EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is entered
into as of the 16th day of November 2001, by and among XXX.XXX, INC., a Delaware
corporation ("MCYC"), XXXXXX XXXX VENTURE LTD., a corporation organized under
the laws of Yukon Territory, Canada ("Xxxxxx Xxxx") and the shareholders of
Xxxxxx Xxxx identified on the signature page hereto ("Xxxxxx Xxxx
Shareholders").
RECITALS
WHEREAS, Xxxxxx Xxxx Shareholders own 100% of the 3,000 issued and
outstanding shares of common stock of Xxxxxx Xxxx (the "Xxxxxx Xxxx Shares");
and
WHEREAS, MCYC desires to acquire all of the Xxxxxx Xxxx Shares, and
Xxxxxx Xxxx Shareholders desire to exchange all of their Xxxxxx Xxxx Shares for
an aggregate of 30,000,000 shares of common stock of MCYC (the "MCYC Shares").
WHEREAS, through the transactions referenced above, MCYC will own 100%
of the Xxxxxx Xxxx Shares and Xxxxxx Xxxx will become a wholly owned subsidiary
of MCYC.
WHEREAS, the parties desire that upon execution of this Agreement,
Xxxxxxxx Xxxxxxx in his capacity as an officer and a director of MCYC and its
subsidiaries and Xxxxxxxx xxx Xxxxx in his capacity as a director of MCYC shall
resign from such positions and are to be replaced by the officers and directors
of Xxxxxx Xxxx as the new management of MCYC.
NOW, THEREFORE, for and in consideration of the mutual covenants and
representations and warranties contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, MCYC, Xxxxxx Xxxx
and Xxxxxx Xxxx Shareholders agree as follows:
1. THE ACQUISITION.
1.1 Acquisition. At the Closing (as defined in section 4, below), MCYC
shall acquire from Xxxxxx Xxxx Shareholders and Xxxxxx Xxxx Shareholders shall
sell, transfer, assign and convey to MCYC 100% of the Xxxxxx Xxxx Shares in
exchange for 30,000,000 MCYC Shares. The MCYC Shares issued to Xxxxxx Xxxx
Shareholders shall have the rights, restrictions and privileges set forth in
MCYC's Certificate of Incorporation, as amended and in the stock certificates
therefore. The MCYC Shares transferred to the Xxxxxx Xxxx Shareholders are
"restricted shares" and are not freely transferable for at least a period of a
year as described herein. Upon the Closing, Xxxxxx Xxxx shall become a wholly
owned subsidiary of MCYC.
1.2 Taxes. It is the intent of the parties that this reorganization
will constitute a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended. Each party shall be
responsible for and shall pay any and all taxes, charges or fees
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attributable to such party, including individual state and federal income taxes,
arising out of, or by reason of, the exchange of MCYC Shares for the Xxxxxx Xxxx
Shares, or otherwise in connection with the transactions contemplated hereby.
Each party hereto represents and warrants that it has relied solely on the
opinions or advice of its own professional advisors with respect to the tax
consequences of this transaction, if any, and has not relied on the opinions or
advice of the other parties or its professional advisors in any way with respect
to the tax consequences of this transaction.
2. CHANGE IN MANAGEMENT OF MCYC AND UNWIND PROVISION
2.1 Change in Management of MCYC.
(a) By execution of the Severance Agreement attached hereto as
EXHIBIT A and executed simultaneously herewith, Xxxxxxxx Xxxxxxx, pursuant to
the terms and conditions of the Severance Agreement resigns as an officer and
director of MCYC and its subsidiaries; Xxxxxxxx xxx Xxxxx also resigns as a
director of MCYC . Simultaneously with the resignation of the persons mentioned
above, the board of directors of MCYC will appoint the persons identified below
to serve in certain capacities as the officers and directors of MCYC ( the
"Xxxxxx Xxxx Management Team") until their successors are duly elected at the
next annual shareholders' meeting of MCYC:
Name Position with MCYC
---- ------------------
X.X. Xxxxxx.................................Director, President, Treasurer
Xxxxxxx X. X. Xxxxxx........................Director, Secretary
Xxxx Xxxxxxxx...............................Director
2.2 Indemnification
(a) Indemnification. Xxxxxx Xxxx hereby indemnifies MCYC for, and
will pay to MCYC the amount of, any losses, liabilities, claims, damages
(including incidental and consequential damages), expenses (including costs of
investigation and defense and reasonable attorneys' fees) or diminutions of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with any (i) breach of
any representation or warranty made by Xxxxxx Xxxx in this Agreement or any
other certificate or document delivered by Xxxxxx Xxxx pursuant to this
Agreement and (ii) any misstatement or misrepresentation by Xxxxxx Xxxx in this
Agreement or any other documents delivered pursuant to this Agreement.
(b) Indemnification of Former MCYC Officers and Directors. MCYC
shall indemnify and hold harmless each of Xxxxxxxx Xxxxxxx and Xxxxxxxx xxx
Xxxxx (collectively herein referred to as the "Managers") and shall reimburse
each of the Managers, any loss, liability, claim, damage, expense (including,
but not limited to, reasonable cost of investigation and defense and reasonable
attorneys' fees) or diminution of value (collectively, "Damages")
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arising from or in connection with against any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that he or she is or was a director or
officer of MCYC, to the fullest extent permitted by MCYC's Certificate of
Incorporation, as amended, and the General Corporation Law of Delaware. The
obligations of MCYC to indemnify and hold harmless the Indemnified Persons shall
also apply to any action, claim or suit which arises from the operations of MCYC
prior to the Closing Date, to the extent that MCYC's liability therefore is not
covered by insurance, whether or not such action, claim or suit is disclosed in
this Agreement or the Schedules attached hereto.
(c) Procedure for Indemnification. Promptly after receipt by a
person entitled to indemnification under Sections 2.2 (a) or (b) of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party under such section,
give notice to the indemnifying party of the commencement thereof, but the
failure so to notify the indemnifying party shall not receive it of any
liability that it may have to any indemnified party except to the extent the
defense of such action by the indemnifying party is prejudiced thereby. In case
any such action shall be brought against an indemnified party and it shall give
notice to the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, to assume the defense thereof with counsel reasonable satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
section for any fees of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation, If an indemnifying party
assume the defense of such an action, (a) no compromise or settlement thereof
may be effected by the indemnifying party without the indemnified party's
consent (which shall not be unreasonable withheld) unless (i) there is no
finding or admission of any violation of law or any violation of the rights of
any person which is not fully remedied by the payment referred to in clause (ii)
and no adverse effect on any other claims that may be made against the
indemnified party; and (ii) the sole relief provided is monetary damages that
are paid in full by the indemnifying party, (b) the indemnifying party shall
have no liability with respect to any compromise or settlement thereof effected
without its consent (which shall not be unreasonably withheld) and (c) the
indemnified party will reasonable cooperate with the indemnifying party in the
defense of such action. If notice is given to an indemnifying party of the
commencement of any action and it does not, within 15 days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense thereof, the indemnifying party shall be bound by any
determination made in such action or any compromise or settlement thereof
effected by the indemnified party. Notwithstanding the foregoing, if an
indemnified party determined in good faith that there is a reasonable
probability that an action may materially and adversely affect it or its
affiliated party other than as a result of monetary damages, such indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such action, but the indemnifying party shall not
be bound by any determination of an action so defended or any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld).
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3. MCYC TECHNOLOGY
3.1 Maintenance of Systems. After appointment to serve as the new
management of MCYC, the Xxxxxx Xxxx Management Team agrees to continue to
maintain the minimum hosting, storage and service requirements consistent with
current operating standards determined by Xxxxxxxx Xxxxxxx to be necessary to
utilize the technology licensed to MCYC by Xxxxxxxx Xxxxxxx for a minimum period
of two (2) years from the execution of this Agreement.
3.2 Consulting Agreement. Xxxxxxxx Xxxxxxx shall be retained as a
consultant to MCYC, pursuant to the terms and conditions of a consulting
agreement executed simultaneously herewith between MYC and Xxxxxxxx Xxxxxxx (the
"Consulting Agreement") as attached hereto as EXHIBIT B.
4. CLOSING. A "Closing" shall take place at a location to be mutually agreed
upon by the parties, on the first business day following the satisfaction or
waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective parties will take at the Closing itself) or such other date
and/or time as the parties may mutually determine.
4.1 Delivery of Documents at Post-Closing. The parties undertake to
promptly, but in no event later than November 20, 2001, undertake the delivery
of documents required by this Agreement post-closing:
(a) Xxxxxx Xxxx Shareholders shall deliver to MCYC certificates,
duly endorsed or accompanied by stock powers duly executed in blank, evidencing
100% of the Xxxxxx Xxxx Shares.
(b) MCYC shall issue to the Xxxxxx Xxxx Shareholders, and deliver
certificates evidencing, the MCYC Shares, representing 10,000 MCYC shares for
each Xxxxxx Xxxx Share, in proportion to the relative ownership indicated on the
signature page hereof;
(c) Xxxxxx Xxxx shall deliver to the Xxxxxx Xxxx Management Team
Xxxxxx Xxxx'x corporate minute books (which shall contain copies of the
Certificate of Incorporation, as amended, and Bylaws, as amended), licenses and
sub-licenses, non-disclosure and confidentiality agreements, and such other
corporate books and records as may be reasonably requested;
(d) MCYC shall deliver to the Xxxxxx Xxxx Management Team MCYC's
corporate minute books(which shall contain copies of the Certificate of
Incorporation and Bylaws, amended), licenses and sub-licenses, non-disclosure
and confidentiality agreements, and such other corporate books and records as
may be reasonably requested;
(e) MCYC shall deliver an executed Consulting Agreement with
Xxxxxxxx Xxxxxxx.
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(f) MCYC shall deliver an executed copy of the Severance Agreement
with Xxxxxxxx Xxxxxxx attached hereto as Exhibit C.;
(g) MCYC shall deliver an executed copy of the license agreement to
be executed between MCYC and Xxxxxxxx Xxxxxxx executed simultaneously herewith
(the "Xxxxxxx License") relating to certain intellectual property owned by
Xxxxxxxx Xxxxxxx as attached hereto as Exhibit D.
(h) MCYC shall deliver an executed copy of the license agreement to
be executed between - MCYC, NETrax Technologies Inc. and Xxxxxxxx Xxxxxxx
executed simultaneously herewith (the "NeTrax License") relating to certain
intellectual property owned by MCYC and NeTrax Technologies Inc. as attached
hereto as Exhibit E; and
(i) the parties shall execute and deliver such other instruments
and documents, if any, as may be required to effect the transactions
contemplated herein.
5. REPRESENTATIONS OF XXXXXX XXXX. Except as may be disclosed in writing prior
to Closing, Xxxxxx Xxxx hereby represents and warrants, and to the extent
specifically identified, Xxxxxx Xxxx Shareholders represent and warrant, that
effective this date, the representations and warranties listed below are true
and correct:
5.1 Organization. Xxxxxx Xxxx is a corporation duly incorporated,
validly existing and in good standing under the laws of Yukon Territory, Canada,
with full power and authority to own and use its properties and conduct its
business as presently conducted by it. Xxxxxx Xxxx shall furnish MCYC with
copies of the Memorandum and Articles of Xxxxxx Xxxx, including all amendments
thereto. Such copies are true, correct and complete and contain all amendments
through the date hereof, which, together with this Agreement, are sufficient to
effect the transactions hereunder and evidence the intent of the parties hereto.
5.2 Capitalization. The authorized stock of Xxxxxx Xxxx consists of
3,000 shares of common stock. All shares issued and outstanding are duly and
validly authorized and issued and are fully paid and nonassessable. Xxxxxx Xxxx
does not have outstanding any other security convertible into, or any warrant,
option or other right to subscribe for or acquire any equity interest in Xxxxxx
Xxxx.
5.3 Authority. Xxxxxx Xxxx has the requisite corporate authority to
enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement by Xxxxxx Xxxx and the consummation of
the transactions contemplated hereby will not violate or conflict with any
provisions of the Memorandum as amended, or Articles of Xxxxxx Xxxx or
contravene any law, rule, regulation, court or administrative order binding on
it, or result in the breach of or constitute a default in the performance of any
material obligation, agreement, covenant or condition contained in any material
contract, lease, judgment, decree, order, award, note, loan or credit agreement
or any other material agreement or instrument to which Xxxxxx Xxxx
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is a party or by which it is bound, the default or breach of which would have a
material adverse effect on the property and assets of Xxxxxx Xxxx, considered as
a whole. Xxxxxx Xxxx has taken all requisite corporate action to authorize and
approve the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. Upon due execution and
delivery of this Agreement, this Agreement will constitute a valid, legal and
binding obligation of Xxxxxx Xxxx and Xxxxxx Xxxx Shareholders enforceable
against them in accordance with its terms.
5.4 Xxxxxx Xxxx Shareholders. Xxxxxx Xxxx Shareholders are the owners
of 100% of the issued and outstanding common stock of Xxxxxx Xxxx; such Xxxxxx
Xxxx Shares are free and clear from any security interests, claims, liens, or
other encumbrances; and Xxxxxx Xxxx Shareholders have the unqualified right to
transfer and dispose of their Xxxxxx Xxxx Shares.
5.5 Due Diligence. Xxxxxx Xxxx shall furnish to MCYC copies of all
documents requested by MCYC. No due diligence investigations undertaken by MCYC
shall in any event relieve Xxxxxx Xxxx of its responsibility for the accuracy
and completeness of any representation or warranty of Xxxxxx Xxxx contained
herein or the performance of any covenant or agreement of Xxxxxx Xxxx contained
herein; relieve Xxxxxx Xxxx Shareholders of their responsibilities for the
accuracy and completeness of any representation or warranty of Xxxxxx Xxxx
Shareholders contained herein.
5.6 Approvals and Consent. No approval, authorization or other action
by, or filing with, any third-party, including a governmental authority is
required in connection with the execution, delivery and performance by Xxxxxx
Xxxx and Xxxxxx Xxxx Shareholders of their obligations under this Agreement and
their respective performance of the transactions contemplated hereby.
5.7 Undisclosed Liabilities. Xxxxxx Xxxx has no material liabilities or
obligations whatsoever, either accrued, absolute, contingent or otherwise,
except as disclosed on the unaudited financial statements for the nine months
ended September 30, 2001 (the "Financial Statements") previously provided and
those incurred in or as a result of the ordinary course of business of Xxxxxx
Xxxx subsequent to the date of the financial statements.
5.8 Assets. The assets of Xxxxxx Xxxx as set forth in its financial
statements have been acquired in bona fide transactions, fully supported by
appropriate instruments of assignment, sale, or transfer, where appropriate, and
are offset by no liabilities or contingencies, contractual or otherwise, except
as indicated in the financial statements.
5.9 Litigation. Xxxxxx Xxxx is not involved in any pending litigation
or governmental investigation or proceeding and, to the best knowledge of Xxxxxx
Xxxx, no litigation, claims, assessments, or governmental investigation or
proceeding is threatened against Xxxxxx Xxxx.
5.10 Applicable Laws. Xxxxxx Xxxx has complied with all applicable laws
in connection with its formation, issuance of securities, organization,
capitalization and operations, and no contingent liabilities have been
threatened or claims made, and no basis for the same exists with
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respect to said operations, formation or capitalization, including claims for
violation of any state or federal securities laws.
5.11 Taxes. Xxxxxx Xxxx has filed all governmental, tax or related
returns and reports due or required to be filed and has paid all taxes or
assessments which have become due as of the date of this Agreement, including
any employment related taxes and withholdings, and Xxxxxx Xxxx, to the best of
its knowledge, is not subject to a tax audit by any federal, state or local tax
authority and its properties are not subject to any tax liens.
5.12 Breach of Contracts. Xxxxxx Xxxx has not breached, nor is there
any pending or threatened claims or any legal basis for a claim that Xxxxxx Xxxx
has breached, any of the terms or conditions of any agreements, contracts or
commitments to which it is a party or is bound and the execution and performance
hereof will not violate any provisions of applicable law of any agreement to
which Xxxxxx Xxxx is subject.
5.13 Xxxxxx Xxxx Disclosure. At the date of this Agreement, Xxxxxx Xxxx
has disclosed all events, conditions and facts materially affecting the business
and prospects of Xxxxxx Xxxx. Xxxxxx Xxxx has not withheld disclosure of any
such events, conditions, and facts which it, through management, has knowledge
of, or has reasonable grounds to know, which may materially affect the business
and prospects of Xxxxxx Xxxx. No representation or warranty by any of Xxxxxx
Xxxx or the Xxxxxx Xxxx Shareholders in this Agreement, nor any statement,
certificate or Schedule furnished, or to be furnished, by or on behalf of them
pursuant to this Agreement, nor any document or certificate delivered to MCYC
pursuant to this Agreement, or in connection with actions contemplated hereby,
contains or shall contain any untrue statement of a material fact, or omits, or
shall omit to state a material fact necessary to make the statements contained
therein not misleading.
5.14 Financial Statements.
(a) The unaudited balance sheets of each of the Companies as of
September 30, 2001 and the related unaudited statement of earnings for the nine
months ended September 30, 2001 prepared by Xxxxxx Xxxx previously delivered to
MCYC, are complete and correct and present fairly the financial condition of
Xxxxxx Xxxx as of September 30, 2001, and the results of its operations for the
periods then ended, in conformity with United States generally accepted
accounting principles applied on a basis consistent with that of preceding
periods.
(b) Since September 30, 2001, except as specified in Schedule 5.14,
the business of Xxxxxx Xxxx has been carried on in the ordinary course in
substantially the same manner as prior to that date, and Xxxxxx Xxxx has not:
(i) experienced any material adverse change in its
financial condition or in the operation of its
businesses from that shown on the unaudited
financial statements as of September 30, 2001
referred to in subsection (a) of this Section;
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(ii) incurred any damages, destruction or loss, whether
covered by insurance or not, which materially and
adversely affecting the business, property or
assets any Xxxxxx Xxxx;
(iii) made any declaration, setting aside or payment of
any dividend, or any distribution with respect to
its Stock;
(iv) encountered any other event or condition of any
character, not in the ordinary course of business,
materially and adversely affecting its results of
operations or business or financial condition.
(c) Within 75 days of Closing, Xxxxxx Xxxx will provide audited
financial statements for such fiscal periods as may be required by the SEC,
which financial statements shall be audited in accordance to GAAP.
5.14 Real Property. Except as set forth in Schedule 5.15 attached
hereto, Xxxxxx Xxxx does not own an interest in any real property nor does it
have a leasehold interest in any real property. Each such lease is in full force
and effect on the date hereof without any default or breach thereof by Xxxxxx
Xxxx or any other party thereto. No consent of any landlord or any other party
is required under any such lease in order to consummate this transaction and to
keep such lease in full force and effect without being terminable after the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. True and complete copies of all leases,
including all amendments, addenda, waivers and all other binding documents
affecting the tenant's rights thereunder, have previously been delivered to
MCYC.
5.15 Material Contracts. Xxxxxx Xxxx shall provide a schedule within
one week of the date hereof of the contracts or leases material to the business
of Xxxxxx Xxxx, whether written or oral, to which Xxxxxx Xxxx is a party (the
"Material Contracts"). Xxxxxx Xxxx shall provide to MCYC access to true, correct
and complete copies of all such Material Contracts (including, if any Contract
has not been reduced to writing, a true, correct and complete written summary of
the material terms thereof). All Material Contracts have been duly authorized
and delivered, are in full force and effect and constitute the valid and binding
obligations of Xxxxxx Xxxx enforceable in accordance with their respective
terms. As to the Material Contracts, (i) there are no existing breaches or
defaults by Xxxxxx Xxxx or its subsidiaries thereunder or, to the knowledge of
Xxxxxx Xxxx, by the other parties to such Material Contracts, (ii) no event, act
or omission has occurred or, as a result of the consummation of the transactions
contemplated hereby, will occur which (with or without notice, lapse of time or
the happening or occurrence of any other event) would result in a default by
Xxxxxx Xxxx thereunder or give cause for termination thereof, provided that
insofar as the foregoing representation involves the actions or omissions of
parties other than Xxxxxx Xxxx, it shall be limited to the knowledge of Xxxxxx
Xxxx, (iii) none of them will result in any loss to Xxxxxx Xxxx upon completion
or performance thereof and (iv) none of the parties to Material Contracts have
expressed an indication to Xxxxxx Xxxx of their intention to cancel, renegotiate
or exercise or not exercise any option under any such Material Contracts.
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5.16 Interests in Other Entities. Except as set forth in schedule 5.16,
Xxxxxx Xxxx does not: (i) own, directly or indirectly, of record or
beneficially, any shares of voting stock or other equity securities of any other
corporation or entity; (ii) have any ownership interest, direct or indirect, of
record or beneficially, in any unincorporated entity; or (iii) have any
obligation, direct or indirect, present or contingent: (A) to purchase or
subscribe for any interest in, advance or loan monies to (except in the ordinary
course of business), or in any way make investments in, any person or entity; or
(B) to share any profits or capital investments in other persons or entities, or
both.
5.17 Security Deposits, Claims. A list of all claims, deposits,
prepayments, refunds causes of action, choses in action, rights of recovery,
rights of set off, and rights of recoupment (including any such item relating to
the payment of taxes) payable or accruing to Xxxxxx Xxxx or its subsidiaries
shall be provided to MCYC within seven days of the date hereof.
5.18 Approvals and Consent. No approval, authorization or other action
by, or filing with, any third-party, including a governmental authority is
required in connection with the execution, delivery and performance by Xxxxxx
Xxxx of its obligations under this Agreement and its performance of the
transactions contemplated hereby.
5.19 Intellectual Property. "Intellectual Property" means any and all
(i) inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (ii)
trademarks, service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) copyrightable works,
all copyrights, and all applications, registrations, and renewals in connection
therewith, (iv) trade secrets and confidential business information (including
ideas, research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
blueprints, sketches, storyboards, models, engineering drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (v) computer software (including data and
related documentation), (vi) other proprietary rights and know-how, (vii) copies
and tangible embodiments thereof (in whatever form or medium) and (viii)
licenses and sublicenses granted and obtained with respect thereto, and rights
thereunder.
(a) Xxxxxx Xxxx shall provide a schedule within seven days of the
date hereof of each material license or licensing agreement used by Xxxxxx Xxxx
in the conduct of its business.
(b) Xxxxxx Xxxx shall provide a schedule within seven days of the
date hereof the of each material license or licensing agreement granted by
Xxxxxx Xxxx.
(c) Xxxxxx Xxxx shall provide a schedule within seven days of the
date hereof of all patents, trademarks, service marks or copyrights issued to or
applied for by Xxxxxx Xxxx. Except as disclosed, Xxxxxx Xxxx either owns the
entire right, title and interest in, to and under, or has an
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express or implied license to use, any and all Intellectual Property that is
necessary for the conduct of its business in the manner that its business has
heretofore been conducted, except where the failure to own or possess valid
rights to use such Intellectual Property would not, individually or in the
aggregate, reasonably be expected to have a material adverse Effect. Except as
disclosed, none of the Intellectual Property is subject to any order, judgment,
decree, stipulation or agreement materially restricting the use thereof by
Xxxxxx Xxxx, and (ii) to the knowledge of Xxxxxx Xxxx, the use of the
Intellectual Property does not conflict with, infringe upon or violate, in any
respect that would reasonably be likely to have a material adverse effect, any
Intellectual Property of any persons.
5.20 Labor Matters. There is no unfair labor practice or employment
discrimination or other employment related complaint, grievance or proceeding
against Xxxxxx Xxxx or its subsidiaries or against any person with respect to
any employee of Xxxxxx Xxxx or its subsidiaries pending or, to the knowledge of
either of Xxxxxx Xxxx or its subsidiaries, threatened before any federal, state,
local or foreign governmental entity or regulatory body. To the knowledge of
Xxxxxx Xxxx, there is no basis for any such complaint, grievance or proceeding.
6. Representations of Xxxxxx Xxxx Shareholders.
Each Xxxxxx Xxxx Shareholder represents and warrants to MCYC, solely with
respect to that Stockholder, that:
6.1 Owner of the Shares. The Shareholder is the registered holder and
the beneficial owner of the Xxxxxx Xxxx Shares set forth opposite the
Shareholder's name as set forth on Schedule 6.1 attached hereto, all of which
the Shareholder is transferring to MCYC ; in the aggregate, on the Closing, such
Xxxxxx Xxxx Shares will constitute all of the issued and outstanding shares of
capital stock of Xxxxxx Xxxx. With respect to those shares: (i) the Shareholder
is the registered holder and beneficial owner of those shares and no other
person has any legal or beneficial interest therein; (ii) the Shareholder has
the legal power to transfer those Xxxxxx Xxxx Shares to MCYC, and no other
person is required to consent thereto; and (iii) at the Closing, the Xxxxxx Xxxx
Shareholder will convey title to those Xxxxxx Xxxx Shares to MCYC, free and
clear of any encumbrances.
6.2 Review of SEC Filings. The Xxxxxx Xxxx Shareholder has had the
opportunity to review MCYC's annual and quarterly reports and all other filings
as filed with the Securities and Exchange Commission (the "SEC").
6.3 Opportunity for Investigation. MCYC has given the Xxxxxx Xxxx
Shareholder the opportunity to meet with MCYC's directors and executive officers
for the purpose of asking questions and receiving answers concerning the terms
and conditions of the Agreement, and to obtain any additional information that
MCYC may possess or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of any information that MCYC has furnished the
Xxxxxx Xxxx Shareholder in connection with this Agreement.
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6.4 Restricted Securities. The Xxxxxx Xxxx Shareholder understands and
acknowledges that the MCYC Shares being issued to the Xxxxxx Xxxx Shareholder as
part of this Agreement are "restricted securities," (as such terms is defined in
Rule 144(a)(3)) under the Securities Act of 1933, as amended (the "Securities
Act") that the certificate or certificates evidencing those shares will bear a
legend, substantially in the form set forth below, indicating that those shares
are restricted securities, and that those shares may not be transferred except
pursuant to an effective registration statement under the Securities Act or an
available exemption from such registration.
The legend referred to above will be substantially as follows:
"THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND ARE RESTRICTED
SECURITIES, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, MADE THE SUBJECT OF A GIFT OR OTHERWISE
TRANSFERRED, FOR VALUE OR OTHERWISE, WITHOUT THE WRITTEN APPROVAL OF COUNSEL FOR
THE ISSUER MAKING SPECIFIC REFERENCE TO THIS CERTIFICATE. THE TRANSFER AGENTS OF
THE ISSUER HAVE BEEN INSTRUCTED TO REGISTER TRANSFERS OF THE SHARES EVIDENCED BY
THIS CERTIFICATE ONLY IN ACCORDANCE WITH THE FOREGOING INSTRUCTIONS."
6.5 Shareholder's Intent. The Shareholder is acquiring the MCYC Shares
for the Shareholder's own account, for investment purposes, and not with a view
towards their distribution.
6.6 Enforceability. This Agreement is the Shareholder's valid and
binding obligation, enforceable against the Shareholder in accordance with its
terms.
7. REPRESENTATIONS OF MCYC. MCYC hereby represents and warrants that effective
this date, the representations and warranties listed below are true and correct:
7.1 Organization. MCYC is a corporation duly organized, validly
existing under the laws of the State of Delaware with full power and authority
to own and use its properties and conduct its business as presently conducted by
it. Copies of the Certificate of Incorporation and the Bylaws of MCYC, including
all amendments thereto have previously been filed with the SEC. Such copies are
true, correct and complete and contain all amendments through the date hereof,
together with this Agreement, which are sufficient to effect the transactions
hereunder and evidence the intent of the parties hereto.
7.2 Capitalization. The authorized stock of MCYC consists of (a)
100,000,000 shares of common stock, par value $0.001 per share, of which
62,174,507 shares have been issued and are outstanding; and (b) 10,000,000
shares of preferred stock, par value $0.001 per share, of which 1,000,000 have
been designated as Series I Voting Preferred Stock, all of which have been
issued and are outstanding. At the time of their issuance and delivery pursuant
to this Agreement, all MCYC Shares to be issued pursuant to the terms hereof
shall be duly and validly authorized and issued, fully paid and nonassessable.
Except as disclosed in MCYC's periodic reports filed with the SEC or as set
forth in a schedule attached hereto, attached hereto, MCYC
11
does not have outstanding any security convertible into, or any warrant, option
or other right to subscribe for or acquire any shares of stock of MCYC; nor is
MCYC under any obligation, whether written or oral, to issue any of its
securities.
7.3 Authority. MCYC has the requisite corporate authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement by MCYC and the consummation of the
transactions contemplated hereby will not violate or conflict with any
provisions of the Certificate of Incorporation, as amended, or Bylaws of MCYC or
contravene any law, rule, regulation, court or administrative order binding on
it, or result in the breach of or constitute a default in the performance of any
material obligation, agreement, covenant or condition contained in any material
contract, lease, judgment, decree, order, award, note, loan or credit agreement
or any other material agreement or instrument to which MCYC is a party or by
which it is bound, the default or breach of which would have a material adverse
effect on the property and assets of MCYC, considered as a whole. MCYC has taken
all requisite corporate action to authorize and approve the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby. Upon due execution and delivery of this Agreement, this
Agreement will constitute a valid, legal and binding obligation of MCYC
enforceable against it in accordance with its terms.
7.4 Due Diligence. MCYC has furnished, or will furnish prior to
Closing, to Xxxxxx Xxxx and Xxxxxx Xxxx Shareholders copies of all documents
requested by them. No due diligence investigations undertaken by Xxxxxx Xxxx and
Xxxxxx Xxxx Shareholders shall in any event relieve MCYC for the accuracy and
completeness of any representation or warranty of MCYC contained herein or the
performance of any covenant or agreement of MCYC contained herein.
7.5 SEC Reporting. MCYC has filed all forms, reports and documents
required to be filed with the SEC and has made copies of all such documents
available to Xxxxxx Xxxx.
8. MUTUAL COVENANTS OF THE PARTIES. Each of the MCYC, Xxxxxx Xxxx and Xxxxxx
Xxxx Shareholders covenant and agree to execute any further documents or
agreements and to take any further acts that may be reasonably necessary to
effect the transactions contemplated hereunder, including, but not limited to,
obtaining any consents or approvals of any third-party required to be obtained
to consummate the transactions contemplated by this Agreement.
9. CONDITIONS OF CLOSING. THE RESPECTIVE OBLIGATION OF EACH PARTY TO EFFECTUATE
THE TRANSFER OF SHARES CONTEMPLATED HEREBY IS SUBJECT TO THE SATISFACTION OR
WAIVER, IF APPLICABLE, AT OR PRIOR TO THE CLOSING, OF EACH OF THE FOLLOWING
CONDITIONS:
9.1 Exhibits and Schedules. The Exhibits and Schedules shall have been
delivered and accepted by MCYC and Xxxxxx Xxxx (such acceptance to be in each
party's sole and absolute discretion) in accordance with the terms and
conditions hereof;
9.2 Each of the MCYC and Xxxxxx Xxxx shall have completed its
respective continuing business, legal and accounting due diligence review, shall
be satisfied with the results
12
of such review in its sole and absolute discretion, and shall have notified the
other that it has completed such review;
9.3 Shareholder Approval. This Agreement shall have been duly adopted
by Xxxxxx Xxxx Shareholders;
9.4 Laws and Orders. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Agreement or the other transactions
contemplated by this Agreement (collectively, an "Order"), and no Governmental
Entity shall have instituted any proceeding or threatened to institute any
proceeding seeking any such Order;
9.5 Tax-Free Reorganization. The exchange of shares shall qualify as a
tax-free reorganization within the meaning of Section 368(a) of the Code;
9.6 Ancillary Agreements. The Severance Agreement, the Consulting
Agreement and the License are to be executed simultaneously herewith;
9.7 Condition to Obligations of MCYC. The obligations of the MCYC to
effect the transactions contemplated herein are also subject to the satisfaction
or waiver by MCYC at or prior to the Closing of the following conditions:
(a) Representations and Warranties of Xxxxxx Xxxx. The
representations and warranties of Xxxxxx Xxxx set forth in this Agreement (i) to
the extent qualified by material adverse effect shall be true and correct and
(ii) to the extent not qualified by material adverse effect shall be true and
correct (except that this clause (ii) shall be deemed satisfied so long as any
failures of such representations and warranties to be true and correct, taken
together, would not reasonably be expected to have a material adverse effect on
Xxxxxx Xxxx and would not reasonably be expected to have a material adverse
effect on the expected benefits of the Agreement to MCYC.
(b) Performance of Obligations of Xxxxxx Xxxx. Xxxxxx Xxxx shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing;
(c) Officer's Certificate. Xxxxxx Xxxx shall have delivered to MCYC
a certificate signed on behalf of Xxxxxx Xxxx by an executive officer of Xxxxxx
Xxxx certifying to the matters set forth in (a) and (b) above;
(d) Representations and Warranties of Xxxxxx Xxxx Shareholders. The
representations and warranties of the Xxxxxx Xxxx Shareholders set forth in this
Agreement shall be true and correct
(e) Consents Under Agreements. Xxxxxx Xxxx shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the
13
transactions contemplated by this Agreement under any contract to which Xxxxxx
Xxxx is a party, except those for which the failure to obtain such consent or
approval, individually or in the aggregate, is not reasonably likely to have a
material adverse effect on Xxxxxx Xxxx or a material adverse effect on the
expected benefits of this Agreement to MCYC.
(f) Outstanding Securities. There shall be no securities
outstanding that are convertible into any Xxxxxx Xxxx Shares.
(g) Performance of Obligations of Xxxxxx Xxxx Shareholders. The
Xxxxxx Xxxx Shareholders shall have performed, in all material respects, their
respective obligations under this Agreement;
(h) Legal Opinion. MCYC shall have received the opinion of legal
counsel to Xxxxxx Xxxx and the Xxxxxx Xxxx Shareholders, reasonably satisfactory
to MCYC, as to such matters relating to Xxxxxx Xxxx, the Xxxxxx Xxxx
Shareholders and the transactions contemplated by this Agreement as MCYC shall
reasonably request; and
9.8 Conditions to Obligation of Xxxxxx Xxxx. The obligation of Xxxxxx
Xxxx to effectuate this Agreement is also subject to the satisfaction or waiver
by Xxxxxx Xxxx at or prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the MCYC set forth in this Agreement shall be true and correct as
if made on and as of the Closing;
(b) Performance of Obligations of MCYC. MCYC shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing; and
(c) Officer's Certificate. MCYC shall have delivered to Xxxxxx Xxxx
a certificate signed on behalf of MCYC by an executive officer of MCYC
certifying to the matters set forth in (a) and (b) above.
10. TERMINATION. This Agreement may be terminated as follows:
(a) Upon the written consent of both parties.
(b) By either party, by notice to the other party, in the event
that the Closing has not occurred on or before December 7, 2001.
(c) In the event of termination of this Agreement pursuant to this
Section 10, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto or any of its affiliates, directors,
officers or stockholders.
14
11. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations, warranties and
covenants made by any party in this Agreement shall survive the Closing
hereunder and the consummation of the transactions contemplated hereby for two
(2) years from the date hereof. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for and not upon
any investigation upon which it might have made or any representations,
warranty, agreement, promise or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
12. MISCELLANEOUS.
12.1 Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
12.2 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and will be effective when
hand-delivered or upon delivery if sent by commercial courier service such as
Federal Express or Airborne or on the day of delivery or first attempted
delivery if sent by first class, postage prepaid, certified United States mail,
return receipt requested (whether or not the return receipt is subsequently
received), and addressed by the sender to the addresses set forth on the
signature page hereof.
12.3 Headings. The paragraph and subparagraph headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.4 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of
New York. The parties hereto
consent to the jurisdiction of the Southern District of
New York or the courts
of the State of
New York with respect to all disputes arising out of this
Agreement.
12.5 Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns. This Agreement shall not be
assigned by any party hereto, except upon the consent, in writing, of the other
parties hereto.
12.6 Entire Agreement. This Agreement, including any documents
delivered pursuant to the terms hereof, is the entire agreement of the parties
covering everything agreed upon or understood with respect to the transactions
contemplated hereby and supersedes all prior agreements, covenants,
representations or warranties, whether written or oral, by any party hereto.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
12.7 Time. Time is of the essence. The parties each agree to proceed
promptly and in good faith to consummate the transactions contemplated herein.
15
12.8 Expenses. Each of the parties hereto shall pay its own expenses
incurred in connection with the authorization, preparation, execution and
performance of this Agreement and obtaining any necessary regulatory approvals,
including, without limitation, all fees and expenses of its respective counsel.
12.9 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
12.10 Confidentiality. The parties shall maintain in strict confidence
and shall not at any time disclose to any third party the terms or provisions of
this Agreement.
12.11. Brokers. No broker, finder, investment banker or other party is
entitled to any brokerage, finder's or other similar fee or commission in
connection with the transactions contemplated herein.
12.12. Counterparts and Facsimile Signatures. This Agreement and any
exhibits, attachments, or documents ancillary hereto, may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party hereto shall constitute a
valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
XXX.XXX, INC., a Delaware corporation
By
--------------------------------
Its
By
--------------------------------
Its
XXXXXX XXXX VENTURE LTD., a Yukon Territory corporation
16
By:
-----------------------
Its:
----------------------
Xxxxxx Xxxx Shareholders
(as to the representations and warranties made by the Xxxxxx Xxxx Shareholders)
----------------------
STAR ANISE, LTD.
By:
-----------------------
Its:
---------------------
----------------------
XXXXXX, XXXX & XXXXX & CO.
By:
-----------------------
Its:
---------------------
17
Schedule 6.1
XXXXXX XXXX SHAREHOLDERS No. of Shares of Xxxxxx Xxxx
Owned:
Xxxxxx, Lees & Xxxxx & Co. 2,000
Star Ainse, Ltd. 1,000
18
