EXHIBIT 2.2
AGREEMENT FOR MERGER
This Agreement for Merger (this "Agreement") is dated February 24, 2003
and is among Dialog Group, Inc., a Delaware corporation ("DGI"), IP2M
Acquisition Corp. ("Acquisition"), a Delaware corporation, IP2M, Inc., a
Delaware corporation ("IP2M"), and Xxxxx Xxxxx, Xxxxxxx Xxxxxxx, Five Don, Ltd.
(a/k/a 5 Don Ltd.), Xxxxxxx Xxxxx, and Art Xxxxx, each an individual,
(collectively the "Shareholders"). The foregoing are collectively referred to as
the "Parties".
RECITALS
1. The parties have engaged in extensive due diligence, including the
exchange of the materials listed on Schedule R-1 ("Disclosures"). Those
Disclosures provided by IP2M are referred to herein as "IP2M Disclosures" and
those Disclosures provided by DGI are referred to herein as "DGI Disclosures."
2. As of the date hereof, IP2M's outstanding capital structure ("IP2M
Equity") consists of 820,000 shares of preferred stock, $.001 par value, ("IP2M
Preferred"), 17,456,576 shares of common stock, $.0005 par value, ("IP2M
Common"), warrants to purchase 3,224,500 shares of IP2M Common ("IP2M
Warrants"), and employee stock options to purchase 2,224,500 shares of IP2M
Common ("IP2M Options"). The current holders of each class of equity security
are listed on Schedules R-2 (P), (C), (W), and (O), respectively.
3. The Shareholders, in reliance upon the DGI Disclosures, desire, as
holders of the majority of the common stock of IP2M, that IP2M merge with IP2M
Acquisition, a wholly owned subsidiary of DGI (the "Merger"), and receive as a
result of the merger the equity securities of DGI described below.
4. DGI, in reliance upon the IP2M Disclosures, desires to merge IP2M
Acquisition with IP2M pursuant to, and in accordance with, the terms and
conditions of this Agreement.
Now, Therefore, in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree that
the Recitals set forth above are true and correct and incorporated herein as if
fully set forth and further agree as follows:
AGREEMENT
ARTICLE I. The Parties
Section 1.01. The Parties
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(a) DGI is a publicly traded Delaware corporation having a business
office at 00 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000.
(b) IP2M is a Delaware corporation having a business office at 0000
Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000.
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(c) The Shareholders are listed on Schedule R-2(c) and are United
States citizens or entities formed under the laws of states in the U.S., except
for Incentis, Inc., a foreign corporation believed to be incorporated in
Switzerland.
Section 1.02. Assignment
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(a) No party may assign its rights under this Agreement to another
party. Notwithstanding the foregoing, DGI may assign some of its rights under
this Agreement to IP2M Acquisition to the extent necessary to consummate the
transactions contemplated hereby. No assignment shall relieve DGI of its
obligations under this Agreement.
(b) For purposes of this Section 1.02, an assignment includes the
purchase or sale of over 50% of the voting securities of DGI or IP2M.
ARTICLE II. The MERGER
Section 2.01. The Merger
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On the Effective Date, and subject to any approvals required by this
Agreement or by law, IP2M shall merge with IP2M Acquisition.
Section 2.02. The Effective Date
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The Effective Date shall be the date on which the Certificate of Merger
is filed with and accepted by the state of Delaware or March 1st, 2003 which
ever is later.
Section 2.03. The Certificate of Merger
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At the Closing Conference, IP2M and IP2M Acquisition shall execute a
Certificate of Merger in the form satisfactory to counsel for the parties.
Section 2.04 The Required Vote
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At a meeting of the IP2M stockholders, or by written consent, the
Shareholders shall vote or consent to approve the Merger contemplated by this
Agreement.
Section 2.05 Post Merger Leadership of IP2M
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After the merger, the sole director of the surviving corporation shall
be designated by DGI. The Officers shall initially be the individuals designated
on Schedule 2.05.
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ARTICLE III. THE SHARE EXCHANGE
Section 3.01. IP2M Stockholders
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At least five (5) days prior to the Closing Date, IP2M shall deliver to
DGI a list ("IP2M Stockholders List"), certified by its President and Secretary,
of all of the individuals ("IP2M Stockholders") who will own IP2M Equity the
Closing Date. IP2M Stockholders whose IP2M Equity consists of the right to
acquire IP2M Common shall be listed separately and shall be referred to as the
"Remaining Warrant Holders". The IP2M Stockholders List shall set forth all of
the following information about the IP2M Stockholders:
(a) Their name, residence address, notice address, business telephone,
(b) The number and class of equity each person owns.
(c) The amount of any debt owed by IP2M to each person listed.
(d) The name and style in which they wish their DGI stock to be issued
and the address they wish to be shown on DGI's records.
(e) Their Portion, which shall equal (x) the number of shares of IP2M
Common they own or have the right to acquire divided by (y) the total number of
shares of IP2M Common to be outstanding on the Closing Date plus the number of
shares of IP2M Common which may be acquired by the exercise of any IP2M Warrants
which are uncancelled on the Closing Date.
Schedule 3.01 is IP2M's best estimate of what the IP2M Stockholders
List will show when delivered.
Section 3.02. DGI Shares
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(a) As a group, the IP2M Stockholders will be issued (i) eleven and
one-tenth (11.1%) percent of the number of shares of DGI common stock, $0.001
par value ("DGI Common") determined in accordance with subsection 3.02(b) and
(ii) 44,312 shares of DGI's new Class B-1 Preferred Stock ("Class B-1
Preferred"). The DGI Common and Class B-1 Preferred are collectively referred to
as the "DGI Stock".
(b) The number of outstanding shares of DGI Common equal 55,719,317.
(c) Registration. If, at anytime prior to the second anniversary of the
Closing Date, DGI shall prepare to file a Registration Statement under the
Securities Act of 1933, as amended, ("Act") with the Securities and Exchange
Commission ("SEC"), other than pursuant to Form S-4 or Form S-8, pertaining to
the public sale of DGI Common, it shall give at least thirty (30) days' notice
of its intention to so do to the IP2M Stockholders. The notice shall set forth
the number of shares of DGI Common to be registered for sale and, to the extent
then known by DGI, the proposed terms upon which the sale will take place.
Within fifteen (15) days of the notice, any IP2M Stockholder may, by notice to
DGI, require DGI to include its DGI Common in the registration statement. DGI
shall bear all the costs of the registration and sale, including legal and
accounting fees and costs, printing costs, and other expenses except that the
former IP2M Stockholders shall bear their own brokers' commissions, fees, costs,
and expenses.
(d) No fractional shares shall be issued. Any fractions shall not be
settled in cash but shall be eliminated by rounding to the closest whole number.
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Section 3.03. Distribution of DGI Stock
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(a) Notwithstanding any provision to the contrary, five (5%) percent of
each IP2M Stockholder's Portion shall be set aside and delivered to the finder
identified in Section 8.11.
(b) At or after the Closing Conference certificates evidencing the DGI
Stock shall be delivered to the escrow agent appointed pursuant to Section
8.10(e) ("Escrow Agent").
(c) At the end of the escrow period, the finder identified in Section
8.11 shall receive its five (5%) percent and each IP2M Stockholder other than
the Remaining Warrant Holders shall receive the part of the remaining DGI Stock
equal to their Portion as shown on the IP2M Stockholders List. In order to
receive delivery of the DGI Stock, an IP2M Stockholder shall deliver either (i)
the certificate(s) evidencing ownership of the IP2M equity to be exchanged for
their Portion, or (ii) an affidavit of loss satisfactory to DGI's transfer
agent. DGI shall reserve sufficient DGI Stock and DGI Warrants equal to the
Remaining Warrant Holders' Portions. Delivery of these instruments may be made
to the Escrow Agent anytime on or after the Closing Date
(c) The Remaining Warrant Holders shall receive delivery of their
Portion of the DGI Stock.
ARTICLE IV. REPRESENTATIONS
Section 4.01. IP2M's and Shareholders' Representations
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IP2M and the Shareholders, jointly and severally, represent to DGI as
follows:
(a) IP2M is a corporation validly existing and in good standing under
the laws of the State of Delaware.
(b) As of the date hereof, IP2M has only one subsidiary: M2PI, Inc. It
is inactive, has no assets or liabilities, and is not in good standing in the
state of its incorporation.
(c) The IP2M Disclosures include true and complete copies of all IP2M's
charter documents, by-laws, and any amendments thereto. The IP2M Common, IP2M
Preferred, IP2M Warrants, and IP2M Options are IP2M's only equity securities. No
other rights to acquire any class of IP2M Equity exist, other than $100,000 of
principal amount of convertible debt and warrants to acquire 20,000 IP2M shares
that were not cancelled.
(d) The execution, delivery, and consummation of the transactions
contemplated by this Agreement have been duly authorized by IP2M's Board of
Directors and the IP2M Stockholders, and will not contravene any provisions of
law, an order of any court or other agency of government, or of its Certificate
of Incorporation or bylaws. Any consents, approvals, authorizations,
registrations, or qualifications with any person, bank, or any governmental
body, or court having the authority or power to regulate, supervise, or direct
the business and affairs of IP2M that are necessary for the consummation of the
transactions specified in this Agreement shall have been obtained prior to the
Closing Date. Nothing in any agreement to which IP2M is a party prohibits the
execution or implementation of this Agreement.
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(e) This Agreement constitutes the legal, valid and binding obligation
of IP2M and the Shareholders and is enforceable against them in accordance with
its terms, subject only to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and the award by courts of money damages rather than specific performance of
contractual provisions involving matters other than the payment of money.
(f) The lists, copies, and other information provided on the Schedules,
or delivered pursuant to this Agreement, are accurate and complete in every
material respect. Any agreement from which IP2M derives more than five (5%)
percent of its revenues or profits (the "Material Agreements") is listed on
Schedule 4.01(f). Copies of the Material Agreements are included in the IP2M
Disclosures.
(g) With respect to any agreements, including the Material Agreements,
delivered as part of the IP2M Disclosures or referred to in any Schedule, (i)
IP2M is not in default of any agreement in any material respect, (ii) IP2m knows
of no state of facts that, with the giving of notice or the passage of time, or
both, would give rise to a default under any Material Agreement that would have
a material adverse effect on IP2M's business, and (iii) to the best of IP2M's
knowledge, no other party to any agreement is in default thereof (except as may
be provided on the applicable Schedule).
(h) To its knowledge, IP2M has all rights to use the domain names,
patents, trade names, trademarks, service marks or other intellectual property
currently used in the operation of the IP2M's business ("IP2M Rights"). IP2M
Rights are listed on Schedule 4.01(h). IP2M owns all the IP2M Rights free and
clear of any liens, claims, or other title defects, except as listed on Schedule
4.01(h). IP2M has the full power and right to transfer title to the IP2M Rights
without the consent of any other person.
(i) IP2M has not received notification of infringement from any person
with respect to any IP2M Right, and IP2M is not aware of a basis for any claim.
To the best of IP2M's knowledge, no right or other trademark, service xxxx or
trade name used by IP2M in connection with its business infringes any trademark,
service xxxx or trade name of another person in any country in which the
trademark, service xxxx or trade name is used.
(j) Set forth in Schedule 4.01(j) is a list of each piece of IP2M's
equipment ("Equipment") that is used in its business, owned or leased by it, or
is worth in excess of $2,500. The Equipment (except for any Equipment that is
held pursuant to leases or licenses as described in Schedule 4.01(j)) is owned
free and clear of all liens, mortgages, security interests, pledges, charges and
encumbrances (except for (i) liens for current debts not yet due, (ii) disclosed
in Schedule 4.01(j), or (iii) disclosed on the Financial Statements provided in
Schedule 4.01(m)). IP2M is not in default under any lease for the Equipment and
knows of no state of facts that, with the giving of notice or the passage of
time, or both, would give rise to a default under any lease for the Equipment.
(k) The Equipment is in substantially good operating condition and
repair, excluding ordinary wear and tear, taking into consideration the age and
prior use of same, and is, to the best of IP2M's knowledge, in compliance with
all applicable laws, regulations, orders and ordinances. The value of fixed
assets used in IP2M's business has not been written up.
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(l) IP2M's insurance policies ("Insurance Policies") are listed on
Schedule 4.01(l), which sets forth each policy's carrier, the amount of
coverage, its expiration date, and the date through which premiums have been
paid. All Insurance Policies are now in full force and effect.
(m) IP2M's financial statements ("Financial Statements") are listed on
Schedule 4.01(m). True and complete copies of the Financial Statements have been
included in the Disclosures. Each of the Financial Statements is true and
complete in all material respects. Each item therein was prepared in accordance
with generally accepted accounting principals, consistently applied, and
accurately reflects the financial condition of IP2M and the results of its
operations for the periods to which they relate. There has been no material
change in the financial condition or the operations of IP2M that is not
reflected in the Financial Statements or otherwise disclosed in this Agreement.
(n) The annual Financial Statements for 2001 and 2000 have been audited
as described in the audit reports contained in Schedule 4.01(m). The
Shareholders have reviewed the Financial Statements and believe them to be true
and complete. The Shareholders know of no obstacle to the completion of an
annual audit of IP2M for 2002 within the time required by the SEC.
(o) The Internal Revenue Service ("IRS") has not audited IP2M's tax
returns.
(p) (i) Up to and as of the Closing Date, IP2M has duly and timely
filed, where required, all federal, state and local tax returns required to be
filed prior to the date of this Agreement, including income, employment, rent,
and sales and use tax returns, and has paid all taxes shown as due and payable
on the returns, all deficiencies and assessments notice of which has been
received, all other taxes, and all governmental charges, duties, penalties,
interest and fines (collectively, "Other Charges") due and payable on or before
the date of this Agreement.
(ii) There are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax returns by IP2M or for the payment by, or assessment against, any
tax, deficiency, assessment or Other Charge.
(iii) There are no suits, actions, claims, audits,
investigations, inquiries or proceedings pending against IP2M in
respect of any unpaid taxes, deficiencies, assessments or Other
Charges, and there are no such threatened suits, actions, claims,
audits, investigations or inquiries.
(q) IP2M is not in arrears in the payment of federal, state and local
withholding taxes, FICA, Medicare, real estate taxes and assessments, and sales
taxes. IP2M has withheld or collected from each payment made to each of its
employees the amount of all taxes required to be withheld or collected there
from and has paid the same to the proper tax receiving officers.
(r) IP2M is not a party to any civil litigation or arbitration
proceeding except as listed on Schedule 4.01(r), or otherwise disclosed to DGI.
IP2M has no knowledge of, nor has it received notice of, any criminal,
regulatory, or compliance proceedings or threatened proceedings from or by any
government or governmental entity or agency except as listed on Schedule
4.01(r). IP2M has provided, or will provide prior to the Closing Date, DGI with
a summary of the proceedings listed on the Schedule or otherwise disclosed to
DGI.
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(s) (i) The Shareholders are acquiring the DGI Stock for
investment and not with a view towards distribution. They acknowledge
and understand that they each must bear the economic risk of an
investment in the DGI Stock being acquired pursuant hereto for an
indefinite period of time since these securities have not been
registered under the Act and, therefore, cannot be sold unless they are
either subsequently registered under the Act or an exemption from such
registration is available and favorable opinions of counsel in form and
substance satisfactory to DGI to that effect are obtained. The
certificates representing the DGI Stock (unless such securities have
been registered) shall bear on their face the following legend:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Securities
Act"), as amended. These shares have been acquired for
investment and not for distribution or resale. They may not be
mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such shares
under the Securities Act or an opinion of counsel acceptable
to the Corporation that such registration is not required.
(ii) IP2M and the Shareholders, taking into account the
personnel and resources they can practically bring to bear on the
purchase of the DGI Stock contemplated hereby, are knowledgeable,
sophisticated, and experienced in making, and are qualified to make,
decisions with respect to investments presenting an investment decision
like that involved in the purchase of the DGI Stock.
(iii) IP2M and the Shareholders have had the opportunity to
ask questions of, and receive answers from, representatives of DGI or
persons acting on its behalf concerning the terms and conditions of the
proposed investment in DGI, have had the opportunity to obtain
additional information necessary to verify the accuracy of information
previously furnished about DGI, and have requested, received, reviewed
and considered all information they deem relevant in making an informed
decision with respect to the purchase of DGI Stock.
(iv) Each Shareholder is an "accredited investor" as such term
is defined in Rule 501 of Regulation D promulgated under the Act.
(t) Each of the Schedules described in this Section 4.01 is certified
by IP2M and the Shareholders as being true and complete in every material
respect as of the date hereof. None of the representations, warranties,
covenants or agreements by IP2M or the Shareholders in this Agreement, the IP2M
Disclosures, or in any document, certificate, or schedule furnished or to be
furnished pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements of
facts contained therein not misleading.
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(u) All statements contained in any certificate or other instruments
delivered by or on behalf of the IP2M pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed a representation and warranty
of the IP2M and the Shareholders.
(v) No broker or finder other than as named in Section 8.11 procured or
was otherwise involved in the Merger transaction or has any right to
compensation as a result of the consummation of the Merger transaction.
Section 4.02. DGI's Representations
---------------------
DGI represents as follows:
(a) DGI and IP2M Acquisition are corporations that were duly
incorporated and are validly existing and in good standing under the laws of the
State of Delaware.
(b) As of the date hereof, DGI owns all of the capital stock of
ThinkDirectMarketing, Inc. ("TDMI"), and Findstar, plc as described in DGI's
filings with the SEC. Prior to the Closing Date, DGI's wholly owned subsidiary
HCD Acquisition, Inc. will merge with Healthcare Dialog, Inc. There are no other
subsidiaries nor is the acquisition of any additional companies contemplated,
other than fifty (50%) percent of the capital stock of Healthcare Horizons, Inc.
and the assets of Azimuth Target Marketing, Inc. (the "Xxxxxx Companies") and
IP2M. As used in this Article alone, the term DGI includes all of its
subsidiaries, both direct and indirect.
(c) The execution, delivery and performance of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors (and by all other requisite corporate action) of DGI and Acquisition,
and will not contravene any provisions of law, or an order of any court or other
agency of government, or their Articles of Incorporation or bylaws. Any and all
consents, approvals, authorizations, or orders of, or registrations or
qualifications with, any person, bank, governmental body, or court having
authority or power to regulate supervise or direct the business and affairs of
DGI necessary for the consummation of the transactions specified in this
Agreement shall have been obtained prior to the Closing Date.
(d) This Agreement constitutes the legal, valid and binding obligation
of DGI enforceable against it in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money.
(e) Nothing in any agreement to which DGI is a party prohibits the
execution or implementation of this Agreement.
(f) This Agreement is not in violation of any law or regulation of any
governmental jurisdiction in which DGI does business, or to which DGI is
otherwise subject.
(g) The DGI Stock, when issued in accordance with this Agreement, will
be duly authorized, validly issued, outstanding, fully paid and non-assessable.
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(h) The reports and other documents filed by DGI with the SEC were
complete, accurate, and timely when filed, and have been updated or supplemented
as appropriate. The financial statements included or referenced therein were
prepared in accordance with generally accepted accounting principals,
consistently applied, and accurately reflect the financial condition of DGI and
the results of its operations for the periods to which they relate. Since June
2001, all reports filed by DGI with the SEC (i) were prepared in all material
respects in accordance with requirements with federal securities laws and the
rules and regulations of the SEC, and (ii) did not at the time they were filed
(or if amended or superceded prior to the date of this Agreement, then on the
day of that filing), contain any untrue statement of material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the DGI
subsidiaries are required to file separately any forms, reports or other
documents with the SEC. There has been no material change in the financial
condition or the operations of DGI that has not been included in a report filed
with the SEC.
(i) All statements contained in any certificate or other instruments
delivered by or on behalf of the DGI pursuant hereto, or in connection with the
transactions contemplated hereby, shall be deemed representations and warranties
by the DGI.
(j) The IRS has not audited DGI's tax returns since 1997.
(k) (i) Up to and as of the Closing Date, DGI has duly and timely filed
where required all federal, state and local tax returns required to be filed
prior to the date of this Agreement, including income, employment, rent and
sales and use tax returns, and has paid all taxes due and payable on such
returns, all deficiencies and assessments notice of which has been received, all
other taxes, and all Other Charges due and payable on or before the date of this
Agreement.
(ii) There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any
tax returns by DGI or for the payment by, or assessment against, any
tax, deficiency, assessment or Other Charge.
(iii) There are no suits, actions, claims, audits,
investigations, inquiries or proceedings pending against DGI in respect
of any unpaid taxes, deficiencies, assessments or Other Charges and
there are no such threatened suits, actions, claims, audits,
investigations or inquiries.
(iv) DGI has withheld or collected from each payment made to
each of its employees the amount of all taxes required to be withheld
or collected there from and has paid the same to the proper tax
receiving officers.
(l) DGI is not in arrears in the payment of federal, state and local
withholding taxes, FICA, Medicare, real estate taxes and assessments, and sales
taxes. DGI has withheld or collected from each payment made to each of its
employees the amount of all taxes required to be withheld or collected there
from and has paid the same to the proper tax receiving officers except as listed
on Schedule 4.02(l).
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(m) None of the representations, warranties, covenants or agreements by
DGI in this Agreement, nor any document, certificate or schedule furnished or to
be furnished pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements of facts contained therein not misleading.
(n) DGI is not a party to any civil litigation or arbitration
proceeding. DGI has no knowledge of and has received no notice of any criminal,
regulatory, or compliance proceedings or threatened proceedings from or by any
government or governmental entity or agency. DGI has provided, or will provide
prior to the Closing Date, IP2M with a summary of the proceedings listed on the
Schedule.
(o) Each of the Schedules described in this Section 4.02 is certified
by DGI as being true and complete in every material respect as of the date
hereof. None of the representations, warranties, covenants or agreements by DGI
in this Agreement, the DGI Disclosures, or in any document, certificate, or
schedule furnished or to be furnished pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements of facts contained therein not misleading.
(p) As of the date hereof and as of Closing, there will be options to
purchase no more than 150,000 shares of DGI common stock outstanding (excluding
the options to be issued as set forth in Schedule 5.02(g)).
ARTICLE V. CONDITIONS PRECEDENT TO THE CLOSING
Section 5.01. Conditions Precedent to DGI's Obligation to Close
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Notwithstanding any other provision herein, the obligations of the DGI
under this Agreement are, at the option of the DGI, subject to the fulfillment
of each of the conditions set forth below.
(a) HCD Acquisition, Inc. shall have merged with Healthcare Dialog,
Inc. Schedule 5.01(a) contains copies of the Agreement for Merger and the
amendment thereto.
(b) The required percentage of the IP2M Stockholders shall have
approved the Merger.
(c) DGI shall have raised at least $250,000 (net of all costs and
expenses) through the sale of DGI common stock from investors introduced to it
by IP2M. DGI shall bear, subject to a maximum of ten (10%) percent of the total
amount raised, all costs and expenses in connection with the sale, including any
consulting fees and any brokerage fees and or related commissions.
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(d) IP2M shall have achieved the following financial goals:
(i) IP2M shall have discharged sufficient Current Liabilities
(except Deferred Revenue) so that its Current Liabilities (except
Deferred Revenue) shall not exceed its Current Assets (except Prepaid
Media Expenses and Inventory other than contracted but unbilled banner
inventory). Notwithstanding the foregoing, if the net amount of funds
raised pursuant to section 5.01(c) exceeds $250,000, then (x) Current
Liabilities (except Deferred Revenue) may exceed Current Assets (except
Prepaid Media Expenses and Inventory other than contracted but unbilled
banner inventory) by the amount of the net excess and (y) a number of
shares of Common Stock equal to the amount of the net excess divided by
the average price at which shares were sold pursuant to Section 5.01(c)
shall be deducted from the number of shares of Common Stock to be
issued to the IP2M shareholders as a group.
(ii) All IP2M's obligations to holders of more than five (5%)
of its equity shall have been cancelled or capitalized.
(iii) IP2M shall have no Long Term Liabilities other than a
Dell line of credit that does not exceed $15,000.
(e) All of the IP2M Preferred shall have been converted to IP2M Common.
(f) All of the IP2M Options shall have been cancelled.
(g) Xxxxx Xxxxx shall have executed an employment agreement with DGI as
set forth on Schedule 5.01(g).
(h) The representations of the IP2M and the Shareholders contained in
this Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, shall be true and correct in all material respects on and
as of the Closing Date. On or before the Closing Date, IP2M shall have complied
with and duly performed any and all covenants, agreements and conditions in all
material respects on its part to be complied with, performed pursuant to or in
connection with, this Agreement on or before the Closing Date.
(i) DGI shall have received a certificate executed by the Secretary of
IP2M setting forth a copy of the resolutions adopted by written consent by its
Board of Directors and stockholders approving the execution and delivery of this
Agreement and the consummation of the Merger and of all the transactions
contemplated hereby. IP2M shall provide a true copy of the notice to the IP2M
Stockholders that did not execute the written consent and affirm that a copy of
that notice has been mailed to them as provided by statue.
(j) DGI shall have received an opinion of Xxxxxx & Xxxxxxxxx, counsel
for IP2M, dated as of the Closing Date, to the effect that (i) IP2M is a
corporation that is validly existing and in good standing under the laws of the
state of its incorporation and has the corporate power to carry on their
business as it is now being conducted; (ii) any and all consents or orders of
any and all courts or governmental agencies, administrative bodies or lenders or
others known to counsel have been obtained as of the Closing Date, which are
required for the consummation of the transactions contemplated by this
Agreement; (iii) this Agreement has been duly executed and delivered by IP2M and
the Shareholders, and is their valid and binding obligation in accordance with
its terms, subject only to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and the award by courts of money damages rather than specific performance of
contractual provisions involving matters other than the payment of money; (iv)
the Certificate Merger has been duly prepared and executed for filing; (v)
counsel has no knowledge of a breach of any representation made by IP2M or the
Shareholders pursuant to this Agreement; (vi) counsel has no knowledge of any
pending or threatened litigation, action, or proceeding involving IP2M or the
Shareholders or the entry of any orders or injunctions which might materially
and adversely affect or impair IP2M's business; and (vii) the transactions
contemplated hereby will not cause a breach of the certificate of incorporation
or by-laws of IP2M.
11
(k) No action or proceeding shall have been instituted to restrain or
prohibit the Merger.
(l) IP2M shall not have suffered any destruction or damage by fire,
explosion or other calamity exceeding Ten Thousand Dollars ($10,000.00) in value
not covered by insurance, nor has any other event, condition or state of facts
of any character occurred which materially and adversely affects, or, to the
best of the knowledge of IP2M, threatens to materially and adversely affect, the
property, business or financial condition of IP2M.
(m) IP2M has executed any Documents (as defined in Section 6.02) that
require its execution.
(n) DGI's accounting firm, Berenfeld, Spritzer, Xxxxxxxx & Sheer
("BSSS"), has determined in writing that a satisfactory certified audit of IP2M
for the two years ended December 31, 2001 and 2002 can be achieved and that the
financials required for DGI's report on Form 8-K relating to this transaction
can be prepared in the time required by the SEC.
Section 5.02. Conditions Precedent to IP2M's and Shareholders' Obligation
to Close
-----------------------------------------------------------
Notwithstanding any other provision herein, the obligations of the IP2M
and the Shareholders under this Agreement are, at the option of the IP2M,
subject to the fulfillment of each of the conditions set forth below.
(a) HCD Acquisition, Inc. shall have merged with Healthcare Dialog,
Inc.
(b) The representations of DGI contained in this Agreement, or
otherwise made in writing in connection with the transactions contemplated
hereby, shall be true and correct in all material respects on and as of the
Closing Date. On or before the Closing Date, DGI shall have complied with and
duly performed any and all covenants, agreements and conditions in all material
respects, on its part to be complied with or performed pursuant to or in
connection with this Agreement on or before the Closing Date.
(c) IP2M shall have received a certificate dated as of the Closing Date
executed by the Secretary of DGI setting forth (i) a copy of the resolutions
adopted by DGI's Board of Directors approving the execution and delivery of this
Agreement and the consummation of the Merger and of all the transactions
contemplated hereby, (ii) the number of shares authorized and outstanding of DGI
common stock and preferred stock of whatever series, and the number of shares
for which warrants and any other convertible securities (other than employee
stock options) are outstanding.
12
(d) IP2M shall have received an opinion of Xxxx Xxxx Xxxxxx, Esq.,
counsel for DGI, dated as of the Closing Date, to the effect that (i) DGI and
Acquisition are corporations that were duly incorporated and are validly
existing and in good standing under the law of the state of Delaware, and each
have the corporate power to carry on its business as it is now being conducted
and are qualified to do business in each jurisdiction where the nature of the
business requires qualification; (ii) any and all consents or orders of any and
all courts or governmental agencies, administrative bodies or lenders or others
known to counsel have been obtained as of the Closing Date, which are required
for the consummation of the transactions contemplated by this Agreement have
been obtained as of the Closing Date; (iii) this Agreement has been duly
executed and delivered by DGI, and is the valid and binding obligation of DGI,
in accordance with its terms, subject only to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto, and the award by courts of money damages rather than
specific performance of contractual provisions involving matters other than the
payment of money; (iv) the Certificate of Merger has been duly prepared and
executed for filing; (v) counsel has no actual knowledge of a material breach by
DGI of any representation made by it pursuant to this Agreement; (vi) the
issuance of the DGI Stock to the IP2M Stockholders will be exempt from the
registration provisions of the Securities Act and will not violate the
registration provisions of Section 5 of the Securities Act; (vii) the DGI Stock,
when issued, will be duly issued, fully paid, and non-assessable; and (viii) the
transactions contemplated hereby will not cause a breach of the amended and
restated certificate of incorporation or by-laws of DGI.
(e) No action or proceeding shall have been instituted to restrain or
prohibit the consummation of the Merger.
(f) DGI has executed any Documents that require its execution.
(g) DGI shall have made grants of stock options under the 2002 DGI
Stock Option Plan as set forth on Schedule 5.02(g).
(h) DGI shall have either (i) bound a Director's and Officer's
insurance, on terms acceptable to IP2M, that covers claims made during its
policy period which arose in connection with IP2M in periods prior to its
acquisition or (ii) shall deliver a binder reflecting that it has obtained a
tail to the directors and officers insurance policy currently maintained by IP2M
on terms acceptable to IP2M.
(i) Schedule 5.02(i) sets forth DGI's current liabilities of DGI as of
a date within ten days of the Closing.
ARTICLE VI. THE CLOSING
Section 6.01. The Closing Conference and Closing Date
---------------------------------------
The Closing Conference and Closing shall take place at DGI's business
office or at another place as agreed between the Parties on February 27, 2003.
13
Section 6.02. IP2M'S AND THE IP2M STOCKHOLDERS' RESPONSIBILITIES AT THE
CLOSING CONFERENCE
----------------------------------------------------------
At the Closing Conference, IP2M and the IP2M Stockholders shall take
the actions listed below:
(a) IP2M shall deliver all the instruments listed in this subsection
("Documents"):
(i) A fully executed Certificate of Merger.
(ii) The opinion of Xxxxxx & Xxxxxxxxx.
(iii) The officers' certificate as required by Section
5.01(i).
(iv) An officer's certificate as to compliance with Sections
5.01 (d), (e), (f), (h), (k), (l), and (m).
(v) An executed escrow agreement contemplated by Section 8.10.
(b) At or after the Closing Conference, the IP2M Stockholders
shall deliver either of the following to DGI:
(i) All certificates evidencing their ownership of IP2M stock,
or
(ii) an affidavit of lost certificate.
Section 6.03. DGI's Responsibilities at the Closing Conference
------------------------------------------------
At the Closing Conference, DGI shall take the actions listed below:
(a) DGI shall deliver to the Escrow Agent certificates of the DGI Stock
registered in the name of the Escrow Agent representing the number of shares of
DGI Common and Class B-1 Preferred determined in accordance with Section 3.02.
(b) DGI shall accept delivery of the certificates or affidavits
required by 6.02(b).
(c) DGI shall deliver the opinion of Xxxx Xxxx Xxxxxx, Esq.
(d) DGI shall deliver the officers' certificate as required by Section
5.02 (a) and (b).
(e) DGI shall deliver the certificates for shares of common stock
acquired as set forth in Section 5.01(c).
(f) DGI shall deliver evidence of compliance with Section 5.02 (h).
(g) DGI shall execute an escrow agreement as contemplated by Section
..8.10.
(h) DGI shall deliver a certificate setting forth the number of shares
of DGI common stock outstanding as of the Closing.
14
ARTICLE VII. ADDITIONAL COVENANTS
Section 7.01. Additional DGI Stock
--------------------
(a) Upon the closing of the acquisition of a Xxxxxx Company, the IP2M
Stockholders, as a group, shall receive a number of shares of DGI Stock equal to
eleven and one-tenth (11.1%) percent of the shares, by class, issued pursuant to
those Agreements. Certificates evidencing these shares shall be delivered to the
Escrow Agent.
(b) If, prior to June 30th, 2003, DGI shall have raised at least
$182,500 (net of all costs and expenses) through the sale of DGI common stock
from investors introduced to it by Xxxxx Xxxxx, then the IP2M Stockholders as a
group, shall receive 691,954 shares of DGI Common Stock. DGI shall bear, subject
to a maximum of ten (10%) percent of the total amount raised, all costs and
expenses in connection with the sale, including any consulting fees and any
brokerage fees and or related commissions. The price and terms of any proposed
subscription shall be subject to the reasonable approval of DGI. Sales for cash
at or above the market price shall be deemed reasonable.
(c) Upon the close of the escrow, each IP2M Stockholder other than the
Remaining Warrant Holders shall receive the part of any additional shares to
which their Portion entitles them.
Section 7.02. Audit Procedures
----------------
(a) The parties recognize that the time period permitted by the SEC for
filing audited financial statements concerning IP2M and the combined entity is
limited.
(b) Immediately upon execution of this Agreement, BSSS may commence a
review of the audit of IP2M for the year ended December 31, 2001 and may review
the audit process for the year ended December 31, 2002.
Section 7.03. Further Actions
---------------
The Parties agree, in order to perfect DGI's control of IP2M and the
Subsidiaries and to accomplish the purpose of this Agreement, to execute all
documents and take all such other action as the Parties may reasonably request,
whether at or after the Closing Date, as may be reasonably necessary or proper
to allow the Parties to receive the full benefits of this Agreement.
Section 7.04. Adjustments of DGI Stock and DGI Warrants
-----------------------------------------
(a) In the event that it is discovered that the Officer's Certificate
required by Section 5.02(c) understated the number of shares of stock
outstanding (or in the case of convertible securities, the number of shares into
which such securities are convertible), DGI shall issue to IP2M Stockholders, at
no cost to them twenty two and two-tenths (22.2%) percent of the number of
shares (of the respective class) equal to the discrepancy.
(b) In addition, if any shares are issued to creditors of DGI under the
Plan of Reorganization after the Closing Date, the DGI shall issue to the IP2M
Stockholders twenty two and two-tenths (22.2%) percent of the number of DGI
Common shares issued to the creditors.
15
Section 7.05. Information
-----------
The parties agree that they will not, and will use their best efforts
to cause their representatives not to, use any information obtained pursuant to
this Agreement, as well as any other information obtained prior to the date
hereof in connection with its consideration of the transactions contemplated
hereby and the entering into of this Agreement, for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. The parties
shall keep confidential, and shall cause their representatives to keep
confidential, all information and documents obtained pursuant to this Agreement,
as well as any other information obtained prior to the date hereof in connection
with its consideration of the transactions contemplated hereby and the entering
into of this Agreement, unless such information (i) was already known to that
party, (ii) is disclosed with the prior written approval of the party to which
such information pertains, (iii) is already present in the public domain, or
(iv) is required to be disclosed by law. In the event that this Agreement is
terminated or the transactions contemplated hereby shall otherwise fail to be
consummated, the parties shall promptly cause all copies of documents or
extracts thereof containing information and data as to the other to be returned
to the other.
Section 7.06. Termination
-----------
This Agreement may only be terminated at any time prior to the Closing
Date:
(a) upon mutual written consent authorized by the Board of
Directors of DGI and IP2M; or
(b) by either DGI or IP2M if the Closing shall not have been
consummated by the close of business on February 28, 2003.
ARTICLE VIII. MISCELLANEOUS
Section 8.01. Entire Agreement; Amendments
----------------------------
This Agreement, including those additional agreements referred to in
the Schedules, embodies the entire understanding of the Parties. No amendment or
modification of this Agreement may be made except in writing, signed by the
Parties hereto.
Section 8.02. Expenses
--------
In the event that this Agreement does not close, each party shall bear
its own costs and expenses. In the event that this Agreement does close, all the
reasonable legal costs and expenses of the transaction incurred by IP2M shall be
paid by DGI including any and all audit fees incurred by BSSS in reviewing
and/or auditing IP2M's financial statements.
16
Section 8.03. Headings
--------
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
Section 8.04. Notices
-------
All notices, requests, demands, approvals, consents, waivers or other
communications hereunder shall be in writing and shall be deemed duly given if
delivered to or mailed by registered or certified mail, postage prepaid or by
nationally recognized overnight express delivery service as follows:
E>
If to DGI to: Dialog Group, Inc.
Attn: Xxxxxx Xxxxxx
Third Floor, 00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to: Xxxx Xxxx Xxxxxx, Esq.
Suite 400 E, 0000 Xxxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
If to IP2M to: IP2M, Inc.
Attn: Dr. Xxxxx Xxxxx
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxxx & Xxxxxxxxx
Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
A party may change its address for purposes of this Section 8.04 by giving
notice hereunder.
Section 8.05. Governing Law; Jurisdiction
---------------------------
This Agreement and the legal relations among the Parties hereto shall
be governed by and construed in accordance with the substantive law of the State
of New York without regard to conflict of law principles. The Parties consent to
the jurisdiction of the courts of the State of New York or the U.S. District
Court for the Southern District of New York as if all parts of the agreement
were negotiated and effectuated there.
Section 8.06. Beneficiaries
-------------
This Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective successors and legal representatives.
Nothing in this Agreement, express or implied, is intended to confer on any
other person other than the Parties hereto, IP2M Shareholders or their
respective successors and legal representatives, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
17
Section 8.07. Counterparts
------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. Its execution shall be effective when
copies of signed signature pages are exchanged by facsimile between the Parties.
Section 8.08. Severance
---------
If any section, subsection or provision of this Agreement, or the
application of such section, subsection, or provision, is held invalid, the
remainder of this Agreement and the application of such section, subsection or
provision to persons or circumstances other than those to which it is held
invalid shall not be affected thereby.
Section 8.09. Survival of Representations
---------------------------
All representations and covenants contained in this Agreement shall
survive the Closing.
Section 8.10. Indemnification
---------------
(a) The IP2M Stockholders, severally, shall indemnify and hold DGI, and
its officers, directors, employees, and agents (each a "IP2M Indemnified
Entity") harmless from and against, and reimburse a IP2M Indemnified Entity with
respect to, any and all loss, damage, liability, cost and expense, including
reasonable attorneys' fees and costs incurred by the IP2M Indemnified Entity by
reason of, or arising out of (i) the material breach of any representation made
by IP2M or the Shareholders in this Agreement; (ii) IP2M's or the Shareholder's
failure to perform any action required by this Agreement; and (iii) claims
arising from any undisclosed liability claim which accrued on or before the
Closing Date.
(b) DGI shall indemnify and hold the IP2M Stockholders (each a "DGI
Indemnified Party") harmless from and against, and reimburse a DGI Indemnified
Party with respect to, any and all loss, damage, liability, cost and expense,
including reasonable attorneys' fees and costs, incurred by the DGI Indemnified
Party by reason of or arising out of (i) the material breach of any
representation, any certificate delivered at Closing, or covenant made by DGI in
this Agreement; (ii) the failure by DGI to perform any action required by this
Agreement; (iii) claims arising from any liability claim which accrued after the
Closing Date; and (iv) claims made by Xxxx Xxxxxxxx, Xxx Xxxxxx and/or Xxxxxx
Xxxxxx with respect to all or a portion of the $100,000 of 10% convertible
debentures owed to these individuals.
(c) If a claim for which indemnification may be sought against the
other party is asserted the party entitled to indemnification hereunder shall
advise the other to that effect and shall thereafter permit the other to
participate at such party's sole expense in the negotiation and settlement of
that claim and to join in or assume the defense of any legal action arising
there from with counsel selected by them and reasonably satisfactory to the
other party. Either party may implead the other in any action that is subject to
indemnity.
18
(d) Notwithstanding the foregoing, (i) the provisions of this indemnity
shall not apply unless the aggregate loss, damage, liability, cost and expense
shall exceed $10,000; (ii) the aggregate loss, damage, liability, cost and
expense to be indemnified shall not exceed $1,000,000; and (iii) all claims for
damages shall be settled by cancellation or issuance of DGI Common, as the
circumstances require. The valuation of DGI Common to be delivered shall be the
average closing price for the DGI Common on the five trading days immediately
proceeding the date on which the obligation to deliver shares is determined.
(e) In order to secure the obligation of the IP2M Stockholders
hereunder, all DGI Stock issued to them shall be held in escrow by the Escrow
Agent, Xxxx Xxxx Xxxxxx, Esq., pursuant to an escrow agreement agreeable to
counsel for the parties and executed at Closing.
(f) Notwithstanding the foregoing, the escrow period and all liability
under this section shall end on December 1, 2003.
Section 8.11. Brokers and Finders
-------------------
Pursuant to an agreement entered into by and between IP2M and
Knightsbridge, Inc. dated December 23, 2001, Xxx Xxxxx and Knightsbridge, Inc.
have acted as a finder and are entitled to a maximum of 5% from the compensation
the IP2M shareholders receive hereunder. No other broker or finder shall be
entitled to any fees or commissions relating to this Merger.
Section 8.12. Interpretation
--------------
The use of words "it" or "its," in reference to any party hereto shall
be construed to be a proper reference even though a party may be a partnership,
an individual or two or more individuals. The term "person" includes
individuals; corporations, partnerships, associations, or other legal entities;
and governments, governmental subdivisions, agencies, or instrumentalities.
Words of one gender shall be deemed to include the other, or both, or neither. A
provision of this Agreement that requires a party to perform an action shall be
construed as requiring the party to perform the action or to cause such action
to be performed. A provision of this Agreement that prohibits a party from
performing an action shall be construed as prohibiting such party from
performing such action or permitting others to perform such action. Wherever the
term "including" is used herein, the same shall be deemed to read "including,
but not limited to." The singular shall be deemed to include the plural, and the
plural shall be deemed to include the singular. The agreements contained in this
Agreement shall not be construed as independent covenants. "Any" shall be deemed
to read "any and all" whenever applicable. "Anytime" shall be deemed to read
"anytime and from time to time" whenever applicable. The conjunction "and" shall
include the conjunction "or" whenever applicable. The conjunction "or" shall
include the conjunction "and" whenever applicable.
{Balance of Page Intentionally Left Blank}
19
In Order To Indicate Their Intention to be Bound, the Parties hereto
have caused this Agreement to be duly executed as of the date first above
written by their respective duly authorized officers.
Dialog Group, Inc.
By:
----------------------------------
Xxxxxx Xxxxxx, President
IP2M, Inc.
By:
----------------------------------
Xxxxx Xxxxx, President
The Shareholders
----------------------------------
Xxxxx Xxxxx
----------------------------------
Xxxxxxx Xxxxxxx
Five Don, Ltd. a/k/a 5 Don, Ltd.
By:
----------------------------------
Xxxxxxx Xxxxxxx
----------------------------------
Xxxxxxx Xxxxx
----------------------------------
Art Xxxxx
20
