EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
by and among
1st Net Technologies, Inc.
a Colorado corporation
and
VOS Systems, Inc.
a California corporation
Effective as of August 30, 2004
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into this 30th day of August, 2004, by and among 1st Net Technologies,
Inc., a Colorado corporation ("FNTT") and VOS Systems, Inc., a California
corporation, ("XXXX"), and the shareholders of VOS Systems, Inc. hereafter
referred to collectively as the "Shareholders."
Premises
A. This Agreement provides for the reorganization of XXXX with FNTT, with
FNTT adopting the name VOS Systems, Inc., and in connection therewith, the
exchange of the outstanding common stock of XXXX for shares of common voting
stock of FNTT, all for the purpose of effecting a tax-free reorganization
pursuant to sections 354 and 368(a) of the Internal Revenue Code of 1986, as
amended.
B. The Shareholders own 100% of the issued and outstanding capital stock of
XXXX.
C. The board of directors of XXXX with respect to XXXX, the board of
directors of FNTT with respect to FNTT, and the Shareholders have determined,
subject to the terms and conditions set forth in this Agreement, that the
exchange of shares contemplated hereby, is desirable and in the best interests
of the stockholders of XXXX and FNTT. This Agreement is being entered into for
the purpose of setting forth the terms and conditions of the proposed exchange.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF XXXX
As an inducement to and to obtain the reliance of FNTT, XXXX and the
Shareholders represent and warrant as follows:
Section 1.1 Organization. XXXX is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California and has
the corporate power and is duly authorized, qualified, franchised and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the jurisdiction in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the XXXX Schedules (as
hereinafter defined) are complete and correct copies of the articles of
incorporation, bylaws and amendments thereto of XXXX as in effect on the date
hereof. The execution and delivery of this Agreement do not and the consummation
of the transactions contemplated by this Agreement in accordance with the terms
hereof will not violate any provision of XXXX'x articles of incorporation or
bylaws. XXXX has full power, authority and legal right and has taken all action
required by law, its articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement.
Section 1.2 Capitalization. The authorized capitalization of XXXX consists
of 49,000,000 common shares, no par value per share and 1,000,000 preferred
shares, no par value per share. All issued and outstanding shares are legally
issued, fully paid and nonassessable and are not issued in violation of the
preemptive or other rights of any person. XXXX has no other securities, warrants
or options authorized or issued other than as set forth in the XXXX Schedules.
Section 1.3 Subsidiaries and Predecessor Corporations. Except as otherwise
set forth in the XXXX Schedules or as previously provided to FNTT, XXXX does not
have any other subsidiaries and does not own, beneficially or of record, any
shares of any other corporation.
Section 1.4 Financial Statements.
(a) Included in the XXXX Schedules are the audited financial
statements of FNTT for the period ending September 30, 2003.
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved. The XXXX balance sheets present fairly as
of their respective dates the financial condition of XXXX. XXXX did not
have as of the date of any of such XXXX balance sheets, any liabilities or
obligations (absolute or contingent) which should be reflected in a balance
sheet or the notes thereto prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of XXXX, in accordance
with generally accepted accounting principles. The statements of
operations, stockholders' equity and changes in financial position reflect
fairly the information required to be set forth therein by generally
accepted accounting principles.
(c) The books and records, financial and others, of XXXX are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices.
(d) XXXX has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties).
Section 1.5 Information. The information concerning XXXX set forth in this
Agreement and in the XXXX Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 1.6 Options and Warrants. Except as set forth in the XXXX
Schedules, there are no existing options, warrants, calls or commitments of any
character to which XXXX is a party and by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except as set forth in
this Agreement, the XXXX Schedules, or as otherwise disclosed to FNTT:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of XXXX; or (ii) any
damage, destruction or loss to XXXX (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets or condition of XXXX;
(b) XXXX has not: (i) amended its articles of incorporation or bylaws;
(ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed or agreed to purchase or redeem any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of XXXX;
(iv) made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction; (vi) made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee; (vii) increased the rate of compensation payable or to
become payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $5,000; or (viii) made any
increase in any profit sharing, bonus, deferred compensation, insurance,
pension, retirement or other employee benefit plan, payment or arrangement
made to, for, or with its officers, directors or employees;
(c) XXXX has not: (i) granted or agreed to grant any options, warrants
or other rights for its stocks, bonds or other corporate securities calling
for the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary course
of business; (iii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent XXXX balance sheet and current liabilities incurred since that
date in the ordinary course of business; (iv) sold or transferred, or
agreed to sell or transfer, any of its assets, properties or rights (except
assets, properties or rights not used or useful in its business which, in
the aggregate have a value of less than $5,000); (v) made or permitted any
amendment or termination of any contract, agreement or license to which it
is a party if such amendment or termination is material, considering the
business of XXXX; or (vi) issued, delivered or agreed to issue or deliver
any stock, bonds or other corporate securities, including debentures
(whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of XXXX, it has not become subject to any
law or regulation which materially and adversely affects, or in the future
may adversely affect, the business, operations, properties, assets or
condition of XXXX.
Section 1.8 Title and Related Matters. XXXX has good and marketable title
to and is the sole and exclusive owner of all of its properties, inventory,
interests in properties and assets, real and personal (collectively, the
"Assets") which are reflected in the XXXX Schedules free and clear of all liens,
pledges, charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will
not, materially detract from or interfere with the present or proposed use of
the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the XXXX Schedules. Except as set forth in the XXXX Schedules, XXXX owns free
and clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever any and all procedures,
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with XXXX'x business. Except as set forth in
the XXXX Schedules, no third party has any right to, and XXXX has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on the business, operations,
financial conditions or income of XXXX or any material portion of its
properties, assets or rights. The Shareholders have good and marketable title to
100% of the issued and outstanding common shares of XXXX which represent all of
the capital shares of XXXX issued and outstanding and all such common shares are
free and clear of any lien or encumbrance and can legally be delivered by the
Shareholders without restriction pursuant to the terms and the conditions of
this Agreement.
Section 1.9 Litigation and Proceedings. Except as set forth in this
Agreement, the XXXX Schedules, or as otherwise disclosed to FNTT; to the best of
XXXX'x and the Shareholders' knowledge and belief, there are no actions, suits,
proceedings or investigations pending or threatened by or against XXXX or
affecting XXXX or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before any
arbitrator of any kind that would have a material adverse effect on the
business, operations, financial condition or income of XXXX. XXXX does not have
any knowledge of any default on its part with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the XXXX Schedules, there are
no material contracts, agreements, franchises, license agreements or other
commitments to which XXXX is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) except as included or described in the XXXX Schedules or reflected
in the most recent XXXX balance sheet, XXXX is not a party to any oral or
written: (i) contract for the employment of any officer or employee which
is not terminable on thirty (30) days or less notice; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension benefit
or retirement plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract or indenture relating to the borrowing of money; (iv) guaranty of
any obligation, other than one on which XXXX is a primary obligor, for
collection and other guaranties of obligations, which, in the aggregate do
not exceed more than one year or providing for payments in excess of $5,000
in the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in excess of
$5,000 in the aggregate; (vi) collective bargaining agreements; (vii)
agreement with any present or former officer or director of XXXX; or (viii)
contract, agreement or other commitment involving payments by it of more
than $5,000 in the aggregate; and
(c) to XXXX'x and the Shareholders' knowledge, all contracts,
agreements, franchises, license agreements and other commitments to which
XXXX is a party or by which its properties are bound and which are material
to the operations of XXXX taken as a whole, are valid and enforceable by
XXXX in all respects, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
Section 1.11 Material Contract Defaults. Except as set forth in the XXXX
Schedules, to the best of XXXX'x and the Shareholders' knowledge and belief,
XXXX is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of XXXX, and there is
no event of default in any material respect under any such contract, agreement,
lease or other commitment in respect of which XXXX has not taken adequate steps
to prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which XXXX is a
party or to which any of its properties or operations are subject.
Section 1.13 Governmental Authorizations. To the best of XXXX'x and the
Shareholders' knowledge, XXXX has all licenses, franchises, permits or other
governmental authorizations legally required to enable XXXX to conduct its
business in all material respects as conducted on the date hereof. Except for
compliance with provincial, federal and state securities and corporation laws,
as hereinafter provided, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by XXXX of this
Agreement and the consummation by XXXX of the transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the best of XXXX'x
and the Shareholders' knowledge, except as disclosed in the XXXX Schedules, XXXX
has complied with all applicable statutes and regulations of any provincial,
federal, state or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of XXXX or would not
result in XXXX'x incurring any material liability.
Section 1.15 Insurance. All of the insurable properties owned either
directly or indirectly by XXXX are insured for XXXX'x benefit in accordance with
the insurance policies disclosed in the XXXX Schedules under valid and
enforceable policies issued by insurers of recognized responsibility. Such
policy or policies containing substantially equivalent coverage will be
outstanding and in full force at the Closing Date. Insurance exists only to the
extent disclosed on such schedules.
Section 1.16 Approval of Agreement The board of directors and shareholders
of XXXX have authorized the execution and delivery of this Agreement by XXXX and
have approved the transactions contemplated hereby.
Section 1.17 Material Transactions or Affiliations. Except as disclosed
herein and in the XXXX Schedules, there exists no material contract, agreement
or arrangement between XXXX and any predecessor and any person who was at the
time of such contract, agreement or arrangement an officer, director or person
owning of record, or known by XXXX to own beneficially, ten percent (10%) or
more of the issued and outstanding Common Shares of XXXX and which is to be
performed in whole or in part after the date hereof. In all of such
transactions, the amount paid or received, whether in cash, in services or in
kind, has been during the full term thereof, and is required to be during the
unexpired portion of the term thereof, no less favorable to XXXX than terms
available from otherwise unrelated parties in arms-length transactions. There
are no commitments by XXXX, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions with, any
such affiliated person.
Section 1.18 Labor Relations. XXXX has never had a work stoppage resulting
from labor problems. To the best knowledge of XXXX, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
XXXX.
Section 1.19 Previous Sales of Securities. Since inception, XXXX has sold
or otherwise issued 8,664,116 common shares to investors and warrants for the
issuance of up to 1,800,000 common shares, exercisable at various prices, in
reliance upon applicable exemptions from the registration requirements under the
laws of the United States and Canada and all such sales were made in accordance
with the laws of said jurisdictions.
Section 1.20 Current Sales of Securities. Currently, XXXX is selling or
otherwise issuing a maximum of 3,350,000 common shares to accredited investors
only in a private offering, in reliance upon applicable exemptions from the
registration requirements under the laws of the United States.
Section 1.21 XXXX Schedules. Upon execution hereof, XXXX will deliver to
FNTT the following schedules, which are collectively referred to as the "XXXX
Schedules" and which consist of schedules dated as of the date of this Agreement
and instruments and data as of such date, all certified by the chief executive
officer of XXXX as complete, true and correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all minutes of
shareholders' and directors' meetings of XXXX or such other corporate
documentation and records required to maintain XXXX in good standing in the
State of California;
(b) a list indicating the names and addresses of the stockholders of
XXXX, together with the number of shares owned by them;
(c) copies of all licenses, permits and other governmental
authorizations, requests or applications therefore, pursuant to which XXXX
carries on or proposes to carry on its business (except those which in the
aggregate, are immaterial to the present or proposed business of XXXX);
(d) a list of every debt, mortgage, security interest, pledge, lien,
encumbrance or claim of any nature whatsoever in excess of $5,000 as may
affect XXXX, its properties or assets;
(e) a list of all executive employees of XXXX, including current
compensation, with notation as to job description and whether or not such
employee is subject to a written contract;
(f) a description of all real and personal property owned by XXXX,
together with a description of every mortgage, deed of trust, pledge, lien,
agreement, encumbrance, claim or equity interest of any nature whatsoever
in such real and personal property;
(g) copies of all material contracts, leases, agreements or other
instruments to which XXXX is a party or by which it or its properties are
bound;
(h) the name and location of each bank or other institution with which
XXXX has an account or safety deposit box and the names of all persons
authorized to draw thereon or having access thereto;
(i) a copy of all material documentation relating to the sale of
common shares provided by XXXX to its present stockholders;
(j) a list of insurance policies referred to in Section 1.15;
(k) a description of any material adverse change in the business
operations, property, inventory, assets or condition of XXXX since
incorporation; and
(l) any other information, together with any required copies of
documents required to be disclosed in the XXXX Schedules by Sections 1.1
through 1.20.
XXXX shall cause the XXXX Schedules and the instruments and data delivered
to FNTT hereunder to be updated after the date hereof up to and including the
Closing Date, as hereinafter defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF FNTT
As an inducement to, and to obtain the reliance of XXXX, FNTT represents
and warrants as follows:
Section 2.1 Organization. FNTT is a corporation duly organized, validly
existing and in good standing under the laws of the state of Colorado and has
the corporate power and is duly authorized, qualified, franchised and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it are now being conducted, including qualification
to do business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the FNTT Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation and
bylaws of FNTT as in effect on the date hereof. The execution and delivery of
this Agreement does not and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of FNTT's articles of incorporation or bylaws. FNTT has taken all
action required by law, its articles of incorporation, its bylaws or otherwise
to authorize the execution and delivery of this Agreement. FNTT has full power,
authority and legal right and has taken all action required by law, its articles
of incorporation, bylaws or otherwise to consummate the transactions herein
contemplated.
Section 2.2 Capitalization. The authorized capitalization of FNTT consists
of 40,000,000 shares of common stock, par value $0.001 per share, 10,000,000
shares of preferred stock, par value $.001 per share. FNTT has the authority to
issue 1,000,000 shares of Series A preferred stock. No preferred shares of FNTT
are issued and outstanding. As of the date hereof there are 6,395,357 common
shares of FNTT issued and outstanding.
Section 2.3 Subsidiaries. Except as otherwise set forth in the FNTT
Schedules or as previously provided to XXXX, FNTT does not have any other
subsidiaries and does not own, beneficially or of record, any shares of any
other corporation.
Section 2.4 Financial Statements.
(a) Included in the FNTT Schedules are the audited financial
statements of FNTT for the period ending December 31, 2003.
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved. The FNTT balance sheets present fairly as
of their respective dates the financial condition of FNTT. FNTT did not
have as of the date of any of such FNTT balance sheets, any liabilities or
obligations (absolute or contingent) which should be reflected in a balance
sheet or the notes thereto prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of FNTT, in accordance
with generally accepted accounting principles. The statements of
operations, stockholders' equity and changes in financial position reflect
fairly the information required to be set forth therein by generally
accepted accounting principles.
(c) The books and records, financial and others, of FNTT are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices.
(d) FNTT has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties). Other than those expressly included in the FNTT
Schedules
(e) As of the Closing Date, as defined herein, the FNTT balance sheets
and the notes thereto, shall reflect that FNTT has: (i) no receivables;
(ii) no accounts payable; and (iii) no contingent liabilities, direct or
indirect, matured or unmatured. Other than those expressly included in the
FNTT Schedules
Section 2.5 Information. The information concerning FNTT as set forth in
this Agreement and in the FNTT Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 2.6 Options and Warrants. Other than as previously disclosed by
FNTT to XXXX and as otherwise included in the FNTT Schedules, there are no
existing options, warrants, calls or commitments of any character to which FNTT
is a party and by which it is bound.
Section 2.7 Absence of Certain Changes or Events. Except as described
herein or in the FNTT Schedules:
(a) FNTT has not: (i) amended its articles of incorporation or bylaws;
(ii) waived any rights of value which in the aggregate are extraordinary or
material considering the business of FNTT; (iii) made any material change
in its method of management, operation or accounting; or (iv) made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee;
(b) FNTT has not: (i) granted or agreed to grant any options, warrants
or other rights for its stocks, bonds or other corporate securities calling
for the issuance thereof, which option, warrant or other right has not been
cancelled as of the Closing Date; or (ii) borrowed or agreed to borrow any
funds or incurred or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the
ordinary course of business; and
(c) to the best knowledge of FNTT, it has not become subject to any
law or regulation which materially and adversely affects, or in the future
may adversely affect, the business, operations, properties, assets or
condition of FNTT.
Section 2.8 Title and Related Matters. FNTT has good and marketable title
to and is the sole and exclusive owner of all of its properties, inventory,
interests in properties and assets, real and personal (collectively, the
"Assets") which are reflected in the FNTT Schedules free and clear of all liens,
pledges, charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will
not, materially detract from or interfere with the present or proposed use of
the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the FNTT Schedules. Except as set forth in the FNTT Schedules, FNTT owns free
and clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever any and all procedures,
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with FNTT's business. Except as set forth in
the FNTT Schedules, no third party has any right to, and FNTT has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on the business, operations,
financial conditions or income of FNTT or any material portion of its
properties, assets or rights.
Section 2.9 Litigation and Proceedings. Except as described herein or in
the FNTT Schedules: There are no actions, suits or proceedings pending or, to
the best of FNTT's knowledge and belief, threatened by or against or affecting
FNTT, at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind that
would have a material adverse effect on the business, operations, financial
condition, income or business prospects of FNTT. FNTT does not have any
knowledge of any default on its part with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality.
Section 2.10 Contracts. On the Closing Date:
(a) there are no material contracts, agreements, franchises, license
agreements, or other commitments to which FNTT is a party or by which it or
any of its properties are bound.
(b) FNTT is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as FNTT can now foresee)
materially and adversely affect, the business, operations, properties,
assets or conditions of FNTT; and
(c) FNTT is not a party to any material oral or written: (i) contract
for the employment of any officer or employee; (ii) profit sharing, bonus,
deferred compensation, stock option, severance pay, pension, benefit or
retirement plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract or indenture relating to the borrowing of money; (iv) guaranty of
any obligation for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations,
which, in the aggregate exceeds $1,000; (v) consulting or other similar
contract with an unexpired term of more than one year or providing for
payments in excess of $1,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or director
of FNTT; or (viii) contract, agreement, or other commitment involving
payments by it of more than $1,000 in the aggregate.
Section 2.11 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which FNTT is a
party or to which any of its properties or operations are subject.
Section 2.12 Material Contract Defaults. To the best of FNTT's knowledge
and belief, FNTT is not in default in any material respect under the terms of
any outstanding contract, agreement, lease or other commitment which is material
to the business, operations, properties, assets or condition of FNTT, and there
is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which FNTT has not taken
adequate steps to prevent such a default from occurring.
Section 2.13 Governmental Authorizations. To the best of FNTT's knowledge,
FNTT has all licenses, franchises, permits and other governmental authorizations
that are legally required to enable it to conduct its business operations in all
material respects as conducted on the date hereof. Except for compliance with
federal and state securities or corporation laws, no authorization, approval,
consent or order of, or registration, declaration or filing with, any court or
other governmental body is required in connection with the execution and
delivery by FNTT of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of FNTT's
knowledge and belief, FNTT has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
FNTT or would not result in FNTT's incurring any material liability. Further,
FNTT is, as of the date of this Agreement, a "reporting company" under Section
12 of the Securities Exchange Act of 1934, as amended, and is current in filing
all reports required to be filed pursuant to said Act.
Section 2.15 Insurance. All of the insurable properties owned either
directly or indirectly by FNTT are insured for FNTT's benefit in accordance with
the insurance policies disclosed in the FNTT Schedules under valid and
enforceable policies issued by insurers of recognized responsibility. Such
policy or policies containing substantially equivalent coverage will be
outstanding and in full force at the Closing Date. Insurance exists only to the
extent disclosed on such schedules. Section 2.16 Approval of Agreement The board
of directors of FNTT have authorized the execution and delivery of this
Agreement by FNTT and have approved the transactions contemplated hereby.
Section 2.17 Material Transactions or Affiliations. As of the Closing Date,
there will exist no material contract, agreement or arrangement between FNTT and
any person who was at the time of such contract, agreement or arrangement an
officer, director or person owning of record, or known by FNTT to own
beneficially, ten percent (10%) or more of the issued and outstanding common
stock of FNTT and which is to be performed in whole or in part after the date
hereof. FNTT has no commitment, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions with, any
such affiliated person.
Section 2.18 Labor Relations. FNTT has never had a work stoppage resulting
from labor problems. FNTT has no employees other than its officers and
directors.
Section 2.19 Previous Sales of Securities. Since inception, FNTT has sold
or otherwise issued 6,395,357 common shares to investors in reliance upon
applicable exemptions from the registration requirements under the laws of the
United States and Canada and all such sales were made in accordance with the
laws of said jurisdictions.
Section 2.20 FNTT Schedules. Upon execution hereof, FNTT shall deliver to
XXXX the following schedules, which are collectively referred to as the "FNTT
Schedules" which are dated the date of this Agreement, all certified by an
officer of FNTT to be complete, true and accurate:
(a) complete and correct copies of the articles of incorporation and
bylaws of FNTT as in effect as of the date of this Agreement;
(b) copies of all financial statements of FNTT identified in Section
2.4(a);
(c) a list indicating the names and addresses of the stockholders of
FNTT, together with the number of shares owned by them;
(d) the description of any material adverse change in the business,
operations, property, assets, or condition of FNTT since December 31, 2001,
required to be provided pursuant to Section 2.7;
(e) a list of all executive employees of FNTT, including current
compensation, with notation as to job description and whether or not such
employee is subject to a written contract; and
(f) any other information, together with any required copies of
documents, required to be disclosed in the FNTT Schedules by Sections 2.1
through 2.20.
FNTT shall cause the FNTT Schedules and the instruments to be delivered to
XXXX hereunder to be updated after the date hereof up to and including the
Closing Date. It is specifically acknowledged by FNTT that it has no licenses,
permits or other governmental authorizations relevant to its business.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Share Exchange/Delivery of XXXX Securities. On the Closing
Date, the holders of the XXXX common shares shall deliver to FNTT (i)
certificates or other documents evidencing all of the issued and outstanding
XXXX common shares, duly endorsed in blank or with executed stock power attached
thereto in transferable form; and (ii) investment letters, the form of which is
attached hereto as Exhibit "A".
Section 3.2 Issuance of FNTT Common Shares. In exchange for all of the XXXX
common shares tendered pursuant to Section 3.1, FNTT shall issue a maximum of
36,050,000 "restricted" FNTT common shares to the XXXX shareholders in amounts
as indicated on Exhibit "B" hereto.
(a) Subject to the provisions of Section 3.2(d) hereafter, the
Consideration, consisting of the total purchase price payable to the
Stockholders in connection with the Agreement and Plan of Reorganization
with XXXX, shall be delivered and shall consist exclusively of newly issued
shares of Common Stock, $.001 par value per share, of FNTT (the "Shares")
and shall be a maximum of 36,050,000 shares issued and exchanged on the
basis of (3) shares of FNTT common shares for each common share of XXXX
with fractional shares being rounded up to the next whole share.
(b) The Consideration shall be allocated among the Stockholders in the
proportion of their share ownership of the outstanding shares of XXXX
Common Stock at the Closing as set forth on the XXXX Schedules. It is
intended that the delivery of the Consideration shall qualify as a tax-free
exchange under the Code.
(c) The Shares to be delivered at the Closing shall be fully paid and
non-assessable and shall be free and clear of all liens, levies and
encumbrances except that such shares shall be "restricted securities"
pursuant to Rule 144, promulgated under the Securities Act of 1933, as
amended (the "1933 Act").
(d) FNTT shall deliver certificates evidencing the Shares to the
Stockholders upon the surrender and delivery to FNTT of certificates
representing all of such stockholder's issued and outstanding shares of
XXXX Common Stock; and the execution of this Agreement by the Stockholders
with respect to their investment intent as set forth in Section 3.2.
(e) In the event that any one or more Stockholders have not complied
with the terms identified in Section 3.2 within six months following the
Effective Date (a "Non-Complying Stockholder"), FNTT reserves the right in
its sole discretion at any time thereafter to cancel the Merger
Consideration allocable to such Non-Complying Stockholder without notice,
by payment to such Non-Complying Stockholder of the cash amount such
Non-Complying Stockholder would have been entitled to receive had he
exercised his right of dissent to this Agreement under California law.
Section 3.3 Events Prior to Closing.
(a) Upon execution hereof or as soon thereafter as practical,
management of XXXX and FNTT shall execute, acknowledge and deliver (or
shall cause to be executed, acknowledged and delivered) any and all
certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be
so delivered, together with such other items as may be reasonably requested
by the parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby, subject only
to the conditions to Closing referenced hereinbelow.
(b) Upon execution hereof or as soon thereafter as practical, all the
current shareholders of XXXX shall tender their share certificates, along
with a duly executed stock power, to FNTT for cancellation.
Section 3.4 Closing. The closing of the transaction contemplated by this
Agreement shall be as of the date in which (i) each party hereto has executed
this Agreement; and (ii) all conditions to Closing referenced hereinabove, as
well as in Articles V and VI below, have been satisfied or waived by the
appropriate party and all documentation referenced herein is delivered to the
respective party herein, unless a different date is mutually agreed to in
writing by the parties hereto (the "Closing Date").
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors of
either XXXX or FNTT at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or any
governmental body which shall seek to restrain, prohibit or invalidate
the transactions contemplated by this Agreement and which, in the
judgment of such board of directors, made in good faith and based on
the advice of its legal counsel, makes it inadvisable to proceed with
the exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions; or
(iii) the conditions described in Articles V or VI, below, as
applicable, have not been satisfied in full.
In the event of termination pursuant to this subparagraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder and
each party shall bear all of the expenses incurred by it in connection with
the negotiation, drafting and execution of this Agreement and the
transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the Closing
Date by action of the board of directors of FNTT if XXXX shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of XXXX contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days' written notice
thereof is given to XXXX. If this Agreement is terminated pursuant to this
subparagraph (b) of this Section 3.5, this Agreement shall be of no further
force or effect and no obligation, right or liability shall arise
hereunder.
(c) This Agreement may be terminated at any time prior to the Closing
Date by action of the board of directors of XXXX if FNTT shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of FNTT contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days written notice
thereof is given to FNTT. If this Agreement is terminated pursuant to this
subparagraph (c) of Section 3.5, this Agreement shall be of no further
force or effect and no obligation, right or liability shall arise
hereunder.
Section 3.6 Directors of FNTT. Upon the Closing, FNTT shall confirm that
its board of directors consists of a minimum of five (5) seats; filled by proper
actions of the board of directors and shareholders of the company.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. XXXX and FNTT will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of XXXX and FNTT, as the case may be, in
order that each may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of XXXX and FNTT, as the case may be, as the
other shall from time to time reasonably request.
Section 4.2 Availability of Rule 144. Each of the parties acknowledge that
the stock of FNTT to be issued pursuant to this Agreement will be "restricted
securities," as that term is defined in Rule 144 and/or Regulation S as
promulgated pursuant to the Securities Act. FNTT is under no obligation to
register such shares under the Securities Act, or otherwise.
Section 4.3 Information for FNTT Public Reports. XXXX will furnish FNTT
with all information concerning XXXX and the XXXX Stockholders, including all
financial statements, required for inclusion in any registration statement or
public report intended to be filed by FNTT pursuant to the Securities Act, the
Exchange Act, or any other applicable federal or state law. XXXX covenants that
all information so furnished for either such registration statement or other
public release by FNTT, including the financial statements described in Section
1.4, shall be true and correct in all material respects without omission of any
material fact required to make the information stated not misleading.
Section 4.4 Special Covenants and Representations Regarding the FNTT Common
Shares to be Issued in the Exchange. The consummation of this Agreement,
including the issuance of the FNTT common shares to the stockholders of XXXX as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon the
circumstances under which the XXXX stockholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, XXXX shall cause to
be delivered, and the XXXX stockholders shall deliver to FNTT, the investment
letter referenced in Section 3.1.
Section 4.5 Third Party Consents. XXXX and FNTT agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.6 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the XXXX or FNTT Schedules or as permitted or
contemplated by this Agreement, the parties hereto will each use its best
efforts to:
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear
and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under
material contracts, leases and instruments relating to or affecting
its assets, properties and business;
(v) maintain and preserve its business organization intact, retain its
key employees and maintain its relationship with its material
suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all provincial, federal and
state laws and all rules, regulations and orders imposed by
provincial, federal or state governmental authorities.
(vii) utilize its best efforts in order to establish and/or maintain a
trading market for FNTT' s common stock on a U.S. over the counter
market.
(viii) From and after the date of this Agreement until the Closing
Date, neither XXXX nor FNTT will, without the prior consent of the
other party:
(ix) except as otherwise specifically set forth herein, make any
change in their respective articles of incorporation or bylaws;
(x) declare or pay any dividend on its outstanding shares of capital
stock, except as may otherwise be required by law, or effect any stock
split or otherwise change its capitalization, except as provided
herein;
(xi) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers;
(xii) grant, confer or award any options, warrants, conversion rights
or other rights not existing on the date hereof to acquire any shares
of its capital stock; or
(xiii) purchase or redeem any shares of its capital stock, except as
disclosed herein.
Section 4.7 Indemnification.
(a) XXXX hereby agrees to indemnify FNTT and each of the officers,
agents and directors of FNTT as of the date of execution of this Agreement
against any loss, liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy by XXXX appearing in or
misrepresentation made in this Agreement. The indemnification provided for
in this paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement for a
period of 18 months.
(b) FNTT and its officers and directors hereby agree to indemnify XXXX
and each of the officers, agents, directors and current shareholders of
XXXX as of the Closing Date against any loss, liability, claim, damage or
expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened or any claim whatsoever), to which it
or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement and particularly
the representation regarding no liabilities referred to in Section 2.4(b).
The indemnification provided for in this Section shall survive the Closing
and consummation of the transactions contemplated hereby and termination of
this Agreement for a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF FNTT
The obligations of FNTT under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and warranties
made by XXXX in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such representations and
warranties were made at the Closing Date (except for changes therein permitted
by this Agreement), and XXXX shall have performed or complied with all covenants
and conditions required by this Agreement to be performed or complied with by
XXXX prior to or at the Closing. FNTT shall be furnished with a certificate,
signed by a duly authorized officer of XXXX and dated the Closing Date, to the
foregoing effect.
Section 5.2 Officer's Certificate. FNTT shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
XXXX to the effect that: (a) the representations and warranties of XXXX set
forth in the Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects true and correct
as if made on the Closing Date; (b) XXXX has performed all covenants, satisfied
all conditions, and complied with all other terms and provisions of this
Agreement to be performed, satisfied or complied with by it as of the Closing
Date; (c) since the date of XXXX'x incorporation there has not been any
materially adverse change in the business, prospects, properties or financial
condition of XXXX; (d) since such date and other than as previously disclosed to
FNTT, XXXX has not entered into any material transaction other than transactions
which are usual and in the ordinary course of its business; and (e) no
litigation, proceeding, investigation or inquiry is pending or, to the best
knowledge of XXXX, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement or,
to the extent not disclosed in the XXXX Schedules, by or against XXXX which
might result in any material adverse change in any of the assets, properties,
business or operations of XXXX.
Section 5.3 No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of XXXX.
Section 5.4 Other Items. FNTT shall have received such further documents,
certificates or instruments relating to the transactions contemplated hereby as
FNTT may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXX
The obligations of XXXX under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
Section 6.1 Accuracy of Representations. The representations and warranties
made by FNTT in this Agreement were true when made and shall be true as of the
Closing Date (except for changes therein permitted by this Agreement) with the
same force and effect as if such representations and warranties were made at and
as of the Closing Date, and FNTT shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by FNTT prior to or at the Closing. XXXX shall have been furnished with a
certificate, signed by a duly authorized executive officer of FNTT and dated the
Closing Date, to the foregoing effect.
Section 6.2 Officer's Certificate. XXXX shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
FNTT to the effect that: (a) the representations and warranties of FNTT set
forth in the Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects true and correct
as if made on the Closing Date; (b) FNTT has performed all covenants, satisfied
all conditions, and complied with all other terms and provisions of the
Agreement to be performed, satisfied or complied with by it as of the Closing
Date; (c) since the date of FNTT's audited Balance Sheet of December 31, 2003,
there has not been any materially adverse change in the business, prospects,
properties or financial condition of FNTT; (d) since such date, FNTT has not
entered into any material transaction other than transactions which are usual
and in the ordinary course of its business; and (e) no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of FNTT,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the FNTT Schedules, by or against FNTT which might
result in any material adverse change in any of the assets, properties, business
or operations of FNTT.
Section 6.3 No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of FNTT.
Section 6.4 Compliance with Reporting Requirements. As of the Closing Date,
FNTT shall be current in and in compliance with all requirements of all filings
required to be tendered to the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended.
Section 6.5 . Further Actions and Other Items. XXXX shall receive and FNTT
is obligated to provide such further documents, certificates, or instruments
relating to the transactions contemplated hereby as XXXX may reasonably request.
At any time and from time to time, each party agrees, at its expense, to take
such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as stated in Schedule 7.1, each
party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
Section 7.2 Law, Forum and Jurisdiction. This Agreement shall be construed
and interpreted in accordance with the laws of the State of California.
Section 7.3 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to XXXX: Xx. Xxxxx X Xxxx
00000 Xxxxxxxxx Xxxxxx, Xxxxx X
Xxxxx, XX 00000
If to FNTT: Xx. Xxxxx X. Xxxxxx, Xx.
0000 X. Xxxxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's Schedules delivered
pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely among XXXX
and FNTT and, except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
Section 7.8 Entire Agreement This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other courses of dealing, understandings,
agreements, representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by a written
agreement signed by all parties hereto.
Section 7.9 Survival; Termination. Except as otherwise provided herein, the
representations, warranties and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated.
Section 7.10 Counterparts Facsimile Execution. For purposes of this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the
request of any party, a facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier machine as a
defense to the enforcement of the Agreement or any amendment or other document
executed in compliance with this Section.
Section 7.11 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
Section 7.12 Incorporation of Recitals. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
Section 7.13 Expenses. Each party herein shall bear all of their respective
costs and expenses incurred in connection with the negotiation of this Agreement
and in the consummation of the transactions provided for herein and the
preparation therefore.
Section 7.14 Headings; Context. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon and shall inure
only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.17 Severability. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
Section 7.18 Failure of Conditions; Termination. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, either of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions hereof
Section 7.20 Execution Knowing and Voluntary. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprised by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
Section 7.21 Shareholder Meeting prior to Closing. In addition to the
obligations contained herein, as soon as practicable after the signing of this
Agreement and prior to Closing, all parties to this Agreement shall cooperate to
see that a meeting of the shareholders of FNTT be held at which the FNTT
shareholders shall adopt and approve amendments to the FNTT Articles of
Incorporation, changing the name of FNTT to "VOS Systems, Inc." (or such other
name as may be available and acceptable to management of XXXX), increase the
minimum number of board seats to five(5), elect the board of directors, Increase
the authorized common stock to a minimum of 90,000,000 and approve the terms of
this agreement including the related issuance of FNTT common stock.
Section 7.22 Assumption of Liability and Assignment of Asset
XXXX, FNTT and Xx. Xxxxx X. Xxxxxx, Xx. agree that Xx. Xxxxxx shall personally
assume responsibility for any FNTT debt that is currently outstanding as of the
date of this Agreement, up to a maximum of $100,000 US dollars. Further, it is
hereby agreed that Xx. Xxxxxx shall forgive any and all existing loans, other
debts, or outstanding compensation due him from FNTT at this date. In
consideration thereof, FNTT and XXXX do hereby agree to assign to Xx. Xxxxxx
certain assets currently owned by FNTT, including the outstanding Promissory
Note and Asset Purchase Agreement from LDI Group, LLC, a California limited
liability corporation, and any other assets expressly listed and accepted by the
parties as Schedule 7.22 to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, and entered
into as of the date first above written.
1st Net Technologies, Inc., VOS Systems, Inc.,
a Colorado corporation a California corporation
By: /s/ Xxxxx X. Xxxxxx, Xx. By: /s/ Xxxx X. Xxxx
------------------------ -------------------------
Xxxxx X. Xxxxxx, Xx. Xxxx X. Xxxx
Its: CEO Its: CEO
Accepting the terms and responsibilities indicated under section 7.22
Assumption of Liability and Assignment of Asset including the associated
schedule related to this agreement.
Agreed and Accepted by:
By: /s/ Xxxxx X. Xxxxxx, Xx.
-----------------------------------
Xxxxx X. Xxxxxx, Xx., an individual
EXHIBIT "A"
----------------------
FORM OF INVESTMENT LETTERS
--------------------
INVESTMENT LETTER
VOS Systems, Inc., a California corporation
00000 Xxxxxxxxx Xxxxxx, Xxxxx X
Xxxxx, XX 00000
Management:
The undersigned herewith exchanges certificate(s) for shares of common stock of
VOS Systems, Inc., a California corporation, ("OldCo"), as described below
(endorsed, having executed stock powers attached or declared lost) in acceptance
of and subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement"), between 1st Net Technologies, Inc., a Colorado
corporation ("NewCo" or the "Company") and OldCo, dated July 1, 2004,
availability or receipt of which is hereby acknowledged, in exchange for shares
of common stock of NewCo (the "Exchange Shares"). The undersigned hereby
represents, warrants, covenants and agrees with you that, in connection with the
undersigned's acceptance of the Exchange Shares and as of the date of this
letter:
1. The undersigned is aware that his, her or its acceptance of the Exchange
Shares is irrevocable.
2. The undersigned warrants full authority to deposit all shares referred to
above and NEWCO will acquire a good and unencumbered title thereto.
3. The undersigned has full power and authority to enter into this Agreement and
that this Agreement constitutes a valid and legally binding obligation of the
undersigned.
4. By execution hereof, the undersigned hereby confirms that the NewCo common
stock to be received in exchange for OldCo common stock (the "Securities"), will
be acquired for investment for the undersigned's own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part thereof,
and that the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. By execution hereof, the
undersigned further represents the undersigned does not have any contract,
undertaking, agreement or arrangement with any third party, with respect to any
of the Securities.
5. The undersigned understands that the Securities are being issued pursuant to
available exemption thereto and have not been registered under the Securities
Act of 1933, as amended (the "1933 Act"), or under any state securities laws.
The undersigned understands that no registration statement has been filed with
the United States Securities and Exchange Commission nor with any other
regulatory authority and that, as a result, any benefit which might normally
accrue to a holder such as the undersigned by an impartial review of such a
registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he/she/it cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
registration become available, In this connection the undersigned understands
that the Company has advised the Transfer Agent for the Common Shares to be
issued to US residents that the Securities are "restricted securities" under the
1933 Act and that they may not be transferred by the undersigned to an person
without the prior consent of the Company, which consent of the Company will
require an opinion of counsel to the effect that, in the event the Securities
are not registered under the 1933 Act, any transfer as may be proposed by the
undersigned must be entitled to an exemption from the registration provisions of
the 1933 Act. To this end, the undersigned acknowledges that a legend to the
following effect will be placed upon the certificate representing the Securities
and that the Transfer Agent has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM REGISTRATION THEREUNDER IS
AVAILABLE, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on his/her/its
certificate for the Common Shares limits their value, including their value as
collateral.
6. Representations and Warranties of the undersigned. The undersigned
represents and warrants to the Company as follows;
a) The undersigned, either alone or with the assistance of his/her purchaser
representative (as the term is defined under Rule 501(h) of Regulation D),
if any, has had an opportunity to ask questions of and receive answers from
duly designated representatives of the Company concerning the terms and
conditions of the exchange and has been afforded an opportunity to examine
such documents and other information which the undersigned or his/her
representative, if any, has requested for the purpose of verifying the
information set forth in the Agreement and Plan of Merger referred to above
and for the purpose of answering any questions the undersigned or his/her
representative, if any, may have concerning the business and affairs of the
Company.
b) The undersigned and his/her representative, if any, understand that no
person has been authorized to give any information or to make any
representations which were not contained in the Agreement and Plan of
Merger or furnished pursuant to subparagraph (a) above and that the
undersigned has not relied on any other representations or information.
c) The undersigned acknowledges and understands that these Securities have not
been registered under the Securities Act of 1933, as amended (the "Act"),
and must be held indefinitely unless they are subsequently registered under
the Act and/or applicable state securities laws, or exemptions from such
registration are available. The Company is the only entity which may
register its Securities under the Act and it is not contemplating
registering any of its Securities. Furthermore, the Company has not made
any representation, warranties, or covenants regarding the registration of
the Securities or some other exemption under the Act.
d) The undersigned is aware that the Securities are and will be, when issued,
"restricted securities" as that term is defined in Rule 144 (the "Rule") of
the General Rules and Regulations under the Act.
e) The undersigned is fully aware of the applicable limitations on the resale
of the Securities. The Rule permits sales of "restricted securities" held
for not less than two years and upon compliance with the requirements of
the Rule. If the Rule is available to the undersigned, the undersigned may
make only routine sales of securities in limited amounts in accordance with
the terms and conditions of that Rule.
f) The undersigned understands that any and all certificates representing the
Securities and any and all securities issued in replacement thereof or in
exchange therefore shall bear the following legend, or one substantially
similar thereto, which The undersigned has read and understands;
"The Securities represented by this Certificate have not been registered
under the Securities Act of 1933 (the Act) and are restricted securities as
that term is defined in Rule 144 under the Act. The Securities may not be
offered for sale, sold, or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company."
g) In addition, the certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefore, shall
bear such legend as may be required by the securities laws of the state in
which the undersigned resides.
h) Because of the restrictions imposed on resale, the undersigned understands
that the Company shall have the right to note stop-transfer instructions in
the stock transfer records, and the undersigned has been informed of the
Company's intention to do so. Any sales, transfers, or any other
dispositions of the Securities by the undersigned, if any, will be in
compliance with the Act.
i) The undersigned acknowledges that, either directly or with the assistance
of his/her the undersigned Representative, if any, The undersigned has such
knowledge and experience in financial and business matters as to make an
informed investment decision based upon information set forth in the
Agreement and Plan of Reorganization and such additional information as the
undersigned may have requested and received from the Company.
j) The undersigned further represents that the undersigned can bear the
economic risk of loss of his/her entire investment; that the address set
forth below is his/her principal residence [or, if The undersigned is a
corporation, partnership or other entity, the address of its principal
place of business]; that The undersigned intends the exchange of the
Securities for the undersigned's own account and not, in whole or in part,
for the account of any other person; the undersigned is purchasing the
Securities for investment and not with a view to public resale or
distribution; and that the undersigned has not formed any entity for the
purpose of purchasing the Securities.
k) The undersigned understands that the Company is relying upon the
representations and statements made by the undersigned, in this Investment
Letter, and the representations and statements made by the undersigned's
Representative, if the undersigned has utilized the services of a Purchaser
Representative.
In Witness Whereof, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: ______________, 2004
Very truly yours,
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(signature)
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(print name in full)
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(street address)
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(city, state, zip)
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(social security number or
employer identification number)
LOST CERTIFICATE DECLARATION
The undersigned, _________________________________, hereby declares as follows:
1. I am the registered owner of Certificate No. ______________ dated
______________, representing (__________) shares of Common Stock of VOS Systems,
Inc., a California corporation, (the "Company").
2. Said certificate has been lost or stolen and, after diligent search
therefore, has not been found.
3. I have made no assignment, endorsement, transfer or other disposition
of the shares represented by said certificate.
4. In consideration of the Company authorizing the issuance of a
replacement certificate in my name, I agree to deliver said lost certificate
to the Company immediately should it be recovered by me, and to indemnify and
defend the Company, or any officer, director or transfer agent of the Company,
against any claim that may be made against it, including any expense or
liability, on account of the alleged loss, theft or destruction of the
certificate or the issuance of said replacement certificate.
I declare under penalty of perjury that the foregoing is true and correct and
that this declaration was executed at
__________________________, ____________, on ______________________, 2004.
County State
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Name of shareholder
EXHIBIT "B"
XXXX Shareholders List:
