Exhibit 2.0
Business Combination Agreement
April 25, 2001
BUSINESS COMBINATION AGREEMENT
This agreement is entered into the 25th day of April, 2001 between ZKID
NETWORK COMPANY, a Nevada corporation, (herein, "Company") and XXXXXX XXXXXXXX
and XXXXXXX X. XXXXXX (herein, collectively, Sellers) and QUADRIC ACQUISITION
CORPORATION, a Nevada corporation, (herein, "Quadric). The Company , Sellers and
Quadric desire to enter into a business combination transaction whereby the
Company will issue shares to Sellers in exchange for their shares of Quadric.
For good and valuable consideration, receipt of which is acknowledged
the parties agree, represent and warrant the following:
Agreement
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A. Exchange of Shares. The exchange of shares will be accomplished by a
corporate merger whereby Quadric will be merged into and with the Company (See
Exhibit "A" Plan of Merger and Articles of Merger) Quadric will be the
disappearing corporation and the Company will be the surviving company. The
Company and Sellers agree to exchange shares whereby the Company will acquire
all of the issued and outstanding stock of Quadric. The Company will issue
Company shares to Sellers in exchange for their shares. The Company will issue
one (1) share of Company stock for each share of Sellers' Quadric stock. The
Company will acquire the Sellers' shares and issue to Sellers a total of Five
Million (5,000,000) shares Company common stock to Sellers. The shares will be
issued from the Company's treasury pursuant to the securities transaction
exemption afforded by Section 4(2) of the Securities Act of 1933, as amended.
The shares will be restricted securities bearing the Company's standard
restrictive legend. Xxxxxxxx will receive Four Million Seven Hundred Fifty
Thousand (4,750,000) common shares and Xxxxxx will receive Two Hundred Fifty
Thousand (250,000) shares.
B. Representations, Warranties and Covenants of the Company: The Company
represents and warrants to Sellers as of the date hereof and as of the Closing
Date:
SECTION 1. Enforceability of Agreement Against the Company. The
Company has all necessary power and authority to enter into this Agreement to
which it is a party, to carry out the obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligations of the Company enforceable against it in
accordance with the respective terms.
SECTION 2. Shares. The shares when issued will be free and clear of
all liens, charges, demands or adverse claims or other restrictions on the
exercise of any of the attributes of ownership. There are no contracts,
arrangements, commitments or restrictions relating to the issuance, sale,
transfer or purchase or obtaining of shares or other ownership interests in the
Shares, except for this Agreement.
SECTION 3. Incorporation, Authority and Qualification of The Company.
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada. The Company has all necessary
corporate power and authority to carry on the business now being conducted by
it. The Company is duly qualified to do business, and is in good standing, in
each jurisdiction, if any, where the character of its properties owned, operated
or leased or the nature of its activities makes such qualification necessary.
The Company is authorized to issue 100,000,000 common shares, par value $0.0001
per share. The company has 25,857,034 common shares issued and outstanding. The
Company is authorized to issue 10,000,000 preferred shares. One million shares
of Series A 2001 Preferred Shares have been authorized for issuance to Xxx X.
Xxxxxxxxxxx. There are no outstanding options, warrants, rights or otherwise,
other than those disclosed in the financial statements.
SECTION 4. No Conflict. The execution and delivery by the Company of
this Agreement and each Related Document to which the Company are parties have
been obtained and all filings and notifications required by law, agreement or
otherwise have been made, the performance by the Company of this Agreement and
each Related Document to which they are parties will not:
a. Violate or conflict with any term or provision of the articles
or certificate of incorporation (or other charter documents)
of the Company;
b. Conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
applicable to Company;
c. Conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or
both, would become a default) under, give to others any rights
of termination, amendment, acceleration or cancellation of, or
result in the creation of any lien on any of the assets
pursuant to, any assigned contract or any licenses;
d. Without limiting the generality of the foregoing, result in
the termination, denial or impairment of any material
contract, arrangement or benefit granted with respect to the
Company's business, or require the payment of any fees, taxes
or assessments, pursuant to any federal, state or local
program relating to minority-owned businesses.
SECTION 5. Consents, Approvals and Notifications. The execution and
delivery by the Company of this Agreement and each Related Document to which it
is a party does not, and the performance by it of this Agreement and such
Related Documents will not, require any consent, approval, authorization or
other action by, or filing with or notification to, any Governmental Authority
or any other Person.
SECTION 6. Financial Statements.
6.1 The Company has furnished to Sellers copies of (a)
audited balance sheets of the Company and audited statements of income, changes
in shareholders' equity and statements of cash flow for the period ending
December 31, 1999 and 2000, together with the reports and notes thereon,
independent certified public accountants (collectively, the "Audited Financial
Statements").
6.2 The Audited Financial Statements (a) have been
prepared in conformity with GAAP applied on a consistent basis from year to year
(except as noted otherwise therein); and (b) assuming the Company will continue
as a going concern, are true and correct and present fairly in all material
respects the financial condition of the Company and the results of operations
and changes in cash flow of the Company for the periods to which each relates.
6.3 To the knowledge of the Company, the Interim
Financial Statements, if prepared, (a) have been prepared in conformity with
GAAP applied on a consistent basis from year to year (except as noted otherwise
therein), subject to normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, be material) and the absence of
notes (which, if presented, would not differ materially from those included in
the Audited Financial Statements), and (b) assuming the Company will continue as
a going concern, are true and correct and present fairly in all material
respects the financial condition of the Company and the results of operations
and changes in cash flow of the Company for the periods to which each relates.
SECTION 7. Litigation. There is no claim, action, investigation,
arbitration or proceeding pending or, threatened against the Company, or against
or relating to any of the assets or the ability of the Company to perform its
obligations hereunder, before any arbitrator, judge, court or governmental
authority. Company is not subject to any order, writ judgment, injunction,
decree, determination or award of any arbitrator, judge, court or governmental
authority.
SECTION 8. Contracts. The Company has disclosed a complete list of
all written and oral agreements and contracts in effect on the date of this
Agreement to which the Company is a party in connection with the business
operations or by which any of the Company's properties or assets relating to the
operation are bound. The are no contracts in formation or which are capable of
subsequent formation as a result of future satisfied conditions. The Company has
made available to Sellers true and complete copies of the contracts (including
any amendments or modifications thereto).
SECTION 9. Environmental Matters. To the best knowledge of the
Company, it has not used any property, real or personal to generate,
manufacture, refine, transport, treat, store, handle, or dispose of any
hazardous substances except in accordance with all applicable federal and state
environmental laws.
SECTION 10. Taxes. The Company has or will duly file or caused to be
filed all federal income tax returns and all other federal, state, county, local
or city tax returns which are required to be filed, including, but not limited
to, income and employee withholding taxes, and the Company has paid or caused to
be paid all taxes shown on said returns or on any tax assessment received by it
to the extent that such taxes have become due, or has set aside on its books
reserves (segregated to the extent required by sound accounting practice)
reasonably deemed by the Company to be adequate with respect thereto. No events
have occurred which could impose upon Sellers, any transferee liability for any
taxes, penalties, or interest due or to become due from the Company.
SECTION 11. Absence of Changes. Since the date of the Audited
Financial Statements, the Company has operated its business in the ordinary
course consistent with past practices and there has not been, except as
disclosed in this Agreement or the Exhibits attached hereto:
i. any Material Adverse Effect;
ii. any damage, destruction or loss (whether or not covered by
insurance) affecting any tangible asset or property used or useful in the
business operations, normal wear and tear excepted;
iii. any payments, discharges or satisfactions by the Company of
any liens, claims, charges or liabilities (whether absolute, accrued, contingent
or otherwise and whether due or to become due) relating to the business
operations, other than in the ordinary course of the business and consistent
with past practice;
iv. any licenses, sales, transfers, pledges, mortgages or other
dispositions of any tangible or intangible assets having a value over $1,000 (in
the aggregate) used or held for use in connection with the operation of the
business, other than in the ordinary course of business and consistent with past
practice;
v. any write-offs as uncollectible of any accounts receivable or
notes receivable of the operations, or any portion thereof, not provided for in
the allowance for uncollectible accounts in the Interim Financial Statements;
vi. any cancellations of any material debts or claims of, or any
amendments, terminations or waivers of any rights of material value to, the
business operations;
vii. any general uniform increase in or change in the method of
computing the compensation of employees of the Company who perform services for
the benefit of the business operations;
viii. any material changes in the manner in which the Company
extends discount or credits to customers or otherwise deals with customers of
its business;
ix. any material changes in the accounting methods or practices
followed by the Company and or any changes in depreciation or amortization
policies or rates theretofore adopted;
x. any capital commitments by the Company and for additions to
property, plant or equipment of the business operations;
xi. any agreements or commitments to merge or consolidate with or
otherwise acquire any other corporation, association, firm or other business
organization or division thereof;
xii. any declarations of dividend, payment of any dividend,
issuance of any securities, purchase or redemption of any securities,
commitments or authorizations for any changes to its Articles of Incorporation
or amendments to any by-laws, conversions of any options, warrants or otherwise
into common shares, and except as disclosed in paragraph B.3. relating to the
total shares issued and outstanding which resulted from a corporate
reorganization;
xiii. any other material transaction relating to the Company other
than in the ordinary course of the business and consistent with past practice;
or
xiv. any agreements or understandings, whether in writing or
otherwise, for the Company to take any of the actions specified in items i.
through xii. above.
SECTION 12. Undisclosed Liabilities. To the best knowledge of the
Company, it does not have any liabilities or obligations of any nature that
would be required by GAAP to be reflected in the Financial Statements (subject,
in the case of unaudited statements, to normal year-end audit adjustments),
except: (a) such liabilities and obligations which are reflected in the
Financial Statements, or (b) such liabilities or obligations which were incurred
in the ordinary course of business for normal trade or business obligations and
are not individually or in the aggregate in excess of $1,000.
SECTION 13. Compliance with Laws. Except as individually or in the
aggregate would not have a Material Adverse Effect, the Company has complied in
all respects with all laws of all Governmental Authorities (including all tariff
and reporting requirements) with respect to its business operations.
SECTION 14. Consents, Approvals and Notifications. The execution and
delivery by XXXXX of this Agreement to which she is a party does not, and the
performance by her of this Agreement will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
Governmental Authority or any other Person.
B. Representations, Warranties Covenants of Sellers and Quadric:
Quadric and Sellers represent and warrant to the Company as of the date hereof
and as of the Closing Date:
SECTION 1. Enforceability of Agreement Against the Sellers and
Quadric. Quadric and Sellers have all necessary power and authority to enter
into this Agreement to which each is a party, to carry out the obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligations of the Sellers and Quadric
enforceable against it in accordance with the respective terms.
SECTION 2. Shares. Sellers' shares have been validly issued and are
free and clear of all liens, charges, demands or adverse claims or other
restrictions on the exercise of any of the attributes of ownership. There are no
contracts, arrangements, commitments or restrictions relating to the issuance,
sale, transfer or purchase or obtaining of shares or other ownership interests
in the Shares, except for this Agreement and the Lock-Up Agreements attached to
Quadric's Form 10-SB registration statement.
SECTION 3. Incorporation, Authority and Qualification of Quadric.
Quadric is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada. Quadric has all necessary
corporate power and authority to carry on the business now being conducted by
it. Quadric is duly qualified to do business, and is in good standing, in each
jurisdiction, if any, where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary.
Quadric is authorized to issue 25,000,000 common shares, par value $0.001 per
share. The company has 5,000,000 common shares issued and outstanding. No other
classes of stock are authorized or issued. There are no outstanding options,
warrants, rights or otherwise, other than those disclosed in the financial
statements.
SECTION 4. No Conflict. The execution and delivery by the Sellers and
Quadric of this Agreement and each Related Document to which the each is a party
have been obtained and all filings and notifications required by law, agreement
or otherwise have been made, the performance by the Sellers and Quadric of this
Agreement and each Related Document to which each is a party will not:
C. Violate or conflict with any term or provision of the articles
or certificate of incorporation (or other charter documents)
of Quadric;
D. Conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
applicable to Quadric or Sellers;
E. Conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or
both, would become a default) under, give to others any rights
of termination, amendment, acceleration or cancellation of, or
result in the creation of any lien on any of the assets
pursuant to, any assigned contract or any licenses;
F. Without limiting the generality of the foregoing, result in
the termination, denial or impairment of any material
contract, arrangement or benefit granted with respect to
Quadric or Sellers' business, or require the payment of any
fees, taxes or assessments, pursuant to any federal, state or
local program relating to minority- owned businesses.
SECTION 5. Consents, Approvals and Notifications. The execution and
delivery by the Sellers and Quadric of this Agreement and each Related Document
to which each is a party does not, and the performance by it of this Agreement
and such Related Documents will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
Governmental Authority or any other Person.
SECTION 6. Financial Statements.
6.1 Sellers and Quadric have furnished to the Company
copies of (a) audited balance sheets of the Company and audited statements of
income, changes in shareholders' equity and statements of cash flow for the
period ending February 5, 2000 and December 31, 2000, together with the reports
and notes thereon, independent certified public accountants (collectively, the
"Audited Financial Statements").
6.2 The Audited Financial Statements (a) have been
prepared in conformity with GAAP applied on a consistent basis from year to year
(except as noted otherwise therein); and are true and correct and present fairly
in all material respects the financial condition of Quadric and the results of
operations and changes in cash flow of Quadric for the periods to which each
relates.
6.3 To the knowledge of the Sellers and Quadric , the
Interim Financial Statements, if prepared, (a) have been prepared in conformity
with GAAP applied on a consistent basis from year to year (except as noted
otherwise therein), subject to normal recurring year-end adjustments (the effect
of which will not, individually or in the aggregate, be material) and the
absence of notes (which, if presented, would not differ materially from those
included in the Audited Financial Statements), and are true and correct and
present fairly in all material respects the financial condition of the Company
and the results of operations and changes in cash flow of Quadric for the
periods to which each relates.
SECTION 7. Litigation. There is no claim, action, investigation,
arbitration or proceeding pending or, threatened against Quadric, or against or
relating to any of the assets or the ability of it to perform its obligations
hereunder, before any arbitrator, judge, court or governmental authority.
Quadric is not subject to any order, writ judgment, injunction, decree,
determination or award of any arbitrator, judge, court or governmental
authority.
SECTION 8. Contracts. Quadric has disclosed the complete list of all
written and oral agreements and contracts in effect on the date of this
Agreement to which Quadric is a party in connection with the business operations
or by which any of its properties or assets relating to the operation are bound.
The are no contracts in formation or which are capable of subsequent formation
as a result of future satisfied conditions. Quadric has made available to the
Company true and complete copies of the contracts (including any amendments or
modifications thereto).
SECTION 9. Environmental Matters. To the best knowledge of Quadric,
it has not used any property, real or personal to generate, manufacture, refine,
transport, treat, store, handle, or dispose of any hazardous substances except
in accordance with all applicable federal and state environmental laws.
SECTION 10. Taxes. Quadric has or will duly file or caused to be filed
all federal income tax returns and all other federal, state, county, local or
city tax returns which are required to be filed, including, but not limited to,
income and employee withholding taxes, and it has paid or caused to be paid all
taxes shown on said returns or on any tax assessment received by it to the
extent that such taxes have become due, or has set aside on its books reserves
(segregated to the extent required by sound accounting practice) reasonably
deemed by it to be adequate with respect thereto.
SECTION 11. Absence of Changes. Since the date of the Audited
Financial Statements, Quadric has operated its business in the ordinary course
consistent with past practices and there has not been, except as disclosed in
this Agreement or the Exhibits attached hereto:
i. any Material Adverse Effect;
ii. any damage, destruction or loss (whether or not covered by
insurance) affecting any tangible asset or property used or useful in the
business operations, normal wear and tear excepted;
iii. any payments, discharges or satisfactions by it of any liens,
claims, charges or liabilities (whether absolute, accrued, contingent or
otherwise and whether due or to become due) relating to the business operations,
other than in the ordinary course of the business and consistent with past
practice;
iv. any licenses, sales, transfers, pledges, mortgages or other
dispositions of any tangible or intangible assets having a value over $1,000 (in
the aggregate) used or held for use in connection with the operation of the
business, other than in the ordinary course of business and consistent with past
practice;
v. any write-offs as uncollectible of any accounts receivable or
notes receivable of the operations, or any portion thereof, not provided for in
the allowance for uncollectible accounts in the Interim Financial Statements;
vi. any cancellations of any material debts or claims of, or any
amendments, terminations or waivers of any rights of material value to, the
business operations;
vii. any general uniform increase in or change in the method of
computing the compensation of employees of it who perform services for the
benefit of the business operations;
viii. any material changes in the manner in which Quadric extends
discount or credits to customers or otherwise deals with customers of its
business;
ix. any material changes in the accounting methods or practices
followed by Quadric and or any changes in depreciation or amortization policies
or rates theretofore adopted;
x. any capital commitments by Quadric and for additions to
property, plant or equipment of the business operations;
xi. any agreements or commitments to merge or consolidate with or
otherwise acquire any other corporation, association, firm or other business
organization or division thereof;
xii. any declarations of dividend, payment of any dividend,
issuance of any securities, purchase or redemption of any securities,
commitments or authorizations for any changes to its Articles of Incorporation
or amendments to any by-laws, conversions of any options, warrants or otherwise
into common shares, and except as disclosed in paragraph B.1. relating to the
total shares issued and outstanding which resulted from a corporate
reorganization;
xiii. any other material transaction relating to Quadric other than
in the ordinary course of the business and consistent with past practice; or
xiv. any agreements or understandings, whether in writing or
otherwise, for Quadric to take any of the actions specified in items i. through
xii. above.
SECTION 12. Undisclosed Liabilities. To the best knowledge of Quadric,
it does not have any liabilities or obligations of any nature that would be
required by GAAP to be reflected in the Financial Statements (subject, in the
case of unaudited statements, to normal year-end audit adjustments), except: (a)
such liabilities and obligations which are reflected in the Financial
Statements, or (b) such liabilities or obligations which were incurred in the
ordinary course of business for normal trade or business obligations and are not
individually or in the aggregate in excess of $1,000.
SECTION 13. Compliance with Laws. Except as individually or in the
aggregate would not have a Material Adverse Effect, Quadric has complied in all
respects with all laws of all Governmental Authorities (including all tariff and
reporting requirements) with respect to its business operations.
SECTION 14. Consents, Approvals and Notifications. The execution and
delivery by Quadric and Sellers of this Agreement to which each is a party does
not, and the performance by each of this Agreement will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority or any other Person.
C. Miscellaneous Provisions.
SECTION 1. Conditions to Closing
1.1 Conditions to Obligations of the Company. The
obligations of the Company to consummate the sale of the shares shall be subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions, any one of which may be waived by the Sellers without waiver of any
other rights or remedies which Sellers may have under this Agreement:
i. The Company's Closing Documents. At the Closing,
Sellers shall have executed and/or delivered the following Related Documents to
which they are parties or for which each is responsible: (1) This Agreement, and
(2) the exchange share certificates delivered to Sellers.
1.2 Conditions to Obligations of Sellers. The obligations
of Sellers to consummate the purchase of the shares contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions, any one of which may be waived by the Company
without waiver of any other rights or remedies which the Company may have under
this Agreement.
i. Closing Documents. At the Closing, Sellers shall have
executed and/or delivered this Agreement and delivered the Quadric shares to the
Company.
SECTION 2. Indemnification.
2.1 Survival. All representations and warranties and
covenants and agreements contained herein shall survive the execution of hereof
and the Closing Date. Any investigations by or on behalf of any party shall not
constitute a waiver as to enforcement of any representation, warranty or
covenant contained in this Agreement. No notice or information delivered by one
party shall affect the other party's right to rely on any representation or
warranty made by the party delivering the notice or information or relieve that
party of any obligations under this Agreement as the result of a breach of any
of its representations and warranties.
SECTION 3. General Provisions.
3.1 Headings and Interpretation. The headings used in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of any term or provision of this Agreement.
3.2 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.
3.3 Entire Agreement. This Agreement represents the
entire understanding of the parties with reference to the matters set forth
herein. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications and prior agreements among the parties relating
to the subject matter herein.
3.4 Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the parties hereto.
3.5 Applicable Law. This Agreement shall be governed by
the substantive laws of the State of Nevada, without regard to its conflict of
laws provisions.
3.6 Counterparts and Facsimile Transmission Copies of
Originals. This Agreement may be executed in several original or facsimile copy
counterparts and all so executed and transmitted shall constitute one Agreement,
binding on all the parties hereto even though all the parties are not
signatories to the original or the same counterpart. Facsimile transmitted
signatures shall be deemed valid as though they were originals and the parties
may perform any and all obligations and duties in reliance on the facsimile
copies.
3.7 Further Assurances, Additional Documents, Etc. The
parties will cooperate with each other to accommodate the intent of this
agreement.
IN WITNESS WHEREOF, the parties hereto have executed, or caused their
duly authorized representatives to execute, this Stock Purchase Agreement as of
the date first written above.
QUADRIC ACQUISITION CORPORATION ZKID NETWORK COMPANY
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx Xxxxxxxx
__________________________________ __________________________________
By: Xxxxxxx X. Xxxxxx By: Xxxxxx Xxxxxxxx
Title: President Title: President
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx Xxxxxxxx
__________________________________ __________________________________
Xxxxxxx X. Xxxxxx, Individually Xxxxxx Xxxxxxxx, Individually
