the SEC Documents, Parent
Financial Statements and/or press releases issued by Parent, there are no
actions, suits, claims or proceedings pending or, to the knowledge of Parent's
management, threatened against, by or affecting Parent or any of its
subsidiaries in any court or before any arbitrator or governmental agency which
could have a material adverse effect on Parent or its subsidiaries or which
could materially and adversely affect the right or ability of Parent to
consummate the transactions contemplated hereby. To the knowledge of Parent,
there is no valid basis upon which any such action, suit, claim or proceeding
may be commenced or asserted against Parent or its subsidiaries. There are no
unsatisfied judgments against Parent and no consent decrees or similar
agreements to which Parent or its subsidiaries is subject and which could have a
material adverse effect on Parent or its subsidiaries or which could materially
and adversely affect the right or ability of Parent to consummate the
transactions contemplated hereby.
4.7. Full Disclosure. No representation or warranty of Parent contained in
this Agreement, and none of the statements or information concerning Parent
contained in this Agreement and the Schedules, contains or will contain as of
the date hereof and as of the Closing Date any untrue statement of a material
fact nor will such representations, warranties, covenants or statements taken as
a whole omit a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
5. CONDUCT OF BUSINESS OF THE COMPANY PENDING CLOSING.
The Company and the Shareholders covenant and agree that between the date
hereof and the Closing Date:
5.1. Business in the Ordinary Course. Except as set forth in Schedule 5.1,
the business of the Company shall be conducted only in the ordinary course, and
consistent with past practice. Without limiting the generality of the foregoing,
and except as set forth in Schedule 5.1 or as otherwise approved in writing by
Parent:
(a) the Company shall not enter into any contract, agreement or
other arrangement which would constitute a Material Contract, except for
contracts to sell or supply goods or services to customers in the ordinary
course of business at prices and on terms substantially consistent with the
prior operating practices of the Company;
(b) except for sales of personal property in the ordinary course of
its business, the Company shall not sell, assign, transfer, mortgage, convey,
encumber or otherwise dispose of, or cause the sale, assignment, transfer,
mortgage, conveyance, encumbrance or other disposition of any of the assets or
properties of the Company or any interest therein;
(c) the Company shall not acquire any material assets, except
expenditures made in the ordinary course of business as reasonably necessary to
enable the Company to conduct its normal business operations and to maintain its
normal inventory of goods and materials, at prices and on terms substantially
consistent with current market conditions and prior operating practices;
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(d) the Company shall maintain in full force and effect all
insurance policies referred to in Section 3.17 hereof or other insurance
equivalent thereto;
(e) the books, records and accounts of the Company shall be
maintained in the usual, regular and ordinary course of business on a basis
consistent with prior practices and in accordance with GAAP;
(f) the Company shall use its best efforts to preserve its business
organization, to preserve the good will of its suppliers, customers and others
having business relations with the Company, and to retain the services of key
employees and agents of the Company after the Closing Date on terms acceptable
to Parent;
(g) except as they may terminate in accordance with the terms of
this Agreement, the Company shall keep in full force and effect, and not cause a
default of any of its obligations under, each of its contracts and commitments;
(h) the Company shall duly comply in all material respects with all
laws applicable to it and to the conduct of its business;
(i) the Company shall not create, incur or assume any liability or
indebtedness, except in the ordinary course of business consistent with past
practices;
(j) the Company shall not make or commit to make any capital
expenditures in excess of ten thousand dollars ($10,000) in the aggregate;
(k) other than as contemplated in this Agreement, the Company shall
not apply any of its assets to the direct or indirect payment, discharge,
satisfaction or reduction of any amount payable directly or indirectly to or for
the benefit of the Shareholder or any Related Party; and
(l) neither the Company nor the Shareholders shall take or omit to
take any action which would render any of the Shareholders' representations or
warranties untrue or misleading, or which would be a breach of any of the
Shareholders' covenants.
5.2. No Material Changes. The Company shall not, without the prior written
consent of Parent which consent shall not be unreasonably withheld, materially
alter its organization, capitalization, or financial structure, practices or
operations. Without limiting the generality of the foregoing:
(a) no change shall be made in the Articles of Incorporation or
Bylaws of the Company;
(b) no change shall be made in the authorized or issued capital
stock of the Company;
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(c) the Company shall not issue or grant any right or option to
purchase or otherwise acquire any of its capital stock or other securities;
(d) no dividend or other distribution or payment shall be declared
or made with respect to any of the capital stock of the Company; and
(e) no change shall be made affecting the banking arrangements of
the Company.
5.3. Compensation. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent of the Company, and no bonus or profit-sharing payment or
other arrangement (whether current or deferred) shall be made to or with any
such director, officer, employee or agent, except in the ordinary course of
business and consistent with prior practices.
5.4. Notification. Each party to this Agreement shall promptly notify the
other parties in writing of the occurrence, or threatened occurrence, of any
event that would constitute a breach or violation of this Agreement by any party
or that would cause any representation or warranty made by the notifying party
in this Agreement to be false or misleading in any respect. The Shareholders
will promptly notify Parent of any event of which the Shareholders obtain
knowledge which could have a material adverse effect on the business, assets,
financial condition or prospects of the Company. The Shareholders shall have the
right to update the Schedules to this Agreement immediately prior to Closing;
provided, if such update discloses any breach of a representation, warranty,
covenant or obligation of the Shareholders and/or the Company, Parent shall have
the right to then exercise its available rights and remedies hereunder.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligation of the Company, the Shareholders and Parent to consummate
the transactions contemplated by this Agreement are subject to the satisfaction,
on or before the Closing, of each of the following conditions; any or all of
which may be waived in whole or in part by the joint agreement of Parent, the
Company and the Shareholders:
6.1. Absence of Actions. No action or proceeding shall have been brought
or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving Parent, any of its subsidiaries, the Shareholders or the Company when
considered in light of the effect of the within transactions) shall constitute a
violation of law or give rise to material liability on the part of the
Shareholders, the Company or Parent or its subsidiaries.
6.2. Consents. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including, without limitation, the consents listed on
Schedule 6.2.
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7. CONDITIONS TO OBLIGATIONS OF PARENT.
All obligations of Parent to consummate the transactions contemplated by
this Agreement are subject to the fulfillment and satisfaction of each and every
of the following conditions on or prior to the Closing, any or all of which may
be waived in whole or in part by Parent:
7.1. Representations and Warranties. The representations and warranties
contained in Section 3 of this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of the
Shareholders in connection with the transactions contemplated by this Agreement
shall be true, correct and complete in all material respects (except for
representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
7.2. Compliance with Agreements and Conditions. The Shareholders and the
Company shall have performed and complied with all material agreements and
conditions required by this Agreement to be performed or complied with by him
and/or by the Company prior to or on the Closing Date.
7.3. Absence of Material Adverse Changes. No material adverse change in
the business, assets, financial condition, or prospects of the Company shall
have occurred, no substantial part of the assets of the Company not
substantially covered by insurance shall have been destroyed due to fire or
other casualty, and no event shall have occurred which has had or will have a
material adverse effect on the business, assets, financial condition or
prospects of the Company.
7.4. Certificate of the Shareholders. The Shareholders shall have executed
and delivered, or caused to be executed and delivered, to Parent one or more
certificates, dated the Closing Date, certifying in such detail as Parent may
reasonably request to the fulfillment and satisfaction of the conditions
specified in Sections 7.1 through 7.3 above.
7.5. Board Approval. This Agreement and the transactions contemplated
hereby shall have been approved by a majority of the Parent's Board of
Directors.
7.6. Satisfactory Results of Inspection. The results of the inspection
referred to in Section 2.1 hereof shall be satisfactory to the Parent in its
sole discretion. In addition, prior to the Closing, an independent third party
mutually agreed upon by Parent and the Company shall confirm the accuracy and
reliability of the Company's trade secret paint formula.
7.7. Assets at Closing. The Company shall have as of the Closing Date
Two-Hundred Thousand Dollars (US$200,000.00) in total assets .
21
8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.
All of the obligations of the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment and satisfaction
of each and every of the following conditions on or prior to the Closing, any or
all of which may be waived in whole or in part by the Shareholders:
8.1. Representations and Warranties. The representations and warranties
contained in Section 4 of this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of Parent in
connection with the transactions contemplated by this Agreement shall be true
and correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true, correct
and complete in all respects) when made and shall be deemed to be made again at
and as of the Closing Date and shall be true at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
8.2. Compliance with Agreements and Conditions. Parent and Merger Sub
shall have performed and complied with all material agreements and conditions
required by this Agreement to be performed or complied with by Parent and/or
Merger Sub prior to or on the Closing Date.
8.3. Absence of Material Adverse Changes. No material adverse change in
the business, assets, financial condition, or prospects of Parent and its
subsidiaries, taken as a whole, shall have occurred, no substantial part of the
assets of Parent and its subsidiaries, taken as a whole, shall have been
destroyed due to fire or other casualty, and no event shall have occurred which
has had, or will have a material adverse effect on the business, assets,
financial condition or prospects of Parent and its subsidiaries, taken as a
whole.
8.4. Certificate of Parent. Parent shall have delivered to the
Shareholders a certificate, executed by an executive officer and dated the
Closing Date, certifying to the fulfillment and satisfaction of the conditions
specified in Sections 8.1 through 8.3 above.
9. INDEMNITY.
9.1. Indemnification by Shareholders. Subject to Section 9.5, the
Shareholders (hereinafter, collectively, called the "Shareholder Indemnitors")
shall jointly and severally defend, indemnify and hold harmless Parent and
Merger Sub and their direct and indirect parent corporations, subsidiaries
(including the Company after Closing) and affiliates, their officers, directors,
employees and agents (hereinafter, collectively, called "Parent Indemnitees")
against and in respect of any and all loss, damage, liability, fine, penalty,
cost and expense, including reasonable attorneys' fees and amounts paid in
settlement (collectively, "Parent Losses"), suffered or incurred by any Parent
Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of the Shareholders contained in this Agreement
or in any certificate, schedule, instrument or document delivered to Parent by
or on behalf of the Shareholders or the Company pursuant to the provisions of
this Agreement (without regard to materiality thresholds contained therein); and
22
(b) any liabilities of the Company of any nature whatsoever
(including tax liability, penalties and interest), whether accrued, absolute,
contingent or otherwise, (i) existing as of the date of the Balance Sheet, and
required to be shown therein in accordance with applicable GAAP, to the extent
not reflected or reserved against in full in the Balance Sheet; or (ii) arising
or occurring between August 31, 2003 and the Closing Date, except for
liabilities arising in the ordinary course of business, none of which shall have
a material adverse effect on the Company.
9.2. Indemnification by Parent. Subject to Section 9.5, Parent and Merger
Sub (hereinafter called the "Parent Indemnitor") shall jointly and severally
defend, indemnify and hold harmless the Shareholders (hereinafter called
"Shareholder Indemnitees") against and in respect of any and all loss, damage,
liability, cost and expense, including reasonable attorneys' fees and amounts
paid in settlement (collectively, "Shareholder Losses"), suffered or incurred by
Shareholder Indemnitees by reason of or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of Parent contained in this Agreement
or in any other certificate, schedule, instrument or document delivered to the
Shareholders by or on behalf of Parent pursuant to the provisions of this
Agreement (without regard to materiality thresholds contained therein); and
(b) any liabilities of the Company of any nature whatsoever
(including tax liability, penalties and interest), whether accrued, absolute,
contingent or otherwise, arising from Parent's ownership or operation of the
Company after Closing, but only so long as such liability is not the result of
an act or omission of the Company or any Shareholder occurring prior to the
Closing. Parent Losses and Shareholder Losses are sometimes collectively
referred to as "Indemnifiable Losses."
9.3. Defense of Claims.
(a) Each party seeking indemnification hereunder (an "Indemnitee"):
(i) shall provide the other party or parties (the "Indemnitor") written notice
of any claim or action by a third party arising after the Closing Date for which
an Indemnitor may be liable under the terms of this Agreement, within ten (10)
days after such claim or action arises and is known to Indemnitee, and (ii)
shall give the Indemnitor a reasonable opportunity to participate in any
proceedings and to settle or defend any such claim or action. The expenses of
all proceedings, contests or lawsuits with respect to such claims or actions
shall be borne by the Indemnitor. If the Indemnitor wishes to assume the defense
of such claim or action, the Indemnitor shall give written notice to the
Indemnitee within ten (10) days after notice from the Indemnitee of such claim
or action, and the Indemnitor shall thereafter assume the defense of any such
claim or liability, through counsel reasonably satisfactory to the Indemnitee,
provided that Indemnitee may participate in such defense at their own expense,
and the Indemnitor shall, in any event, have the right to control the defense of
the claim or action.
23
(b) If the Indemnitor shall not assume the defense of, or if after
so assuming it shall fail to defend, any such claim or action, the Indemnitee
may defend against any such claim or action in such manner as they may deem
appropriate and the Indemnitees may settle such claim or litigation on such
terms as they may deem appropriate but subject to the Indemnitor's approval,
such approval not to be unreasonably withheld; provided, however, that any such
settlement shall be deemed approved by the Indemnitor if the Indemnitor fails to
object thereto, by written notice to the Indemnitee, within fifteen (15) days
after the Indemnitor's receipt of a written summary of such settlement. The
Indemnitor shall promptly reimburse the Indemnitee for the amount of all
expenses, legal and otherwise, incurred by the Indemnitee in connection with the
defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered against any Indemnitee
in any action covered by the indemnification hereunder, or any lien attaches to
any of the assets of any of the Indemnitee, the Indemnitor shall immediately
upon such entry or attachment pay such judgment in full or discharge such lien
unless, at the expense and direction of the Indemnitor, an appeal is taken under
which the execution of the judgment or satisfaction of the lien is stayed. If
and when a final judgment is rendered in any such action, the Indemnitor shall
forthwith pay such judgment or discharge such lien before any Indemnitee is
compelled to do so.
9.4. Waiver. The failure of any Indemnitee to give any notice or to take
any action hereunder shall not be deemed a waiver of any of the rights of such
Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
9.5. Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. Time Limitation. No party shall be responsible hereunder for
any Indemnifiable Loss unless the Indemnitee shall have provided such party with
written notice containing a reasonable description of the claim, action or
circumstances giving rise to such Indemnifiable Loss within three (3) years
after the Closing Date (the "Indemnity Notice Period"); provided, however, that:
(a) with respect to any Indemnifiable Loss resulting or
arising from any breach of a representation or warranty of the Shareholders
relating to taxes, or any tax liability of the Company arising or relating to
periods prior to the Closing Date, the Indemnity Notice Period shall extend for
the full duration of the statute of limitations; and
(b) there shall be no limit on the Indemnity Notice Period for
indemnity claims: (i) against the Shareholders for Indemnifiable Losses arising
or resulting from a breach of a representation or warranty relating to
Environmental Laws, or any liability which relates to the handling or disposal
of Wastes or the failure to comply with any Environmental Law; and (ii) against
any party based on fraud or intentional breach or misrepresentation.
9.5.2. Caps on Losses. The aggregate liability of the Shareholders
after the Closing for Parent Losses shall not exceed an amount equal to the
Merger Consideration paid to the Shareholders or the Shareholders'
Representative and Disbursement Agent. The aggregate liability of Parent and
Merger Sub after the Closing for Shareholder Losses shall not exceed the Merger
Consideration paid to the Shareholders.
24
9.5.3. Basket. No party shall have any liability hereunder for
Indemnifiable Losses after the Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnifiable Losses for which the Shareholder or Parent and Merger Sub as a
group, as applicable, are responsible under this Agreement exceeds Twenty-Five
Thousand ($25,000) Dollars (the "Basket"); provided that once such Basket is
exceeded for the Shareholders or Parent and Merger Sub as a group, as
applicable, the responsible party or parties shall be responsible for all
Indemnifiable Losses, from the first dollar as if such Basket never existed; and
further provided that this Section 9.5.3 shall not limit in any respect
indemnity claims: (a) based upon fraud or intentional breach or intentional
misrepresentation; (b) arising from a breach by the Parent Indemnitor of any
covenant contained in this Agreement; (c) arising from a breach by the
Shareholders of any representation or warranty contained in Section 3.2 hereof;
or (d) related to any tax or tax liability of the Company for periods prior to
the Closing Date.
10. TERMINATION.
10.1. Termination. This Agreement may be terminated at any time on or
prior to the Closing:
(a) By mutual consent of Parent and the Shareholders; or
(b) At the election of Parent if: (i) any Shareholder or the
Shareholders' Representative and Disbursement Agent has breached or failed to
perform or comply with any of his representations, warranties, covenants or
obligations under this Agreement; or (ii) any of the conditions precedent set
forth in Section 6 or 7 is not satisfied as and when required by this Agreement;
or (iii) the Closing has not been consummated by January 5, 2004; or
(c) At the election of the Shareholders or the Shareholders'
Representative and Disbursement Agent if: (i) Parent or the Merger Sub has
breached or failed to perform or comply with any of its representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 8 is not satisfied as and when
required by this Agreement; or (iii) if the Closing has not been consummated by
January 5, 2004.
10.2. Manner and Effect of Termination. Written notice of any termination
("Termination Notice") pursuant to this Section 10 shall be given by the party
electing termination of this Agreement ("Terminating Party") to the other party
or parties (collectively, the "Terminated Party"), and such notice shall state
the reason for termination. The party or parties receiving Termination Notice
shall have a period of ten (10) days after receipt of Termination Notice to cure
the matters giving rise to such termination to the reasonable satisfaction of
the Terminating Party. If the matters giving rise to termination are not cured
as required hereby, this Agreement shall be terminated effective as of the close
of business on the tenth (10th) day following the Terminated Party's receipt of
Termination Notice. Upon termination of this Agreement prior to the consummation
of the Closing and in accordance with the terms hereof, this Agreement shall
become void and of no effect, and none of the parties shall have any liability
to the others, except that nothing contained herein shall relieve any party
from: (a) its obligations under Sections 2.2 and 2.3; or (b) liability for its
intentional breach of any representation, warranty or covenant contained herein,
or its intentional failure to comply with the terms and conditions of this
Agreement or to perform its obligations hereunder.
25
11. MISCELLANEOUS.
11.1. Notices.
(a) All notices, requests, demands, or other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given upon receipt if delivered in person, or upon the expiration of four (4)
days after the date sent, if sent by federal express (or similar overnight
courier service) to the parties at the following addresses:
(i) If to Parent of Merger Sub: NeoMedia Technologies, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx #000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
with a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
(ii) If to a Shareholder: the Shareholders' Representative
and Disbursement Agent
00 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx Xxxxxx X0X 0X0
With a copy to: Holland & Knight LLC
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
(b) Notices may also be given in any other manner permitted by law,
effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
11.2. Survival. Except as provided in the next sentence, the
representations, warranties, agreements and indemnifications of the parties
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement shall survive any investigation heretofore or
hereafter made by the parties and the consummation of the transactions
contemplated herein and shall continue in full force and effect after the
Closing, subject to the limitations of Section 9.5. The representations,
warranties and agreements of the Company contained in this Agreement shall not
survive the Closing.
26
11.3. Counterparts; Interpretation. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the parties with respect to the matters covered hereby. All Schedules
hereto shall be deemed a part of this Agreement. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular section or paragraph. References to
"including" means including without limiting the generality of any description
preceding such term. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person other than the parties
hereto any rights or remedies under or by reason of this Agreement.
11.4. Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or federal
courts in Xxx County, Florida, U.S.A. Each of the parties hereby irrevocably
submits to the jurisdiction of any state or federal court sitting in Xxx County,
Florida. Each party hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
any such action in Xxx County, Florida.
11.5. Successors and Assigns; Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, legal representatives, and successors; provided, however, that
no Shareholder may assign this Agreement or any rights hereunder, in whole or in
part.
11.6. Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
11.7. Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
27
11.8. Headings. The headings as to contents of particular paragraphs of
this Agreement are inserted for convenience only and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.9. Expenses. Except as otherwise expressly provided herein, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by Parent or the Shareholders as
each party incurs such expenses, and none of such expenses shall be charged to
or paid by the Company.
11.10. Gender. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.11. Acceptance by Fax. This Agreement shall be accepted, effective and
binding, for all purposes, when the parties shall have signed and transmitted to
each other, by telecopier or otherwise, copies of the signature pages hereto.
11.12. Attorneys Fees. In the event of any litigation arising under the
terms of this Agreement, the prevailing party or parties shall be entitled to
recover its or their reasonable attorneys fees and court costs from the other
party or parties.
11.13. Opportunity to Hire Counsel; Role of Xxxxxxxxxxx & Xxxxxxxx LLP.
The Shareholders acknowledge that they have been advised and have been given an
opportunity to hire counsel with respect to this Agreement and the transactions
contemplated hereby. The Shareholders further acknowledge that the law firm of
Xxxxxxxxxxx & Xxxxxxxx LLP has solely represented the Parent and Merger Sub in
connection with this Agreement and the transactions contemplated hereby and no
other person.
11.14. Time is of the Essence. It is understood and agreed among the
parties hereto that time is of the essence in this Agreement and this applies to
all terms and conditions contained herein.
11.15. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
28
IN WITNESS WHEREOF, the parties have executed this Agreement to be duly
executed by their duly authorized officers as of the day and year first above
written.
PARENT:
NEOMEDIA TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President, COO, CEO
MERGER SUB:
[ACQUISITION CO.]
By: /s/ Xxxxx X. Dodge
---------------------------
Name: Xxxxx X. Dodge
Title: Secretary, Treasurer, and Director
SHAREHOLDERS' REPRESENTATIVE AND DISBURSEMENT AGENT:
/s/ Xxxxx X. XxXxxxx
---------------------------
THE COMPANY:
CSI INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxx
---------------------------
Name: Xxxxxxx Xxxx
Title: President
29
EXHIBIT B
PLAN OF MERGER
THIS PLAN OF MERGER (the "Plan") is made and entered into this 6th day
of February, 2004, by and between CSI INTERNATIONAL, INC., a corporation
organized under the laws of the Province of Alberta, Canada, having an address
of 000 Xxxxx Xxxx XX, #0, Xxxxxxx, Xxxxxxx, Xxxxxx, X0X 0X0 (the "Merging
Company"), with and into NEOMEDIA MICRO PAINT REPAIR, INC., a Nevada
corporation, having an address of 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx,
Xxxxxxx, XXX, 00000, (the "Surviving Corporation"). The Merging Corporation and
the Surviving Corporation are hereinafter sometimes together referred to as the
"Constituent Corporations".
RECITALS:
WHEREAS, the Shareholders and Directors of each Constituent Corporation
have determined that it would be in the best interest of such corporations for
the Merging Corporation to merge with and into the Surviving Corporation;
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, provisions and grants herein contained, the Constituent
Corporations hereby agree and prescribe the terms and conditions of this Plan of
Merger and the mode of carrying the same into effect, as follows:
1. MERGER. On the terms and conditions set forth herein, on the
Effective Date (as defined in Section 2 below), the Merging Corporation shall be
merged (the "Merger") with and into the Surviving Corporation.
2. EFFECTIVE DATE. The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of Nevada (the "Effective
Date").
3. EFFECT OF MERGER. Upon the Effective Date,
(a) The Merging Corporation and the Surviving Corporation
shall become a single corporation and the separate corporate existence of the
Merging Corporation shall cease.
(b) The Surviving Corporation shall succeed to and possess all
the rights, privileges, powers and immunities of the Merging Corporation which,
together with all of the assets, properties, business, patents, trademarks and
goodwill of the Merging Corporation, of every type and description wherever
located, shall vest in the Surviving Corporation without further act or deed.
(c) All rights of creditors and all liens upon any property of
the Constituent Corporations shall remain unimpaired.
4. ARTICLES OF INCORPORATION, BYLAWS, OFFICERS AND DIRECTORS OF
SURVIVING CORPORATION.
Upon the Effective Date,
(a) The Articles of Incorporation of the Surviving Corporation
shall remain and continue as the Articles of Incorporation of the Surviving
Corporation until amended in the manner provided by law.
(b) The Bylaws of the Surviving Corporation shall remain and
continue as the Bylaws of the Surviving Corporation until amended in the manner
provided by law.
(c) The officers and directors of the Surviving Corporation
shall remain and continue as the officers and directors of the Surviving
Corporation until their successors shall have been duly elected and qualified.
5. MANNER AND BASIS OF CONVERTING SHARES. Upon the Effective Date, all
of the then-issued and outstanding shares of Common Stock of the Merging
Corporation shall be converted, at the discretion of the Disbursement Agent,
into fully paid and nonassessable shares of common stock, par value $0.01 per
share (the "Common Stock"), of the Surviving Corporation's parent, NeoMedia
Technologies, Inc. ("NeoMedia"), and (ii) cash. As of the Effective Date, all
such shares of the Merging Corporation's common stock shall be automatically
canceled and retired and shall cease to exist, and each holder of a certificate
which immediately prior to the Effective Date represented any such shares of the
Merging Corporation's common stock shall cease to have any rights with respect
thereto, except the right to receive certificates representing the number of
fully paid and nonassessable shares of Common Stock of NeoMedia into which such
shares of the Merging Corporation's common stock were converted at the Effective
Date. Fractional shares of Common Stock of NeoMedia to be issued shall be
rounded up to one (1) share of Common Stock of NeoMedia and no cash shall be
paid in lieu of fractional shares of Common Stock of NeoMedia to be issued nor
paid in consideration therefore upon surrender of certificates of the Merging
Corporation's common stock.
6. GOVERNING LAW. This Plan of Merger shall be governed and construed
in accordance with the laws of the States of Nevada.
7. ARTICLES OF MERGER. Promptly upon adopting this Plan, the parties
shall execute the Articles of Merger and file the same with Nevada Department of
State.
8. COUNTERPARTS. This Plan of Merger may be executed in counterparts,
each of which when so executed shall constitute an original copy hereof, but
which together shall be considered one and the same document.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Plan of Merger, this
6th day of February, 2004.
SURVIVING CORPORATION
NEOMEDIA MICRO PAINT REPAIR, INC.
By: /s/ Xxxxx X. Dodge
------------------------------
Printed Name: Xxxxx X. Dodge
Title: Secretary, Treasurer & Director
MERGING CORPORATION
CSI INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxx
------------------------------
Printed Name: Xxxxxxx Xxxx
Title: President
