AGREEMENT OF EXCHANGE
BY AND BETWEEN
THE MEMBERS
OF
REMOTE BUSINESS MANAGEMENT, LLC
AND
SIMEX TECHNOLOGIES, INC.
DATED AS OF SEPTEMBER 15, 2003
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT is entered into as of this 15th day of
September, 2003 (the "Agreement"), by and between Probity Investigations, Inc.,
a Georgia corporation ("Probity") and SIMEX Technologies, Inc. a Delaware
corporation ("SIMEX").
R E C I T A L S:
A. Probity owns one hundred percent (100%) of the membership
interests of Remote Business Management, LLC, a Georgia limited liability
company ("RBM") and desires to exchange such membership interests (the
"Membership Interests") with SIMEX for SIMEX common stock, all on the terms and
subject to the conditions set forth herein (the "Exchange").
B. RBM is in the business of developing and implementing
technology, digital video recording and video and audio surveillance systems
(the "RBM Business").
C. The respective Boards of Directors of SIMEX and Probity have
approved the Exchange, upon the terms and subject to the conditions set forth
herein.
D. The parties hereto intend for the Exchange to qualify, for
federal income tax purposes, as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, conditions and agreements set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
ARTICLE I
THE EXCHANGE
1.1. The Exchange. Upon the terms and subject to the conditions
hereof, at the Closing (as defined in Section 1.3), on the Closing Date, Probity
shall assign, transfer and deliver to SIMEX the Membership Interests, and SIMEX
shall take and accept the Membership Interests in exchange for the consideration
set forth in Section 1.2 below.
1.2. Issuance of SIMEX Stock. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, SIMEX shall issue
and deliver to Probity, and Probity shall accept and take, Sixteen Million
(16,000,000) shares of authorized and previously unissued shares or treasury
shares of SIMEX Stock. As a result of the Exchange, RBM shall become a direct,
wholly-owned subsidiary of SIMEX.
1.3. Closing and Closing Date. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 6.1, and subject to the satisfaction or waiver of
the conditions set forth in Article VIII, the closing of the Exchange (the
"Closing") will take place as promptly as practicable (and in any event within
two
(2) business days after satisfaction of the conditions set forth in Sections 5.1
and 5.2) (the "Closing Date") at the offices of Xxxxxxxxx Xxxxxxx, LLP, The
Forum, 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, unless another
date or place is agreed to by the parties.
1.4. Delivery of Certificates. At the Closing, Probity shall
surrender for cancellation certificates representing the Membership Interests
(or if no certificates were ever issued, the appropriate assignment documents),
against delivery of certificates representing the SIMEX Stock for which the
Membership Interests are to be exchanged at Closing.
1.5. No Further Ownership Rights in Stock. The shares of SIMEX
Stock shall be deemed to have been issued and paid in full satisfaction of all
rights pertaining to the Membership Interests.
1.6. No Fractional Shares of SIMEX Stock. No scrip or shares of
SIMEX Stock representing fractional shares of SIMEX Stock or any interests
therein or rights thereto or book-entry credit of the same shall be issued upon
the surrender for exchange of the Membership Interests.
1.7. Lost Certificates. If any certificate representing the
Membership Interests shall have been issued but have been lost, stolen or
destroyed, Probity shall make an affidavit of that fact, if required by SIMEX,
and post a bond or other collateral security in such reasonable amount as SIMEX
may direct as indemnity against any claim that may be made against it with
respect to such certificate. SIMEX will deliver in exchange for such lost,
stolen or destroyed certificate the applicable Exchange Consideration with
respect to the Membership Interests represented thereby.
1.8. Further Assurances. At and after the Effective Time, the
officers and directors of SIMEX will be authorized to execute and deliver, in
the name and on behalf of Probity, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of Probity, any other
actions and things to vest, perfect or confirm of record or otherwise in SIMEX,
any and all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by SIMEX, as a result of or in
connection with the Exchange.
1.9. Transfer Books. The transfer book of RBM shall be closed
immediately upon the Effective Time and there shall be no further registration
of transfers of membership interests of RBM thereafter on the records of RBM.
1.10. Voting Agreement.
(a) For a period of two (2) years or until such time as
the stock is sold to the public under Rule 144 or otherwise, Probity
(and/or its assigns) agree that from and after the date of this
Agreement it will nominate and elect and will vote all of the shares of
SIMEX Common Stock owned or held of record by Probity (and/or its
assigns) to elect and, thereafter, for such period, to continue in
office the Company's Board of Directors consisting of each of the
following: Kyu Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxx Xxxx, L. Xxxxx Xxxxxxx
and Xxxx Xxxxxxx (but not their successors and assigns). Probity
(and/or its assigns) further agrees to maintain a Board of Directors of
the Company composed of five (5) members.
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(b) In order to effectuate Section 1.10(a), and in
addition to and not in lieu of Section 1.10(a), Probity (and/or its
assigns) hereby grant to the Secretary of the Company an irrevocable
proxy pursuant to Section 212(e) of the General Corporation Law of the
State of Delaware (the "Delaware Code"), coupled with an interest,
solely for the purpose of voting all of the shares of Stock of SIMEX
owned by the grantor of the proxy for the election of directors
nominated and composition of the Board in accordance with Section
1.10(a), with a term corresponding to the rights in Section 1.10(a).
(c) The provisions in this Section 1.10 shall survive the
Closing, and shall be binding upon and inure to the benefit of Probity
(its assigns) and their respective heirs, legal representatives,
successors and permitted assigns. Any stock certificate issued or
reissued with respect to the stock subject to this Voting Agreement
shall bear an appropriate legend.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PROBITY
Probity represents and warrants to SIMEX as follows, which
representations and warranties shall survive the Closing in accordance with
Section 7.1.
2.1. Organization and Qualification. RBM is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Georgia. RBM has the requisite corporate power and authority to
carry on the RBM Business as it is now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure so to
qualify could not reasonably be expected to have a material adverse effect on
the RBM Business or on RBM's properties or assets. Set forth on Schedule 2.1 is
a list of any states in which RBM is qualified to do business. Complete and
correct copies of the Articles of Organization and Operating Agreement of RBM as
in effect on the date hereof have been provided to SIMEX and will be attached to
a Closing and incumbency certificate to be delivered at Closing, substantially
in the form of Exhibit "A" ("Probity's Closing Certificate"). The corporate
records of RBM, a correct and complete copy of which have been delivered to
SIMEX, (a) accurately reflects all action taken by the members of RBM at
meetings of members; and (b) contains correct and complete copies, or originals,
of the respective minutes of all meetings or consent actions of the members.
2.2. Authority. Probity has the necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by Probity have been duly
and validly authorized and approved by Probity's Board of Directors. No other
corporate or shareholder proceedings on the part of Probity, its Board of
Directors or its stockholders is necessary to authorize or approve this
Agreement or to consummate the transactions contemplated hereby (including the
Exchange). This Agreement has been duly executed and delivered by Probity, and
assuming the due authorization, execution and delivery by SIMEX, constitutes the
valid and binding obligation of Probity, enforceable against Probity in
accordance with its terms, subject, in each case, to bankruptcy, insolvency,
reorganization,
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moratorium and similar laws of general application relating to or affecting
creditors' rights and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing. This Agreement, and the
transactions contemplated hereby, do not require the approval of the holders of
any (a) shares of capital stock of Probity or (b) voting securities of Probity.
2.3. Capitalization.
(a) All of the issued and outstanding Membership
Interests of RBM are validly issued, fully paid and nonassessable. All
outstanding Membership Interests were issued in accordance with
applicable federal and state securities laws.
(b) Except as set forth on Schedule 2.3(b), there are no
options, warrants, calls, convertible notes, agreements, commitments or
other rights outstanding at present that would obligate RBM or Probity
to issue, deliver or sell Membership Interests of RBM, or to grant,
extend or enter into any such option, warrant, call, convertible note,
agreement, commitment or other right. In addition to the foregoing, as
of the date hereof, RBM has no bond, debenture, note or other
indebtedness issued or outstanding that has voting rights in RBM.
Schedule 2.3(b) sets forth a list of (i) all holders of record of (A)
Membership Interests, and (B) options, warrants, convertible notes or
other rights to purchase Membership Interests.
(c) Except as set forth on Schedule 2.3(c), to the
knowledge of Probity, the Membership Interests are free and clear of
any lien, charge, security interest, pledge, option, right of first
refusal, voting proxy or other voting agreement, or encumbrance of any
kind or nature other than restrictions on transfer imposed by federal
and state securities laws (any of the foregoing, a "Lien").
2.4. Subsidiaries. RBM has no subsidiaries and does not otherwise
own or control, directly or indirectly, any equity interest, or any security
convertible into an equity interest, in any corporation, partnership, limited
liability company, joint venture, association or other business entity (any of
the foregoing, an "Entity").
2.5. No Conflicts, Required Filings and Consents. Except as set
forth on Schedule 2.5, neither of (i) the execution and delivery hereof by
Probity, nor (ii) the consummation of the transactions contemplated hereby
(including the Exchange) will:
(a) conflict with or violate the Articles of Organization
or Operating Agreement of RBM;
(b) result in a violation of any statute, ordinance,
rule, regulation, order, judgment or decree applicable to RBM or by
which RBM or any of its properties or assets may be bound or affected;
(c) result in a violation or material breach of, or
constitute a material default (or an event that, with notice or lapse
of time or both, would become a material default) under, or give to any
other party any material right of termination, amendment, acceleration
or cancellation of, any note, bond, mortgage or indenture, or any
material
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contract, agreement, arrangement, lease, license, permit, judgment,
decree, franchise or other instrument or obligation, to which RBM is a
party or by which RBM or any of its properties or assets may be bound
or affected;
(d) result in the creation of any Lien on any of the
property or assets of RBM; or
(e) require any material consent, waiver, license,
approval, authorization, order, permit, registration or filing with, or
notification to (any of the foregoing being a "Consent") (i) any
government or subdivision thereof, whether domestic or foreign, or any
administrative, governmental or regulatory authority, agency,
commission, court, tribunal or body, whether domestic, foreign or
multinational (any of the foregoing, a "Governmental Entity"); or (ii)
any other individual or Entity (collectively, a "Person").
2.6. Financial Statements. RBM has heretofore furnished SIMEX with
a correct and complete copy of (a) the unaudited financial statements of RBM for
the year ended December 31, 2002; and (b) the unaudited financial statements of
RBM for the six (6)-month period ended June 30, 2003 (all of the foregoing
collectively herein referred to as the "RBM Financial Statements"). Except as
disclosed therein, the RBM Financial Statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") (except for the absence
of footnotes and normal year end adjustments in the case of the RBM Financial
Statements for the period ended June 30, 2003) consistently followed throughout
the period indicated, and present fairly, in all material respects, the
financial position and operating results of RBM as of the dates, and during the
periods, indicated therein.
2.7. Absence of Changes. Except as provided in Schedule 2.7 and
except as contemplated hereby, since June 30, 2003 (a) RBM has not entered into
any material transaction that was not in the ordinary course of business; (b)
except for sales of services and equipment and supplies in the ordinary course
of business of RBM, there has been no sale, assignment, transfer, mortgage,
pledge, encumbrance or lease of any material asset or property of RBM; (c) there
has been (i) no declaration, payment or distribution of any type or nature to
any member of RBM in respect of the Membership Interests, whether in cash or
property, and (ii) no purchase or redemption of the Membership Interests of RBM;
(d) there has been no declaration, payment, or commitment for the payment, by
RBM, of a bonus or other additional salary, compensation, severance or benefit
to any employee or consultant of RBM that was not in the ordinary course of
business other than as specifically contemplated under Section 4.1(g); (e) there
has been no material release, compromise, waiver or cancellation of any debt to
or claim by RBM, or waiver of any material right of RBM; (f) there have been no
capital expenditures in excess of $10,000 for any single item, or $50,000 in the
aggregate; (g) there has been no change in accounting methods or practices or
revaluation of any asset of RBM (other than RBM Accounts Receivable (as defined
in Section 2.26) written down in the ordinary course of business not in excess
of $5,000 for any single RBM Accounts Receivable, or $25,000 in the aggregate);
(h) there has been no material damage or destruction to, or loss of, physical
property (whether or not covered by insurance) adversely affecting the RBM
Business or the operations of RBM; (i) there has been no loan by RBM, or
guaranty by RBM of any loan, to any employee of RBM other than travel or similar
advances for otherwise reimbursable expenses; (j) RBM has not ceased to transact
business with any customer that, as of the date of such cessation, represented
more than
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5% of the annual gross revenues of RBM; (k) there has been no termination or
resignation of any key employee or officer of RBM, and to the knowledge of
Probity, no such termination or resignation is threatened; (l) there has been no
amendment or termination of any material oral or written contract, agreement or
license related to the RBM Business, to which RBM is or was a party or by which
it is or was bound, except in the ordinary course of business or as expressly
contemplated hereby; (m) RBM has not in any material manner failed to satisfy
any of its debts, obligations or liabilities related to the RBM Business or the
assets of RBM as the same become due and owing (except for RBM Accounts Payable,
as defined in Section 2.26, payable in accordance with past practices and in the
ordinary course of business); (n) there has been no agreement or commitment by
RBM to do any of the foregoing; (o) RBM has not offered or made any commitments
to give any discounts or free services to any third party under or in connection
with any contract, other than in the ordinary course of business, that would
materially decrease RBM's profits; and (p) there has been no other event or
condition of any character pertaining to and materially and adversely affecting
the assets, business or financial condition of RBM.
2.8. Undisclosed Liabilities. Except as set forth on Schedule 2.8,
RBM has no debt, liability or obligation of any kind, whether accrued, absolute
or otherwise, including any liability or obligation on account of taxes or any
governmental charge or penalty, interest or fine, except (a) liabilities
incurred in the ordinary course of business after June 30, 2003, that would not,
whether individually or in the aggregate, have a material adverse impact on the
business or financial condition of RBM; (b) liabilities reflected on the RBM
Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated hereby.
2.9. Title to Properties. Except as set forth on Schedule 2.9, RBM
has good and marketable title to all owned tangible property and assets used in
the RBM Business, and good and valid title to its leasehold interests, in each
case, free and clear of any and all Liens other than Permitted Liens (as defined
in Section 7.9).
2.10. Equipment. RBM has heretofore furnished SIMEX with a correct
and complete list, in all material respects, of all items of tangible personal
property (including computer hardware) necessary for or used in the operation of
the RBM Business in the manner in which it has been and is now operated by RBM
(the "RBM Equipment"), except for personal property having a net book value of
less than $5,000. Except as set forth on Schedule 2.10, each material item of
RBM Equipment is in good condition and repair, ordinary wear and tear excepted.
2.11. Intellectual Property.
(a) Set forth on Schedule 2.11(a) is a correct and
complete list, in all material respects, of all patents, trademarks,
trade names, service marks and copyrights (and all pending applications
or current registrations for any of the foregoing) registered by RBM or
used by RBM in the conduct of the RBM Business. The foregoing, together
with the trade secrets and know how used by RBM in the conduct of the
RBM Business, is collectively referred to as the "RBM Intellectual
Property Rights". RBM owns, or is validly licensed or otherwise has the
right to use or exploit, as currently used or exploited, all of the RBM
Intellectual Property Rights necessary for the conduct of RBM Business,
free of any Lien or any obligation to make any payment (whether of a
royalty, license fee, compensation or otherwise). Except as set forth
on Schedule 2.11(a), no
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claims, to the knowledge of Probity, have been filed against RBM or
threatened, that RBM is infringing or otherwise adversely affecting the
rights of any Person with regard to any RBM Intellectual Property Right
or that any RBM Intellectual Property Right is invalid or
unenforceable. To the knowledge of Probity, no Person is infringing the
rights of RBM with respect to any RBM Intellectual Property Right; nor,
to the knowledge of RBM, has any Person threatened to do so. To the
knowledge of Probity, no employee, agent or independent contractor of
RBM, in connection with the performance of such Person's services with
RBM, has used, appropriated or disclosed, directly or indirectly, any
trade secret or other proprietary or confidential information or right
of any other Person, or otherwise violated any confidential
relationship with any other Person.
(b) Set forth on Schedule 2.11(b) is a correct and
complete list, in all material respects, of all material computer
software used by RBM in the conduct of the RBM Business (the "RBM
Software"). RBM currently owns, licenses or otherwise has the legal
right to use all of the RBM Software (including any upgrade, alteration
or enhancement with respect to RBM Software in which RBM owns all
intellectual property rights), and all of the RBM Software is being
used in compliance with any applicable license or other agreement.
(c) Set forth on Schedule 2.11(c) is a correct and
complete list, in all material respects, of all domain names (i)
registered to or used by RBM, (ii) the registration fees for which are
paid by RBM or (iii) registered to any employee of RBM relating to the
RBM Business (collectively, "Domain Names"). RBM has registered the
Domain Names with an Internet domain name registrar and is paying the
applicable registrar on an annual basis for the right to use the Domain
Names, or is validly licensed or otherwise has the right to use, the
Domain Names.
(d) Except as set forth on Schedule 2.11(d):
(i) All former and current consultants or
contractors of RBM have executed and delivered valid written
instruments with RBM that assign to RBM all rights to any
inventions, improvements, discoveries or information developed
by them for RBM. All employees of RBM who participated in the
creation or contributed to the development of RBM Intellectual
Property Rights or Domain Names were employees of RBM at the
time of rendering such services and such services were within
the scope of their employment or such employees have otherwise
validly assigned such Intellectual Property Rights or Domain
Names to RBM; and
(ii) RBM has taken reasonable security measures,
including entering into appropriate confidentiality and
nondisclosure agreements with all of its employees,
consultants and contractors, and any other Persons with access
to RBM's trade secrets or know how, to protect the secrecy,
confidentiality and value of all such trade secrets or know
how. To the knowledge of RBM, there has not been any breach by
any party to any such agreement.
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2.12. Real Property. Except as set forth on Schedule 2.12:
(a) RBM has good and valid leasehold interest in all real
property (including all buildings, improvements and fixtures thereon)
used in the operation of the RBM Business (the "RBM Real Property").
Except for Permitted Liens, and for the items set forth on Schedule
2.12, there are no Liens on RBM's interest in any of the RBM Real
Property. Schedule 2.12 lists each county and state where any RBM Real
Property is located. RBM has heretofore furnished SIMEX with an
accurate description of all RBM Real Property.
(b) There are no parties in possession of any portion of
the RBM Real Property other than RBM, whether as sublessees, subtenants
at will or trespassers.
(c) To the knowledge of Probity, there is no law,
ordinance, order, regulation or requirement now in existence that would
require, under the provisions of any of the RBM Leases (as defined in
Section 2.13) or otherwise, any material expenditure by RBM to modify
or improve any of the RBM Real Property to bring it into compliance
therewith.
2.13. Leases. Schedule 2.13 sets forth a list of all leases pursuant
to which RBM leases, as lessor or lessee, real or personal property used in
operating the RBM Business or otherwise (the "RBM Leases"). Copies of the RBM
Leases, all of which have previously been provided to SIMEX, are correct and
complete copies thereof. All of the RBM Leases are in full force and effect,
unimpaired in any material respect by any act or omission of RBM, and are valid,
binding and enforceable against RBM and, to the knowledge of Probity, against
the other parties thereto, in accordance with their respective terms, and there
is not under any such RBM Lease any existing default by RBM, or, to the
knowledge of Probity, by any other party thereto, or any condition or event
that, with notice or lapse of time or both, would constitute a default. RBM has
not received notice that the lessor of any of the RBM Leases intends to cancel,
suspend or terminate such RBM Lease or to exercise or not exercise any option
thereunder.
2.14. Contracts. Schedule 2.14 sets forth a correct and complete
list of all contracts, agreements and commitments (whether written or oral) to
which RBM is, directly or indirectly, a party (in its own name or as a successor
in interest), or by which it or any of its properties or assets is otherwise
bound, including any service agreements, customer agreements, supplier
agreements, agreements to lend or borrow money, shareholder agreements,
employment agreements, confidentiality agreements (other than confidentiality
agreements with third parties entered into in the ordinary course of business
which agreements are not individually listed on Schedule 2.14 but which are
included within the definition of RBM Contracts, as herein defined)
noncompetition or non-solicitation agreements, agreements relating to RBM
Intellectual Property Rights and the like (collectively, the "RBM Contracts");
excepting only those RBM Contracts which involve less than $10,000 and are
cancelable, without penalty, on no more than 90 days' notice. The aggregate
value of all payment obligations and rights to receive payments, under
agreements, contracts and commitments (whether oral or in writing) to which RBM
is a party or by which it or any of its properties or assets is otherwise bound,
and that are not listed on Schedule 2.14, is less than $25,000 (calculating such
value by adding together the value of rights and obligations, and not by
determining the net amount thereof).
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Except as set forth on Schedule 2.14, correct and complete
copies of all RBM Contracts (or a correct and complete narrative description of
any oral RBM Contract) have previously been provided or made available to SIMEX.
Neither RBM nor, to the knowledge of Probity, any other party to any of the RBM
Contracts (i) is in material default under (nor does there exist any condition
that, with notice or lapse of time or both, would cause such a material default
under) any of the RBM Contracts, or (ii) has waived any right it may have under
any of the RBM Contracts, the waiver of which would have a material adverse
effect on the business, assets or financial condition or prospects of RBM. All
of the RBM Contracts constitute the valid and binding obligations of RBM, and
assuming the due authorization, execution and delivery of such RBM Contract by
the other parties thereto, are enforceable against RBM and, to the knowledge of
Probity, the other parties thereto in accordance with their respective terms,
subject, in each case, to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing.
2.15. Officers. Schedule 2.15 sets forth an accurate list of the
name of each officer of RBM and the position(s) held by each.
2.16. Payroll Information. RBM has previously provided SIMEX with a
correct and complete copy, in all material respects, of the payroll report of
RBM dated August 31, 2003, showing all current employees of RBM and their
current levels of compensation, other than bonuses and other extraordinary
compensation, all of which bonuses and other extraordinary compensation are set
forth in Schedule 2.16. RBM has paid all compensation required to be paid to its
employees on or prior to the date hereof other than compensation (and bonuses
pursuant to arrangements described in Schedule 2.16) accrued in the current pay
period.
2.17. Litigation. Except as set forth on Schedule 2.17, there is no
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Probity, threatened against or affecting RBM or the RBM Business, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against RBM.
2.18. Employee Benefit Plans/Labor Relations.
(a) Except as disclosed in Schedule 2.18, there are no
employee benefit plans, agreements or arrangements maintained by RBM,
including (i) "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); (ii) current or deferred compensation, pension, profit
sharing, vacation or severance plans or programs; or (iii) medical,
hospital, accident, disability or death benefit plans (collectively,
"RBM Benefit Plans"). All RBM Benefit Plans are administered in
accordance with, and are in material compliance with, all applicable
laws and regulations. No default exists with respect to the obligations
of RBM under any RBM Benefit Plan.
(b) RBM is not a party to any collective bargaining
agreement; no collective bargaining agent has been certified as a
representative of any of the employees of RBM; no representation
campaign or election is now in progress with respect to any employee of
RBM; and there are no labor disputes, grievances, controversies,
strikes or requests for
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union representation pending, or, to the knowledge of Probity,
threatened, relating to or affecting the RBM Business. To the knowledge
of Probity, no event has occurred that could give rise to any such
dispute, controversy, strike or request for representation.
2.19. ERISA.
(a) All RBM Benefit Plans that are subject to ERISA have
been administered in accordance with, and are in material compliance
with, the applicable provisions of ERISA. Each of the RBM Benefit Plans
that is intended to meet the requirements of Section 401(a) of the Code
has been determined by the Internal Revenue Service to meet such
requirements in form within the meaning of such provision. No RBM
Benefit Plan is subject to Title IV of ERISA or Section 412 of the
Code. RBM has not engaged in any nonexempt "prohibited transactions,"
as such term is defined in Section 4975 of the Code or Section 406 of
ERISA, involving RBM Benefit Plans that would subject RBM to the
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of
the Code. RBM has not engaged in any transaction described in Section
4069 of ERISA within the last five years. Except as otherwise set forth
herein, disclosed in Schedule 2.19 or pursuant to the terms of the RBM
Benefit Plans, neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation or golden
parachute) becoming due to any director or other employee of RBM, (ii)
increase any benefit otherwise payable under any RBM Benefit Plan or
(iii) result in the acceleration of the time of payment or vesting of
any such benefit to any extent.
(b) No notice of a "reportable event," within the meaning
of Section 4043 of ERISA, for which the 30-day reporting requirement
has not been waived, has been required to be filed for any RBM Benefit
Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA and that is intended to meet the requirements of
Section 401(a) of the Code, or by any entity that is considered one
employer with RBM under Section 4001 of ERISA or Section 414 of the
Code, within the 12-month period ending on the Closing Date. RBM has
not incurred any liability to the Pension Benefit Guaranty Corporation
in respect of any RBM Benefit Plan that remains unpaid.
2.20. Taxes. RBM has heretofore furnished SIMEX with a correct and
complete copy of all of its Tax Returns for the previous two (2) years. Except
as set forth on Schedule 2.20:
(a) RBM has duly and timely filed all federal, state and
local income, franchise, excise, real and personal property and other
tax returns and reports, including extensions, required to have been
filed by RBM on or prior to the Closing Date (the "Tax Returns"). All
Tax Returns were accurate and complete in all material respects. RBM
has duly and timely paid all taxes and other governmental charges, and
all interest and penalties with respect thereto, required to be paid by
RBM (whether by way of withholding or otherwise) to any federal, state,
local or other taxing authority (except to the extent the same are
being contested in good faith, and adequate reserves therefor have been
provided in the RBM Financial Statements). As of the Closing Date, all
deficiencies proposed as a result of any audit have been accrued for,
paid or settled.
10
(b) RBM is not a party to, or bound by, or otherwise in
any way obligated under, any tax sharing or similar agreement.
(c) RBM has not consented to have the provisions of
Section 341(f)(2) of the Code (or comparable state law provisions)
apply to it, and RBM has not agreed or been requested to make any
adjustment under Section 481(c) of the Code by reason of a change in
accounting method or otherwise.
2.21. Compliance with Applicable Laws. RBM holds all material
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary to own, lease or operate all of the assets and
properties of RBM, as appropriate, and to carry on the RBM Business as now
conducted (the "Probity Permits"). To the knowledge of Probity, RBM is in
material compliance with all applicable laws, ordinances and regulations and the
terms of the RBM Permits. Except as set forth on Schedule 2.21, no Consent or
other action shall be required with respect to any of the RBM Permits as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby (including the Exchange). Schedule 2.21 sets
forth a correct and complete list of all RBM Permits, correct and complete
copies of which have previously been provided to or made available to SIMEX.
2.22. Brokers. Except as set forth on Schedule 2.22, no broker or
finder is entitled to any broker's, banker's or finder's fee or other commission
in connection with the transactions contemplated hereby as a result of
arrangements made by or on behalf of Probity.
2.23. Environmental Matters.
(a) To the knowledge of Probity, no real property
currently or formerly owned or operated by RBM is contaminated with any
Hazardous Substance (as hereinafter defined).
(b) RBM is not a party to any litigation or
administrative proceeding nor, to the knowledge of RBM, is any
litigation or administrative proceeding threatened against it, that, in
either case, asserts or alleges that RBM (i) violated any Environmental
Law (as hereinafter defined); (ii) is required to clean up, remove or
take remedial or other responsive action due to the disposal, deposit,
discharge, leak or other release of any Hazardous Substance; or (iii)
is required to pay all or a portion of the cost of any past, present or
future cleanup, removal or remedial or other action that arises out of
or is related to the disposal, deposit, discharge, leak or other
release of any Hazardous Substance.
(c) To the knowledge of Probity, there are not now nor
have there previously been tanks or other facilities on, under, or at
any real property owned, leased, used or occupied by RBM containing
materials that, if known to be present in soil or ground water, would
require cleanup, removal or other remedial action under Environmental
Law.
(d) RBM is not subject to any judgment, order or citation
related to or arising out of any Environmental Law and, to the
knowledge of Probity, has not been named or
11
listed as a potentially responsible party by any Governmental Entity in
a matter related to or arising out of any Environmental Law.
(e) For purposes hereof, (i) the term "Environmental Law"
means any federal, state or local law (including statutes, regulations,
ordinances, codes, rules, judicial opinions and other governmental
restrictions and requirements) relating to the discharge of air
pollutants, water pollutants, noise, odors or process waste water, or
otherwise relating to the environment or hazardous or toxic substances;
and (ii) the term "Hazardous Substance" means any toxic or hazardous
substance that is regulated by or under authority of any Environmental
Law, including any petroleum products, asbestos or polychlorinated
biphenyls.
2.24. Interest in Customers, Suppliers and Competitors. Except as
provided in Schedule 2.24, no officer, director, or employee of RBM and no
family member (including a spouse, sibling or lineal descendent of any of the
foregoing), has any direct or indirect material interest in any material
customer, supplier or competitor of RBM, or in any Person from whom or to whom
RBM leases any real or personal property, or in any other Person with whom RBM
is doing business whether directly or indirectly (including as a debtor or
creditor), whether in existence as of the Closing Date or proposed, other than
the ownership of stock of publicly traded corporations.
2.25. Accounts Receivable. All accounts, notes, contracts and other
receivables of RBM (collectively, "RBM Accounts Receivable") were acquired by
RBM in the ordinary course of business arising from bona fide transactions.
Other than RBM Accounts Receivable that are recorded in connection with the
booking of deferred revenue that has not yet been recognized and solely for
which and to the extent that the applicable services to be performed with
respect to such deferred revenue have not yet, and as of the Effective Time,
will not yet have been performed by RBM, there are no set-offs, counterclaims or
disputes asserted with respect to any RBM Accounts Receivable that would result
in claims in excess of the reserve for bad debts other than set forth on the RBM
Financial Statements and, subject to the foregoing, all RBM Accounts Receivable
are collectible in full. RBM has previously furnished SIMEX with a correct and
complete aging report, prepared as of June 30, 2003, showing the time elapsed
since invoice date for all RBM Accounts Receivable, and corresponding reserves
for bad debts, as of such date.
2.26. Accounts Payable. Except as set forth on Schedule 2.26, all
accounts, notes, contracts and other amounts payable of RBM (collectively, "RBM
Accounts Payable") are currently within their respective terms, and are neither
in default nor otherwise past due by more than 90 days. RBM has previously
furnished SIMEX with a correct and complete aging report, prepared as of June
30, 2003, showing the time elapsed since invoice date for all RBM Accounts
Payable.
2.27. Insurance. RBM currently maintains, in full force and effect,
all insurance policies that are required or appropriate to be maintained for the
conduct of the RBM Business or the ownership of RBM's property (both real and
personal) (collectively, the "RBM Insurance Policies"). The RBM Insurance
Policies are listed on Schedule 2.27, and correct and complete copies of all RBM
Insurance Policies have previously been provided to SIMEX. RBM (a) is not
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in default regarding the provisions of any RBM Insurance Policy; (b) has paid
all premiums due thereunder; and (c) has not failed to present any notice or
material claim thereunder in a due and timely fashion.
2.28. Bankruptcy. RBM has not filed a petition or request for
reorganization or protection or relief under the bankruptcy laws of the United
States or any state or territory thereof, made any general assignment for the
benefit of creditors, or consented to the appointment of a receiver or trustee,
including a custodian under the United States bankruptcy laws, whether such
receiver or trustee is appointed in a voluntary or involuntary proceeding.
2.29. Probity Acknowledgements. Probity acknowledges that it (a) is
an "accredited investor" as such term is defined under the Securities Act, and
(b) has had an adequate opportunity to obtain and review SIMEX's public filings
with the Securities Exchange Commission ("SEC") ("SIMEX's Public Information"),
including its reports and Forms 10-K and 10-Q for the periods January 1, 2000
through March 31, 2003, and such other information, and to ask such questions
from representatives of SIMEX, as would be deemed necessary to permit Probity to
evaluate the merits and risks of its investment in SIMEX and to make an informed
investment decision with respect to the transactions contemplated hereby.
Probity further acknowledges that the SIMEX Stock has not been registered under
either the Securities Act or applicable state securities law, and SIMEX will be
relying upon the foregoing representations in issuing the SIMEX Stock in
accordance with this Agreement.
2.30. Disclosure. No statement of fact by Probity contained herein
and no written statement of fact furnished by Probity to SIMEX in connection
herewith contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements herein or therein
contained, in light of the circumstances in which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SIMEX
SIMEX represents and warrants to Probity as follows, which
representations and warranties shall survive the Closing in accordance with
Section 7.1. For purposes of this Article III, "SIMEX" shall include its
Subsidiaries.
3.1. Organization and Qualification. SIMEX is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. SIMEX has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure so to qualify could not have a material adverse effect on the
business, properties or assets of SIMEX. Complete and correct copies of the
Certificate of Incorporation and Bylaws of SIMEX as in effect on the date hereof
will be attached, respectively, to a Closing and incumbency certificate to be
delivered at Closing, substantially in the form of Exhibit "B" ("SIMEX's Closing
Certificate").
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3.2. Authority. SIMEX has the necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by SIMEX have been duly and
validly authorized and approved by its board of directors, and no other
corporate or shareholder proceedings on the part of either SIMEX, or its
respective board of directors or shareholders, are necessary to authorize or
approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by SIMEX, and assuming the
due authorization, execution and delivery hereof by Probity, constitutes the
valid and binding obligation of SIMEX, enforceable against it in accordance with
its terms, subject, in each case, to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing. This Agreement and the
transactions contemplated hereby, including the issuance of shares of SIMEX
Common Stock pursuant to the Exchange, do not require the approval of the
holders of any (a) shares of capital stock of SIMEX or (b) voting securities of
SIMEX.
3.3. No Conflicts, Required Filings and Consents. Except as set
forth on Schedule 3.3, none of the execution and delivery of this Agreement by
SIMEX, the consummation by SIMEX of the transactions contemplated hereby, or
compliance by SIMEX with any of the provisions hereof, will:
(a) conflict with or violate the Certificate of
Incorporation or Bylaws of SIMEX;
(b) result in a violation of any statute, ordinance,
rule, regulation, order, judgment or decree applicable to SIMEX, or by
which SIMEX or its properties or assets may be bound or affected;
(c) result in a violation or material breach of, or
constitute a material default (or an event that, with notice or lapse
of time or both, would become a material default) under, or give to any
other party any material rights of termination, amendment, acceleration
or cancellation of, any note, bond, mortgage, indenture, or any
material contract, agreement, arrangement, lease, license, permit,
judgment, decree, franchise or other instrument or obligation to which
SIMEX is a party or by which SIMEX or its properties may be bound or
affected;
(d) result in the creation of any Lien on any of the
property or assets of SIMEX; or
(e) require any material Consent of (i) any Governmental
Entity (except for compliance with any applicable requirements of any
applicable securities laws with the SEC, or (ii) any other Person.
3.4. Litigation. Except as set forth on Schedule 3.4 or in SIMEX's
Public Information, there is no suit, action, claim, investigation or proceeding
pending or, to the knowledge of SIMEX, threatened against or affecting SIMEX,
nor is there any judgment, decree,
14
injunction or order of any applicable Governmental Entity or arbitrator
outstanding against SIMEX that, either individually or in the aggregate, would
have a material adverse effect on the assets, business or financial condition of
SIMEX.
3.5. Brokers. No broker or finder is entitled to any broker's or
finder's fee in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of SIMEX.
3.6. SIMEX Stock. The SIMEX Stock to be issued to Probity in the
Exchange will, upon issue in accordance with the terms hereof, (a) not be
registered under either the Securities Act or applicable state securities law,
and (b) shall be subject to the Voting Agreement.
3.7. Board of Directors. The board of directors of SIMEX has, by
written consent or other action, adopted and approved this Agreement and the
transactions contemplated hereby and thereby (including the Exchange).
3.8. Disclosure. No statement of fact by SIMEX contained herein and
no written statement of fact furnished by SIMEX to Probity in connection
herewith contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements herein or therein
contained, in light of the circumstances in which they were made, not
misleading.
3.9. Absence of Changes. Except as set forth on Schedule 3.9 or in
SIMEX's Public Information, since SIMEX's most recent Form 10-Q filed with the
SEC on May 20, 2003, there have been no changes in the operations, earning,
assets, properties, business or financial condition of SIMEX, which changes
could reasonably be expected to have a Material Adverse Effect on SIMEX, except,
however, for any such change that SIMEX discloses to Probity in accordance
herewith. For the purpose of this provision "Material Adverse Effect" excludes
any such change that is attributable to or results from (i) the public
announcement of the transactions contemplated hereby; (ii) changes in general
economic conditions or changes affecting the industry in which SIMEX operates,
or capital markets, generally; (iii) the possible adoption by SIMEX of a new
employee stock option plan; or (iv) changes in the trading prices of SIMEX Stock
not caused primarily by material changes in the operations, earnings, assets,
properties, business or financial condition of SIMEX.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1. Conduct of Business by RBM Pending the Exchange. From and
after the date hereof, prior to the Effective Time, except as contemplated
hereby, unless SIMEX shall otherwise agree in advance in writing, RBM shall
carry on its business in the usual and ordinary course in substantially the same
manner as heretofore conducted, use commercially reasonable efforts to preserve
intact its present business organization, keep available the services of its
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with RBM to the end
that its goodwill and on-going businesses shall not be impaired in any material
respect at the Effective Time. Without limiting the generality of the foregoing,
and except as contemplated hereby, unless SIMEX shall
15
otherwise agree in advance in writing, prior to the Effective Time, RBM shall
not, directly or indirectly:
(a) (i) declare, set aside, or make any distribution in
respect of, any of its Membership Interests, (ii) split, combine or
reclassify any of its Membership Interests, or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for, its Membership Interests, or (iii) purchase, redeem
or otherwise acquire, any membership Interests of RBM or any other
equity security thereof or any right, warrant, or option to acquire any
Membership Interest or other security, or waive any right to do any of
the foregoing;
(b) other than in connection with the exercise of any
option or warrant outstanding, and in accordance with the terms
existing, on the date of this Agreement, issue, deliver, sell, pledge
or otherwise encumber any Membership Interest, any other voting
security issued by RBM or any security convertible into, or any right,
warrant or option to acquire any Membership Interest or voting
security, grant any option, warrant or other right, or alter or allow
the acceleration of vesting or exercise of any outstanding option,
warrant or such right;
(c) amend its Articles of Organization, Operating
Agreement or other comparable organizational documents;
(d) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any Entity or
division thereof, or (ii) any assets that are material to RBM,
individually or in the aggregate;
(e) subject to a Lien or sell, lease or otherwise dispose
of any of its properties or material assets, or license or transfer any
RBM Intellectual Property Right (except for non-exclusive licenses in
the ordinary course of business consistent with past practices), or
revalue any assets or (except as required by GAAP) make any change in
accounting methods, principles or practices;
(f) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person or issue or sell any
debt security of RBM, guarantee any debt security of another Person or
enter into any "keep well" or other agreement to maintain the financial
condition of another Person, make any loan, advance or capital
contribution to, or investment in, any other Person, or settle or
compromise any material claim or litigation;
(g) pay any bonus to any employee, officer or director on
or after the date hereof other than in the ordinary course of RBM's
business consistent with past practices except as set forth in Section
4.14;
(h) enter into any "golden parachute" or other severance
arrangement with any employee, officer or director, or increase or
otherwise change the rate or nature of the compensation (including
wages, salaries, benefits and bonuses) payable to any employee, officer
or director, except as set forth in Section 4.1(g) above or pursuant to
existing
16
compensation and fringe benefit plans, practices and arrangements that
have been disclosed in writing to SIMEX, or enter into, renew, or allow
the renewal of, any employment, consulting or other similar agreement
with any employee, officer or director, or amend or modify any RBM
Benefit Plan in any material respect or adopt any other such plan;
(i) enter into any new contract or agreement (other than
a customer agreement entered into in the ordinary course of business
consistent with past practices), or lease, involving an obligation in
excess of $10,000, or amend, waive any material default under,
terminate (except for such as terminate by their own terms) or modify
in any material respect any RBM Contract or Lease;
(j) offer or make any commitments to give any discounts
or free services to any third party under or in connection with any
contract, other than in the ordinary course of business, that would
materially decrease RBM's profits;
(k) pay, accrue or incur transaction costs or expenses
(such as brokerage, accounting and legal fees) resulting from, or
arising in connection with, this Agreement, the Exchange or any of the
other transactions contemplated hereby; or
(l) authorize any of, or commit or agree to take any of,
the foregoing actions.
4.2. Conduct of Business by SIMEX Pending the Exchange. From and
after the date hereof, prior to the Effective Time, except as contemplated
hereby, SIMEX shall carry on its business in the usual and ordinary course in
substantially the same manner as heretofore conducted, keep available the
services of its employees and preserve its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with SIMEX to the end that its goodwill and on-going businesses shall
not be impaired in any material respect at the Effective Time.
4.3. Actions Regarding SIMEX Stock. Prior to the Effective Time,
SIMEX shall take all such actions as are necessary to ensure that the SIMEX
Stock to be issued under this Agreement as Exchange Consideration is issued at
the Closing to Probity.
4.4. Access to Information. From the date hereof through the
Effective Time, RBM shall afford to SIMEX and SIMEX's accountants, counsel and
other representatives reasonable access during normal business hours (and at
such other times as the parties may mutually agree) upon reasonable prior notice
and approval of RBM, which shall not be unreasonably withheld, to its
properties, books, contracts, commitments, records and personnel and, during
such period, shall furnish promptly to SIMEX all information concerning its
business, properties and personnel as SIMEX may reasonably request. SIMEX and
its accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section 4.4, not unduly interfere with the operation of
the business of RBM. SIMEX and its agents shall maintain the confidentiality of
all information produced or disclosed pursuant to this Section 4.4, on the terms
and conditions of any non-disclosure agreement between SIMEX and RBM.
4.5. Filings; Tax Elections. RBM shall promptly provide SIMEX with
copies of all filings made by RBM with any Governmental Entity in connection
herewith and the transactions
17
contemplated hereby. RBM shall, before settling or compromising any material
income tax liability of RBM, consult with SIMEX and its advisors as to the
positions and elections that will be taken or made with respect to such matter.
4.6. Public Announcements. The parties agree that, except as may
otherwise be required to comply with applicable laws and regulations (including
the rules of the SEC), public disclosure of the transactions contemplated hereby
shall be made only upon or after the consummation of the Exchange. Any such
disclosure shall be coordinated by SIMEX, and RBM shall not directly or
indirectly make any such disclosure without the prior written consent of SIMEX.
4.7. Transfer and Gains Taxes and Certain Other Taxes and Expenses.
SIMEX agrees that, to the extent it is legally able to do so and except as
otherwise provided herein, RBM will pay all documentary stamps, filing fees,
recording fees and sales and use taxes, if any, and any penalties or interest
with respect thereto, payable in connection with consummation of the Exchange.
4.8. Options; Warrants. RBM hereby covenants and agrees that at the
Effective Time, all of the Membership Interest Rights (all of which are set
forth on Schedule 2.3(b)), shall either have been exercised, and the exercise
price paid therefor shall have been paid to RBM, or have been properly
terminated and all rights and obligations thereunder shall have been
extinguished.
4.9. Further Assurances. From time to time after the Effective
Time, upon the reasonable request of any party hereto, the other party or
parties hereto shall execute and deliver or cause to be executed and delivered
such further instruments, and take such further action, as the requesting party
may reasonably request in order to effectuate fully the purposes, terms and
conditions hereof, at the sole cost of the requesting party, except as otherwise
provided in Article VI.
4.10. Exclusivity. Probity, on behalf of itself and each of its
officers, directors and employees, and its stockholders, covenant and agree
that, until such time as this Agreement has been terminated in accordance with
Section 6.1, it and each of them shall forebear directly or indirectly
negotiating, soliciting or accepting any offer with any other Person to
purchase, acquire, option, or merge or combine with, as applicable, RBM, any of
the Membership Interests, or the RBM Business, or any interest in any of the
foregoing. Without limiting the generality of the foregoing:
(a) From and after the date hereof until the Effective
Time or termination of this Agreement pursuant to Section 6.1, Probity
shall not, nor will it authorize or permit any of its officers,
directors, affiliates, shareholders or employees or any investment
banker, attorney or other advisor or representative retained by any of
them to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition
Proposal (as hereinafter defined), (ii) participate in any discussions
or negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii)
engage in discussions with any person with respect to any
18
Acquisition Proposal, except as to the existence of these provisions,
(iv) approve, endorse or recommend any Acquisition Proposal or (v)
enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction. Probity shall immediately cease any and all
existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer,
director or employee of Probity or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of
Probity or any of its subsidiaries shall be deemed to be a breach of
this Section 4.10 by Probity.
(b) For purposes of this Agreement, "Acquisition
Proposal" shall mean any bona fide offer or proposal (other than an
offer or proposal by SIMEX) relating to any Acquisition Transaction.
For the purposes of this Agreement, "Acquisition Transaction" shall
mean any transaction or series of related transactions other than the
transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from Probity by any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 15% interest in the total
outstanding Membership Interests of RBM or any exchange offer that if
consummated would result in any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 15% or more of the total outstanding
Membership Interests of RBM or any Exchange, consolidation, business
combination or similar transaction involving RBM pursuant to which the
members of RBM immediately preceding such transaction hold less than
85% of the membership interests in the surviving or resulting entity of
such transaction; (B) any sale, lease (other than in the ordinary
course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than
50% of the assets of RBM; or (C) any liquidation or dissolution of RBM.
4.11. Corporate Requirements. Probity and SIMEX each covenants and
agrees that, prior to and after the Effective Time, it shall comply with any and
all statutory requirements, whether under the Georgia Business Corporation Code
or otherwise, and with any requirements under its Articles of Incorporation,
Bylaws or any other governing documents, applicable to this Agreement and the
transactions contemplated hereby (including the Exchange), including, without
limitation, any requirements relating to the rights of, or the obligations of
such party to, any of its shareholders.
4.12. Tax-Free Reorganization. The Exchange is intended to qualify
as a tax-free reorganization under Section 368 of the Code, and each of the
parties hereto covenants and agrees to cooperate in order to qualify the
transaction as a tax-free reorganization, to report the Exchange for federal and
state income tax purposes in a manner consistent with such characterization, and
to take or not fail to take any action that would cause the Exchange to fail to
qualify as a reorganization within the meaning of Section 368(a) of the Code.
RBM, on one hand, and SIMEX, on the other hand, shall execute and deliver to
legal counsel of SIMEX and RBM, respectively, certificates in such form and at
such time or times as reasonably requested by such legal counsel in connection
with the tax effects of the transactions contemplated hereby.
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4.13. Registration of Affiliate Shares. If at any time it shall be
determined by any Governmental Entity that any of the shares of SIMEX held by
persons who are affiliates or were affiliates of SIMEX prior to the Closing are
"blank check" shares and require registration in order to be sold, SIMEX agrees
to register such shares within 180 days from the Effective Time. Notwithstanding
the foregoing, SIMEX shall have no obligation to register any shares that are or
may become eligible for resale under Rule 144 of the Securities Act of 1933.
4.14. Rule 145 Agreements. Prior to the Effective Time, Probity
shall obtain and deliver to SIMEX Rule 145 Agreements (in the form attached
hereto as Exhibit "C") from each person who receives SIMEX Common Stock and may
be deemed an affiliate of Probity prior to or at the Effective Time. SIMEX shall
place the appropriate Rule 145 legend on the stock certificates representing
SIMEX Common Stock issued in the Exchange to such affiliates.
4.15. Section 16. SIMEX shall, prior to the Effective Time, cause
SIMEX's Board of Directors to approve the issuance of the shares of SIMEX Common
Stock in connection with the Exchange, with respect to any persons associated
with Probity who upon the Effective Time will become subject to the reporting
requirements of Section 16 of the Exchange Act to the extent necessary for such
issuance to be an exempt acquisition pursuant to Rule 16b-3 of the Securities
Exchange Act of 1934, provided, however, that SIMEX shall not be deemed to have
violated this covenant if Probity and/or its shareholders do not provide SIMEX's
Board of Directors at least five (5) business days prior to the Effective Time,
all information reasonably requested by SIMEX for the purpose of effecting such
exemption.
4.16. Indemnification.
(a) The parties hereto hereby agree to indemnify, defend
and hold harmless one another and their respective parents and
subsidiaries, and all of their respective shareholders, officers,
directors, employees, successors and assigns, against any claims,
demands, actions, suits, proceedings, judgments, costs (including
reasonable outside attorneys' fees and expenses), loss, liability or
damage arising out of or in connection with any breach of any
representation, warranty, covenant or agreement made or to be performed
pursuant to this Agreement
(b) OTHER THAN PURSUANT TO THE PARTIES' RESPECTIVE
INDEMNIFICATION OBLIGATIONS SET FORTH HEREIN, NO PARTY SHALL BE LIABLE
TO ANY OTHER PARTY, ITS AGENTS, AFFILIATES, CUSTOMERS, OR ANY OTHER
PERSONS, FOR ANY LOST PROFITS, OR ANY INCIDENTAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES, FOR THE BREACH OF ANY TERMS OR CONDITIONS OF
THIS AGREEMENT.
4.17. Inventory. Prior to the Closing, Probity shall cause Kyros,
LLC, a Georgia limited liability company and wholly-owned subsidiary of Probity
("Kyros"), to transfer product inventory to RBM with a fair market value of not
less that $550,000.
4.18. Liabilities. Any liabilities of RBM that remain as of the
Closing, will be paid off by RBM within ninety (90) days of the Closing or will
be deducted from any amounts owed to Kyros by RBM.
20
4.19. License Agreement. Prior to the Closing, Probity shall cause
Kyros assign its license agreement with Wooju Communications Co., Ltd to RBM,
which will allow RBM to sell and supply any and all Wooju products in the United
States and will grant RBM the right to use the name "Kyros" for any related
purpose. Prior to or contemporaneous with the Closing, RBM will enter into a
sublicense agreement with Kyros.
4.20. Schedules. All schedules referred to in this Agreement shall
be provided to the other party within ten (10) days of the execution of this
Agreement, but in no event later than September 30, 2003.
4.21. RBM Audit. Probity and RBM will assist SIMEX in completing the
audit for RBM for the year ended December 31, 2002 and in completing any other
financial statements of RBM required by the Securities Act of 1933, Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder.
4.22. Satisfaction of Promissory Notes and Loans. Upon the
completion of the transfer of the inventory described in Section 4.17 and the
repayment of all of the liabilities of RBM, as described in Section 4.18, the
Promissory Notes in the original principal amount of $262,115.00 and
$136,490.00, which matured on June 25, 2003 and are payable to the order of
SIMEX by Kyros and RBM (the "Promissory Notes") and the loans made to Kyros from
SIMEX in the approximate amounts of $75,000.00, $20,000.00 and $11,000.00 (the
"Loans") will be forgiven by SIMEX.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Probity to Effect the Exchange.
The obligations of Probity to effect the Exchange shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) SIMEX shall have performed in all material respects
its respective agreements contained herein required to be performed at
or prior to the Effective Time, and the representations and warranties
of SIMEX contained herein shall be true in all material respects when
made and (except for representations and warranties made as of a
specified date, which need only be true as of such date) at and as of
the Effective Time as if made at and as of such time, except as
contemplated hereby;
(b) the appropriate officers of SIMEX shall have executed
and delivered to Probity at the Closing, SIMEX's Closing Certificate;
(c) Probity shall have received a corporate certificate
of existence for SIMEX and a copy of the Certificate of Incorporation
for SIMEX, as certified by the Secretary of State of Delaware; and
(d) Probity shall have received from SIMEX such other
documents as Probity's counsel shall have reasonably requested, in form
and substance reasonably satisfactory to Probity's counsel.
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5.2. Conditions to Obligations of SIMEX to Effect the Exchange. The
obligations of SIMEX to effect the Exchange shall be subject to the fulfillment,
at or prior to the Effective Time, of the following conditions:
(a) Probity and RBM shall have performed in all material
respects their respective agreements contained herein, and the
representations and warranties of Probity and RBM contained herein
shall be true in all material respects when made, and (except for
representations and warranties made as of a specified date, which need
only be true as of such date) at and as of the Effective Time as if
made at and as of such time, except as contemplated hereby;
(b) the appropriate officers of Probity shall have
executed and delivered to SIMEX at the Closing, Probity's Closing
Certificate;
(c) Probity shall have obtained or caused to be obtained
all of the Consents, if any, listed on Schedule 2.5;
(d) SIMEX shall have received a corporate certificate of
existence for Probity, and a copy of the Articles of Organization of
RBM, both as certified by the Secretary of State of Georgia;
(e) SIMEX shall have received evidence reasonably
satisfactory to it that at the Closing the assets and properties used
in the RBM Business are free and clear of all Liens other than
Permitted Liens;
(f) The issuance of SIMEX Stock as Exchange Consideration
as contemplated under this Agreement shall have been duly approved, by
the requisite vote, under applicable law, by SIMEX; and
(g) SIMEX shall have received from Probity or RBM, as the
case may be, such other documents as SIMEX's counsel shall have
reasonably requested, in form and substance reasonably satisfactory to
SIMEX's counsel.
(h) SIMEX shall have received audited consolidated
financial statements of RBM (in conformity with applicable regulations
of the Securities and Exchange Commission) for the fiscal year ended
December 31, 2002, or, at the sole discretion of SIMEX, SIMEX shall be
satisfied that RBM will be able to complete such audited consolidated
financial statements within seventy-five (75) days from the Effective
Time.
(i) SIMEX shall have received executed Rule 145
Agreements from each of Probity's affiliates who received SIMEX Common
Stock.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time:
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(a) by mutual written consent of SIMEX and Probity;
(b) by SIMEX, upon a material breach hereof on the part
of Probity or RBM which has not been cured and which would cause any
condition set forth in Section 5.2 to be incapable of being satisfied
by September 30, 2003;
(c) by SIMEX or Probity if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or
enforced any order, judgment, decree, injunction or ruling which
restrains, enjoins or otherwise prohibits the Exchange and such order,
judgment, decree, injunction or ruling shall have become final and
nonappealable; or
(d) by SIMEX if the Exchange shall not have been
consummated on or before September 30, 2003 (provided SIMEX is not
otherwise in material breach of its representations, warranties or
obligations hereunder).
6.2. Fees and Expenses. Whether or not the Exchange is consummated,
all costs and expenses in connection with this Agreement and the transactions
contemplated hereby incurred by or on behalf of SIMEX shall be paid by SIMEX and
all such costs and expenses incurred by or on behalf of Probity and/or RBM shall
be paid by Probity.
6.3. Effect of Termination. If this Agreement is terminated
pursuant to Section 6.1, written notice thereof shall promptly be given by the
party electing such termination to the other party and this Agreement shall
terminate without further actions by the parties, and no party shall have any
further obligations hereunder or thereunder; provided that, subject to Section
6.5 hereof, any termination of this Agreement pursuant to this Section shall not
relieve any party from any liability for the breach of any representation,
warranty or covenant contained in this Agreement or be deemed to constitute a
waiver of any remedy available for such breach.
6.4. Amendment. This Agreement may be amended by the mutual
agreement of SIMEX and Probity at any time before or after the Effective Time;
provided, however, that this Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
6.5. Waiver. At any time prior to the Effective Time, the parties
hereto may, to the extent permitted by applicable law, (a) extend the time for
the performance of any of the obligations or other acts of any other party
hereto, (b) waive any inaccuracies in the representations and warranties by any
other party contained herein or in any documents delivered by any other party
pursuant hereto and (c) waive compliance with any of the agreements of any other
party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VII
GENERAL PROVISIONS
7.1. Survival; Recourse. None of the agreements contained herein
shall survive the Exchange, except that (i) the covenants contained in Article
IV shall survive the Exchange
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indefinitely (except to the extent a shorter period of time is explicitly
specified therein); (ii) the representations and warranties made in Articles II
and IIII shall survive the Exchange, and shall survive any independent
investigation by the parties, and any dissolution, Exchange or consolidation of
RBM or SIMEX, and shall bind the legal representatives, assigns and successors
of RBM and SIMEX, and, to the extent provided in the Indemnity Agreement, the
RBM Shareholders, for a period of eighteen (18) months after the Effective Time
(other than the representations and warranties contained in Sections 2.18, 2.19,
2.20 or 2.23, which shall survive for the applicable statute of limitations);
and (iii) the Voting Agreement contained in Section 1.10 shall survive as
described in Section 1.10.
7.2. Notices. All notices or other communications hereunder shall
be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in Person, by facsimile (with confirmation of
receipt), or by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to Probity and RBM: Probity Investigations, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
If to SIMEX: SIMEX Technologies, Inc.
0000 Xxxxxxxx Xxxxx, XX
Xxxxxxx, XX 00000
Attention: Xxxx Xxxx
Facsimile: (000) 000-0000
With copies to: Xxxxxxxxx Traurig, LLP
0000 Xxxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
7.3. Entire Agreement. The Exhibits and Schedules hereto are
incorporated herein by reference. This Agreement and the documents, schedules
and instruments referred to herein or therein and to be delivered pursuant
hereto or thereto constitute the entire agreement between the parties pertaining
to the subject matter hereof, and supersede all other prior agreements and
understandings, both written and oral, among the parties, or between any of
them, with respect to the subject matter hereof. There are no other
representations or warranties, whether written or
24
oral, between the parties in connection the subject matter hereof, except as
expressly set forth herein.
7.4. Assignments; Parties in Interest. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties (and any assignment otherwise shall be
void). This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing herein, express or implied, is intended to or
shall confer upon any Person not a party hereto any right, benefit or remedy of
any nature whatsoever under or by reason hereof, except as otherwise provided.
7.5. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Georgia (without giving effect to the
provisions thereof relating to conflicts of law).
7.6. Headings; Interpretation; Incorporation. The descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation hereof. Words
such as "herein," "hereof," "hereto," "hereunder" or the like shall refer to
this Agreement as a whole. The words "include" or "including" shall be by way of
example rather than by limitation. The words "or," "either" or "any" shall not
be exclusive. Any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms. The parties hereto have participated jointly in the
negotiation and drafting hereof; accordingly, no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship
hereof. References to Sections, Articles, Schedules or Exhibits shall, unless
the context otherwise requires, be to Sections, Schedules or Exhibits hereof.
The Schedules and Exhibits hereto are incorporated herein by reference.
7.7. Counterparts. This Agreement may be executed in two or more
counterparts, including by facsimile, each of which shall be deemed an original
but all of which taken together shall constitute a single agreement.
7.8. Severability. If any term or other provision hereof is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions hereof shall nevertheless remain in
full force and effect provided that the economics or legal substance of the
transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon determination by a court of competent jurisdiction
that any term or other provision hereof is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.
7.9. Certain Definitions. As used herein:
(a) the term "Permitted Liens" shall mean (a) Liens for
taxes, assessments or other governmental charges or levies not yet due;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the
ordinary course of business for amounts not yet due; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of
25
business in connection with worker's compensation, unemployment
insurance or other types of social security; (d) minor defects of
title, easements, rights-of-way, restrictions and other similar charges
or encumbrances not materially detracting from the value of the RBM
Real Property or interfering with the ordinary conduct of any of the
RBM Business; and (e) those Liens listed on Schedule 2.9;
(b) (i) any representation or warranty stated to be made
"to the knowledge" of a party shall refer to the knowledge of such
party's executive officers after reasonable inquiry as to the matter in
question; and (ii) any representation or warranty stated to be made "to
the knowledge of Probity" shall refer also to the knowledge, subject to
clause (i) above, of any of the Probity Voting Shareholders; and
(c) the term "Subsidiary" or "Subsidiaries" means any
Entity of which SIMEX or RBM, as the case may be (either alone or
through or together with any other Subsidiary) owns, directly or
indirectly, stock or other equity interests the holders of which are
entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such Entity (including Sub);
provided, however, that with respect to the SIMEX, the terms
"Subsidiary" and "Subsidiaries" shall not include RBM.
- REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
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IN WITNESS WHEREOF, SIMEX, Probity and RBM have caused this Agreement to be
signed and delivered by their respective duly authorized officers as of the date
first written above.
"RBM"
Remote Business Management, LLC, a Georgia
limited liability company
By:_________________________________________________
Title:______________________________________________
"SIMEX"
SIMEX Technologies Inc., a Delaware corporation
By:_________________________________________________
Title:______________________________________________
"Probity"
Probity Investigations, Inc., a Georgia corporation
By:_________________________________________________
Title:______________________________________________
27
LIST OF EXHIBITS
Exhibit A Probity's Closing Certificate
Exhibit B SIMEX's Closing Certificate
Exhibit C Rule 145 Agreement
LIST OF SCHEDULES
Schedule 2.1 Organization and Qualification
Schedule 2.3(b) Membership Interest Rights
Schedule 2.3(c) Liens on Membership Interests
Schedule 2.5 RBM Conflicts, Required Filings and Consents
Schedule 2.7 Absence of Changes in RBM
Schedule 2.8 Undisclosed Liabilities
Schedule 2.9 Title to Properties
Schedule 2.10 Equipment
Schedule 2.11(a) RBM Intellectual Property Rights
Schedule 2.11(b) RBM Software
Schedule 2.11(c) RBM Domain Names
Schedule 2.11(d) Assignment and Protection of Intellectual Property
Schedule 2.12 Real Property
Schedule 2.13 Leases
Schedule 2.14 Contracts
Schedule 2.15 Officers
Schedule 2.16 Payroll Information
Schedule 2.17 RBM Litigation
Schedule 2.18 Employee Benefit Plans
Schedule 2.19 ERISA
Schedule 2.20 Taxes
Schedule 2.21 Compliance with Applicable Laws
Schedule 2.22 RBM Brokers
Schedule 2.24 Interest in Customers, Suppliers and Competitors
Schedule 2.26 Accounts Payable
Schedule 2.27 Insurance
Schedule 3.3 SIMEX Conflicts, Required Filings and Consents
Schedule 3.4 SIMEX Litigation
Schedule 3.9 Absence of Changes in SIMEX
