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MERGER AGREEMENT AND PLAN OF REORGANIZATION
AMONG
XXXXXXXXXXX.XXX, INC.,
MCNS MERGER SUBSIDIARY II, INC.,
CYBER-TECH, INC.
AND
SHAREHOLDERS OF CYBER-TECH, INC.
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS........................................................1
ARTICLE 2 MERGER AND PLAN OF REORGANIZATION..................................3
2.1 Performance of Agreement of Merger...............................3
2.2 Designation of Shares............................................3
2.3 Conversion of Company Shares.....................................3
2.4 Sub Shares.......................................................4
2.5 Surviving Corporation Documents..................................5
2.6 Directors and Officers of the Surviving Corporation..............5
2.7 Federal Income Tax Status of the Merger..........................5
2.8 Rights of Surviving Corporation..................................5
2.9 Agreement of Merger..............................................5
2.10 Further Assurances...............................................6
2.11 Closing..........................................................6
ARTICLE 3 PAYMENT OF MERGER CONSIDERATION AND ESCROW ARRANGEMENTS............6
3.1 Payment of Merger Consideration..................................6
ARTICLE 4 SCHEDULES..........................................................7
4.1 Schedule of Financial Information................................7
4.2 Schedule of Real and Personal Property (Tangible and Intangible).7
4.3 Schedule of Trade Names, Patents and Copyrights..................7
4.4 Schedule of Insurance Claims and Losses..........................7
4.5 Schedule of Subsidiaries, Joint Ventures and Partnerships........7
4.6 Schedule of Obligations and Guarantees...........................8
4.7 Schedule of Transactions or Arrangements With Affiliates and
Shareholders.....................................................8
4.8 Schedule of Debt, Mortgages and Security Interests...............8
4.9 Schedule of Capitalization and Qualification.....................8
4.10 Schedule of Contracts or Commitments.............................9
4.11 Schedule of Litigation..........................................10
4.12 Schedule of Transactions Occurring Since January 1, 1999........10
4.13 Schedule of Banks...............................................12
4.14 Schedule of Corporate Documents.................................12
4.15 Schedule of Employee Benefit Plan Matters.......................12
4.16 Schedule of Employees...........................................12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE
COMPANY ..............................................................12
5.1 Organization and Standing.......................................12
5.2 Capital Structure of Company....................................13
5.3 Financial Statements, etc.......................................13
5.4 Properties......................................................13
5.5 Patents, Trademarks and other Intellectual Property.............13
5.6 Intangible Properties...........................................14
5.7 Schedules.......................................................14
5.8 Corporate Records...............................................14
5.9 Litigation......................................................15
5.10 Absence of Changes..............................................15
5.11 Correctness of Representations..................................16
5.12 Brokers and Finders.............................................16
5.13 Labor Matters...................................................16
5.14 Contractual Obligations.........................................17
5.15 Power of Attorney...............................................17
5.16 Condition of Equipment..........................................17
5.17 No Default or Waiver of Rights.................................17
5.18 Indebtedness to Officers, Directors and the Shareholders........18
5.19 ERISA...........................................................18
5.20 Employee Benefit Plans..........................................18
5.21 Governmental Approval...........................................18
5.22 Authority; Noncontravention.....................................18
5.23 Taxes...........................................................19
5.24 Environmental Matters...........................................19
5.25 Y2K Compliance..................................................20
5.26 Public Information..............................................20
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF PARENT...............................20
6.1 Compliance by the Shareholders and the Company..................20
6.2 Certificate Regarding Representations and Warranties............21
6.3 Approval of Legal Matters.......................................21
6.4 Escrow Agreement................................................21
6.5 Accuracy of Schedules...........................................21
6.6 Litigation......................................................21
6.7 Resignations of Directors and Officers of the Company...........21
6.8 Employment and Consulting Agreements............................21
6.9 Noncompetition Agreements.......................................22
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PARENT..........................22
7.1 Organization and Good Standing..................................22
7.2 Correctness of Representations..................................22
7.3 Authority; Noncontravention.....................................22
7.4 Brokers and Finders.............................................22
7.5 Capitalization and Parent Shares................................23
7.6 Financial Capacity..............................................23
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SHAREHOLDERS.........23
8.1 Compliance by Parent............................................23
8.2 Certificate Regarding Representations and Warranties............23
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8.3 Escrow Agreement................................................23
8.4 Litigation......................................................23
8.5 Employment Agreements...........................................24
8.6 Noncompetition Agreements.......................................24
8.7 Advisory Board..................................................24
ARTICLE 9 INDEMNIFICATION BY SHAREHOLDERS...................................24
9.1 Indemnification by Shareholders.................................24
9.2 Limitations - Time..............................................24
9.3 Limitations on Amount - Shareholders............................25
9.4 Procedure for Indemnification - Third Party Claims..............25
9.5 Procedure for Indemnification of Other Claims...................26
9.6 Tax Indemnity...................................................26
9.7 Escrow; Remedies Not Exclusive..................................26
ARTICLE 10 MISCELLANEOUS....................................................26
10.1 Actions Pending Closing.........................................26
10.2 Failure of Conditions to Obligations of Parent..................27
10.3 Survival of Representations.....................................28
10.4 Resale of Parent Shares; Securities Act.........................28
10.5 Access and Information..........................................29
10.6 Assignment......................................................29
10.7 Confidentiality of Information..................................29
10.8 Construction....................................................30
10.9 Amendment.......................................................30
10.10 Expenses........................................................30
10.11 Notices.........................................................30
10.12 Counterparts....................................................31
10.13 Entire Agreement................................................31
10.14 Captions and Section Headings...................................31
10.15 Income Tax Filings..............................................32
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MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and effective as of the __ day of June, 1999 at
12:01 PM, by and among Xxxxxxxxxxx.xxx, Inc., a Delaware corporation ("Parent"),
MCNS Merger Subsidiary II, Inc., a New Jersey corporation (the "Sub") (Parent
and Sub shall be referred to collectively as "Parent"), Cyber-Tech, Inc., a New
Jersey corporation (the "Company"), and Xxxxx Xxxxxxxx and Xxxxxx X. Xxxxx, M.D.
(individually, a "Shareholder" and collectively, the "Shareholders") who
together are the owners of all of the issued and outstanding shares of capital
stock of the Company.
WHEREAS, the Board of Directors of each of the Sub and the Company believe
that it is in the best interests of each corporation and its shareholders that
the Company combine into a single corporation, with the Sub as the Surviving
Corporation, through the statutory merger of the Company with the Sub (the
"Merger"), and, in furtherance thereof, have approved the merger;
WHEREAS, the Shareholders of the Company and the Sub, upon recommendation
of their respective boards of directors, also have approved the Merger;
WHEREAS, pursuant to the Merger, the issued and outstanding stock of the
Company (the "Shares") shall be exchanged for a combination of cash and shares
of the Common Stock of Parent (the "Parent Shares");
WHEREAS, it is intended that the Merger shall qualify as a tax free
reorganization within the meaning of Section 368(a)(1)(A) and Section
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"), and
all terms and conditions set forth herein shall be interpreted to effectuate
such intent; and
WHEREAS, the parties intend, by executing this agreement, to adopt a plan
of reorganization within the meaning of Section 368(a) of the Code;
NOW, THEREFORE, the parties hereto, intending to be legally bound, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agree as follows:
ARTICLE 1
DEFINITIONS
The following terms used in this Agreement shall have the meanings set
forth below:
1.1 Affiliate - Any person, firm, corporation, partnership or association
controlling, controlled by or under common control with a person.
1.2 Agreement - This Merger Agreement and Plan of Reorganization,
including the Schedules delivered pursuant hereto.
1.3 Allocation Percentage - The allocation of Merger Consideration between
the Shareholders as described in Section 2.3(c) hereof.
1.4 Closing - The closing referred to in Section 2.11 hereof.
1.5 Closing Date - The date referred to in Section 2.11 hereof.
1.6 Code - The Internal Revenue Code of 1986, as amended.
1.7 Company Shares - The shares of voting and non-voting common stock, no
par value, of the Company.
1.8 Effective Date - The date on which the Merger becomes effective under
applicable law pursuant to this Agreement, which subject to the conditions set
forth herein, shall occur no later than July 2, 1999, unless extended by mutual
agreement of the parties.
1.9 Employee Benefit Plan - Any employee benefit plan or plans and any
trust created thereunder that is established or maintained for employees of the
Company whether or not covered by ERISA.
1.10 Environmental Laws - Any and all federal, state, local municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or of
any governmental authority regulating, relating to or imposing liability or
standards conduct concerning environmental protection matters, including,
without limitation, materials, as now or may at any time hereafter be in effect.
1.11 ERISA - The Employee Retirement Income Security Act of 1974, as
amended.
1.12 Financial Statements - (a) The unaudited balance sheets of the
Company as of December 31, 1997 and 1998, and the related statements of income,
retained earnings and cash flows for each of the years then ended, and (b) the
unaudited, internally prepared balance sheet of the Company as of May 31, 1999,
and the related statements of income, retained earnings and cash flows for the
period then ended.
1.13 GAAP - Generally accepted accounting principles in the United States
as in effect on the date of this Agreement.
1.14 Hazardous Materials - Any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances and petroleum products
(including crude oil or any fraction thereof) defined or regulated as such in
any law.
1.15 material or materially - What is material for purposes of this
Agreement shall be determined in light of the facts and circumstances of the
matter in question. No particular monetary amount cited in this Agreement shall
be deemed to determine materiality.
1.16 Merger - The merger described in Section 2.1 hereof.
1.17 Merger Consideration - The combination of cash and Parent Shares as
described in Section 2.3(c) of this Agreement.
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1.18 Parent Shares - The shares of voting common stock of Parent, $0.001
par value per share.
1.19 Schedules - Those Schedules referred to in Article 4 and Article 5
hereof.
1.20 Securities Act - The Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder, as
may be in effect from time to time.
1.21 Sub Shares - The shares of common stock, $0.001 par value per share,
of the Sub.
1.22 Surviving Corporation - From and after the Effective Date, the Sub,
as the surviving corporation in the Merger.
ARTICLE 2
MERGER AND PLAN OF REORGANIZATION
2.1 Performance of Agreement of Merger.
Upon the terms and subject to the conditions hereof, the Company shall be
merged with and into the Sub in accordance with applicable law. The Sub shall be
the Surviving Corporation and continue its corporate existence under the laws of
the State of New Jersey as a wholly-owned subsidiary of Parent, and the separate
corporate existence of the Company shall cease. The Merger shall be effective on
the Effective Date. Prior to the Effective Date, each of the parties hereto
shall take all actions necessary in accordance with applicable law and their
respective Articles of Incorporation and Bylaws to cause the Merger to be
consummated on the Effective Date, including, without limitation, obtaining the
approval of the stockholders of the Sub and the Company as may be required under
applicable law.
2.2 Designation of Shares.
The designation and number of outstanding shares of each class and series
of stock for each of the Sub and the Company are as follows: (i) the Sub has
presently authorized capital stock consisting of one thousand (1,000) Sub Shares
of which one thousand (1,000) Sub Shares are outstanding and are owned by Parent
and (ii) the Company has presently authorized capital stock consisting of 5,000
Company Shares, of which 1960 Company Shares are outstanding and are owned by
the Shareholders.
2.3 Conversion of Company Shares.
(a) Upon the Effective Date, each of the issued and outstanding
Company Shares shall be, by virtue of the Merger and without any action on the
part of the holders thereof, be converted into and represent solely the right to
receive the Merger Consideration. No fractional Parent Shares shall be issued as
a result of the Merger; the number of Parent Shares to be issued to each
Shareholder hereunder shall be rounded up or down, as the case may be, to the
nearest whole number.
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(b) After the Effective Date, each certificate representing Company
Shares shall represent solely the right to receive the Merger Consideration set
forth herein. Until such certificates are surrendered, the Shareholders shall
not be entitled to vote the Parent Shares to which they are entitled pursuant to
this Section 2.3, or to receive distributions or dividends thereon; provided
that upon surrender of such certificates, there shall be paid to the record
holder of the certificates of Parent Shares issued upon such exchange, the
amount (without interest) of any dividends or other distributions which were
declared and paid to shareholders of record subsequent to the Effective Date.
(c) As used herein, "Merger Consideration" shall mean, for each
Company Share outstanding, the result obtained by dividing the aggregate number
of outstanding Company Shares at the Effective Date into the aggregate of (i)
Three Million Three Hundred Thousand Dollars ($3,300,000.00) in cash or
immediately available funds, as adjusted as described below, and (ii) that
number of Parent Shares determined by (A) dividing Three Million Seven Hundred
Fifty Thousand Dollars ($3,750,000.00) by the average of the closing prices of
Parent Shares, as reported in The Wall Street Journal, for each of the twenty
(20) trading days ending on the trading day immediately preceding the Effective
Date (the "Average Closing Price"), (B) less 10,000 Parent Shares. The cash
portion of the Merger Consideration shall be adjusted on a dollar-for-dollar
basis based on the extent to which the "Working Capital" of the Company is
greater or less than zero as of the Effective Date. As used herein, "Working
Capital" shall mean the net amount of working capital assets (cash, cash
equivalents, accounts receivable net of reserves but excluding deferred revenue
less the amount of all liabilities of the Company (accounts payable, taxes due,
liabilities related to deferred revenue, other liabilities, debt), determined in
accordance with GAAP. Immediately prior to the Effective Date, the parties shall
jointly review the balance sheet of the Company, estimate the amount of Working
Capital of the Company as of the Effective Date and adjust the cash
consideration accordingly pursuant to the provisions of this Agreement. After
the Closing, Parent shall cause a review of the books and records of the Company
to be performed as promptly as possible and prepare a balance sheet as of the
Effective Date. The Shareholders or the Parent, as the case may be, shall pay in
cash to the other such amount by which the final Working Capital is less or
greater than the estimated amount used at Closing. If the Shareholders dispute
the balance sheet prepared by Parent, they shall notify Parent in writing of
such fact, indicating the reason or reasons therefor. If the parties are unable
to resolve the dispute within thirty (30) days following the date of notice of
dispute, either party may submit the matter to arbitration by a nationally
recognized accounting firm not having a current business relationship with any
party hereto and the findings of such arbitrator shall be binding on the
parties. The fees and expenses of such arbitrator shall be divided evenly by the
parties unless the arbitrator shall determine that the position of one of the
parties was unsupported by GAAP or this Agreement, in which case the fees and
expenses shall be paid by that party. The aggregate Merger Consideration shall
be allocated 51% to Xxxxx Xxxxxxxx and 49% to Xxxxxx X. Xxxxx, based on the
respective ownership percentages of the Company Stock held by the Shareholders
(the "Allocation Percentage").
2.4 Sub Shares.
Upon the Effective Date, each of the issued and outstanding Sub Shares
shall continue unchanged and shall evidence one share of the common stock of the
Surviving Corporation.
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2.5 Surviving Corporation Documents.
The Certificate of Incorporation of Sub as in effect immediately prior to
the Effective Date shall be the Certificate of Incorporation of the Surviving
Corporation at the Effective Date and shall continue in effect until the same
shall be further altered, amended or repealed as therein provided or as provided
by law. The Bylaws of the Sub as in effect immediately prior to the Effective
Date shall, on the Effective Date, be the Bylaws of the Surviving Corporation
and shall continue in effect until the same shall be further altered, amended or
repealed as therein provided or as provided by law.
2.6 Directors and Officers of the Surviving Corporation.
The directors and officers of the Surviving Corporation at the Effective
Date shall be those of the Sub immediately preceding the Merger. Such directors
and officers will hold office until their successors are duly elected and
qualified or their earlier resignation or removal.
2.7 Federal Income Tax Status of the Merger.
It is the mutual intention of the parties hereto that, subject to the
provisions of this Agreement, the Merger will be consummated in accordance with
the laws of the State of Delaware and the State of New Jersey and that the
Merger shall constitute a reorganization within the meaning of Sections
368(a)(1)(A) and (a)(2)(D) of the Code; provided, however, that neither the Sub
nor Company shall be required to take any action (or be precluded from taking
any action not otherwise prohibited hereunder) which would result in any
significant actual or potential cause for delay in consummating the Merger. It
shall not be a condition to the Merger that any party receive an Internal
Revenue Service ruling as to the federal income tax consequences of the Merger
and each party hereto shall look to their respective advisors for advice
concerning the tax consequences of the Merger.
2.8 Rights of Surviving Corporation.
Upon consummation of the Merger, the Surviving Corporation shall possess
all the rights, privileges, powers and franchises of a public as well as a
private nature, and be subject to all the restrictions, obligations,
disabilities and duties, each of Sub and Company; and all property, real,
personal and mixed, and all debts, choses in action and other interests due or
belonging to Sub and Company shall be vested in the Surviving Corporation; and
all properties, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter the property of the Surviving Corporation as
they were of Sub and Company, and the title to any real estate vested by deed or
otherwise, in either corporation, shall not revert or in any way be impaired by
reason of the Merger; but all rights of creditors and all liens upon any
property of either corporation shall be preserved unimpaired, and all debts,
liabilities and duties of each of the corporations shall thenceforth attach to
the Surviving Corporation, and may be enforced against it to the same extent as
if said debts, liabilities and duties had been incurred by it.
2.9 Agreement of Merger.
All documents required to effect the Merger under the Business Corporation
Law of New Jersey shall be authorized, executed and delivered by and between Sub
and Company and filed,
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together with appropriate officers' certificates of each corporation, to effect
the Merger as of the Effective Date.
2.10 Further Assurances.
Prior to and from and after the Effective Date, Company and the Sub shall
take all such action as shall be necessary or appropriate in order to effectuate
the Merger. If at any time the Surviving Corporation shall consider or be
advised that any further assignments or assurances in law or any other actions
are necessary, appropriate or desirable to vest in said corporation, according
to the terms hereof, the title to any property or rights of Company, the last
acting officers of Company or the corresponding officers of the Surviving
Corporation shall and will execute and make all such proper assignments and
assurances and take all action necessary and proper to vest title in such
property or rights in the Surviving Corporation, and otherwise to carry out the
purposes of this Agreement.
2.11 Closing.
The Closing of the transactions contemplated herein shall occur at the
offices of Brach, Eichler, 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxxxx, at
12:01 p.m. on the Effective Date or at such other time and place as shall be
mutually agreed upon by the parties hereto.
ARTICLE 3
PAYMENT OF MERGER CONSIDERATION
AND ESCROW ARRANGEMENTS
3.1 Payment of Merger Consideration.
(a) The parties acknowledge that the sum of $50,000 has been
advanced to the Company as an advance on amounts to be paid to the Shareholders
under this Agreement. Such amount may be retained by the Company in the event
this Agreement is terminated prior to Closing.
(b) At Closing, the cash portion of the Merger Consideration, net of
the deposit described in paragraph (a) above and with such adjustment for
estimated Working Capital contemplated by Section 2.3(c) hereof, shall be paid
by Parent to the Shareholders, by certified or cashiers check, or other check
acceptable to the Shareholders in accordance with the Allocation Percentage.
(c) At Closing, the portion of Merger Consideration consisting of
Parent Shares shall be delivered as follows:
(i) 25% of such amount to be delivered to the Escrow Agent to
be held under the Escrow Agreement; and
(ii) the balance of Parent Shares shall be delivered by Parent
to the Shareholders, in accordance with the Allocation Percentage, to be
held by them pursuant to Section 10.4 below.
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ARTICLE 4
SCHEDULES
Contemporaneously with or prior to the execution of this Agreement, the
Shareholders have caused or will cause the Company to furnish the Schedules set
forth below.
4.1 Schedule of Financial Information.
Containing the Financial Statements of the Company.
4.2 Schedule of Real and Personal Property (Tangible and Intangible).
Containing a list and brief description of all real property owned by or
leased to the Company, including all plants and structures located thereon, and
all material machinery, vehicles and equipment owned by or leased to the Company
and all intellectual property (not otherwise listed in Schedule 4.3), including,
without limitation, software and documentation, owned or licensed by the
Company.
4.3 Schedule of Trade Names, Patents and Copyrights.
Containing a list of all patents, patent applications, copyrights,
copyright applications, trade names, trademarks, trademark registrations,
trademark applications, and trade secrets or processes used or useful in the
business of the Company that are owned by or registered in the name of the
Company or to which the Company has any rights as licensee or otherwise, giving
in each case a brief description thereof including the terms and any such
license or other arrangement, together with true and legible copies of all
applications, registrations and license agreements relating to any item
described or referred to in such Schedule.
4.4 Schedule of Insurance Claims and Losses.
Consisting of a detailed listing and a general description of all claims
asserted and losses incurred by the Company or any of its subsidiaries regarding
general liability, product liability, automobile liability and workers'
compensation coverage for the three most recent calendar or fiscal years
(whichever is available) and any interim period of the Company occurring prior
to the Closing Date.
4.5 Schedule of Subsidiaries, Joint Ventures and Partnerships.
Containing a list of all subsidiaries of the Company indicating the:
(a) capital structure and percentage of ownership by the Company;
(b) state or jurisdiction of incorporation and where authorized to
do business;
(c) officers and directors;
(d) location of principal place of business and nature of business;
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(e) location of the corporate records of each such subsidiary, and
including a list of all joint ventures, partnerships or other associations with
which the Company or any of its subsidiaries is associated or in which it has an
interest, giving in each case the nature of participation, percentage of
interest and location of business and furnishing copies of the governing
instruments.
4.6 Schedule of Obligations and Guarantees.
Listing any agreements, contract, or understanding, formal or informal,
under the terms of which the Company is, directly or indirectly, liable upon or
with respect thereto (by discount, repurchase agreement or otherwise), or is
obligated in any other way to provide funds in respect of, or to guarantee or
assume, any debt or obligation of any other corporation or any other person,
association, partnership, joint venture or other entity, except endorsements
made in the ordinary course of business in connection with the deposit of items
for collection, together with true and legible copies of all agreements or
instruments creating or evidencing any obligation listed or referred to in such
Schedule.
4.7 Schedule of Transactions or Arrangements With Affiliates and
Shareholders.
Listing any officer, director or Shareholder of the Company or any
Affiliate of any such officer, director or Shareholder who is presently,
directly or indirectly, a party to any transaction with the Company and
accounting a brief description of each transaction, including without
limitation:
(a) any contract, agreement or other arrangement providing for the
employment of, the furnishing of services by, the rental or real or personal
property from, or otherwise requiring payments to any such officer, director,
shareholder or Affiliate;
(b) any agreements among the Shareholders regarding voting rights,
transferability or repurchase of any share of capital stock or other securities
of the Company; and
(c) any loans or advances to or from the Company, giving for each
the principal amount outstanding, interest rate, maturity date and security
therefor.
4.8 Schedule of Debt, Mortgages and Security Interests.
Listing and briefly describing the material terms, provisions and
conditions of all mortgages, indentures, notes, liens, encumbrances and other
obligations for or relating to borrowed money to which the Company is a party,
or which have been assumed by the Company or to which any of the properties or
assets of the Company are subject, having attached amortization schedules, if
available, for each of the outstanding balances as of December 31, 1998, and
estimated balances as of the Closing Date, and listing the terms of any line of
credit or other credit facility and attaching a true and legible copy of all
material documents related to any such borrowed money, line of credit or credit
facility.
4.9 Schedule of Capitalization and Qualification.
Listing with respect to the Company and any subsidiary:
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(a) the authorized capital stock, classes and number of shares of
each such class issued and outstanding and whether such shares are fully paid
and nonassessable, the number of shares of each class issued but not outstanding
and description of rights to acquire any capital stock or equity interest;
(b) the number of outstanding shares held by each Shareholder; and
(c) the state or jurisdiction of incorporation of the Company and
any subsidiary and the state or jurisdictions where the Company and any
subsidiary are qualified to do business.
4.10 Schedule of Contracts or Commitments.
Containing a list and brief description of any of the following contracts
or commitments, whether written or oral, formal or informal, to which the
Company is a party or by which the Company benefits:
(a) oral or written contracts or commitments for the employment of
any officer, employee or consultant except for such contracts or commitments
characterized as being "at will" in the ordinary course of business of the
Company;
(b) contract with or commitment to any labor union or any other
agreement, amendment, supplements, letters or memoranda of understanding with
any labor union or other representative of employees;
(c) conditional sale agreement, security agreement, installment
sales contract or chattel mortgage or lease (for other than real property under
which the Company is obligated to make annual payments during any year of the
term thereof in excess of $1,000);
(d) oral or written contracts not made in ordinary course of
business and oral or written contracts made in the ordinary course of business
but under which the Company is or may be obligated during the life of the
contract to make payments in excess of $1,000, for the purchase, sale,
production or supply, whether on a continuing basis or otherwise, of goods or
services of any type;
(e) distributor, sales agency or vendor contracts or subcontracts or
any franchise or license agreements;
(f) advertising contracts or commitments;
(g) lease under which it is lessor;
(h) Employee Benefit Plans, and, to the extent not included, any
other bonus, sales incentive, sales reward, pension, profit sharing, retirement,
stock purchase, stock option, hospitalization, insurance or similar plan or
practice, formal or informal, in effect concerning employees or others;
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(i) material contract or commitment, oral or written, for any
capital expenditures;
(j) contract or commitment, oral or written, affecting ownership of,
title to or use of any interest in real property; and
(k) material contracts or commitments not made in the ordinary
course of business, including any noncompetition covenant restricting the
Company or any subsidiary or any Shareholder or Affiliate.
4.11 Schedule of Litigation.
Listing and furnishing a brief description of the nature of all claims,
actions, suits, investigations, or proceedings, (whether or not purportedly on
behalf of the Company) pending or, to the knowledge of the Company and the
Shareholders, threatened against or by or affecting the Company or a
Shareholder, at law, in equity, in admiralty, or before or by any federal,
state, municipality or their governmental departments, commission, board,
bureau, agency or instrumentality, domestic or foreign; the foregoing to exclude
any claims described under Section 4.4 of this Agreement.
4.12 Schedule of Transactions Occurring Since January 1, 1999.
Specifying any transaction (other than the transactions contemplated by
this Agreement) occurring after January 1, 1999, in which the Company has:
(a) issued or delivered or agreed to issue or deliver any stock or
other securities (whether stock, bonds, debentures or other corporate
securities), granted or agreed to grant any options or rights to purchase any
securities, or borrowed or agreed to borrow any funds;
(b) incurred or become subject to, or agreed to incur or become
subject to, any obligation or liability (absolute or contingent) other than in
the ordinary course of business, except obligations under contracts not in the
ordinary course of business listed in the Schedule of Contracts or Commitments;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent) other than current liabilities
shown on the balance sheet of the Company as of January 1, 1999, included in the
Financial Statements, and current liabilities incurred since that date in the
ordinary course of business;
(d) declared, set aside or made, or agreed to declare, set aside or
make any payments of dividends or any distribution to shareholders or purchased,
redeemed or otherwise acquired, directly or indirectly, or agreed to purchase,
redeem or acquire, directly or indirectly, any shares of stock or other
securities;
(e) mortgaged, pledged or subjected to a lien, charge or any other
encumbrance, or agreed so to do, any of its assets, tangible or intangible,
except the lien of current real and personal property taxes not yet due and
payable;
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(f) sold, assigned, licensed, transferred or agreed so to do, any of
its tangible assets, or cancelled or agreed to cancel any debts or claims,
except, in each case, in the ordinary course of business;
(g) sold, assigned or transferred any patents, trademarks, trade
names, copyrights, software, other intellectual property or other similar
assets;
(h) suffered any extraordinary losses or waived any rights of
substantial value, whether or not in the ordinary course of business;
(i) increased the rate of compensation payable or to become payable
by it to any of its officers, directors, employees or agents over the rate being
paid to them at January 1, 1999, except general hourly rate increases and normal
merit increases for employees other than officers;
(j) terminated any material contract, agreement, license or other
instrument to which it is a party;
(k) through negotiation or otherwise, made any commitment or
incurred any liability or obligation, enforceable or not, to any labor
organization evidenced in writing;
(l) made or agreed to make any accrual or arrangement for or payment
of any material bonuses or special compensation of any kind to any officer,
director, employee or agent;
(m) directly or indirectly paid or made a commitment to pay any
severance or pay to any officer, director, employee or agent;
(n) introduced any new method of management, operation or accounting
that would have a material, adverse effect on its business or on any of the
assets, properties or rights applicable thereto;
(o) reclassified its shares of capital stock into a different number
of shares;
(p) made or agreed to make any charitable contributions or incurred
or agreed to incur any non-business expenses;
(q) offered or extended more favorable prices, discounts, allowances
or advertising, whether promotional, display or otherwise, than were offered or
extended regularly on and prior to the date of this Agreement which would
materially adversely affect the business of the Company;
(r) made capital expenditures exceeding the aggregate amounts set
forth on the Schedule of Contracts or Commitments; or
(s) entered into or agreed to enter into any other transactions
other than in the ordinary course of business.
11
4.13 Schedule of Banks.
Specifying all banking arrangements for the Company.
4.14 Schedule of Corporate Documents.
(a) Furnishing a copy, certified as true and correct by the
Secretary of State or other appropriate governmental official of the state of
incorporation of the Company, of the Articles of Incorporation and all
amendments thereto of the Company; and
(b) Furnishing a copy, certified as true and correct by the
Secretary of the Company, of the Bylaws and all amendments thereto of the
Company.
4.15 Schedule of Employee Benefit Plan Matters.
Listing, any "reportable event" (as defined in Section 4043 of ERISA) that
has occurred and continues to occur regarding any Employee Benefit Plan of the
Company, if any, and having attached thereto the statement of assets and
liabilities of each Employee Benefit Plan for the most recent Employee Benefit
Plan year ended on or prior to the date of this Agreement, the statements of
changes in fund balance and in financial position, and the statements of changes
in net assets available for the benefit of such Employee Benefit Plan for the
Employee Benefit Plan year then ended, certified by the trustee of each Employee
Benefit Plan.
4.16 Schedule of Employees.
Listing each and every employee of the Company, their respective
employment status, if other than active, and the salary or wage rate and bonus
or other incentive opportunity for each such employee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
AND THE COMPANY
The Shareholders hereby jointly and severally represent and warrant and,
prior to the Closing, the Company represents and warrants, that:
5.1 Organization and Standing.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. The Company has no
subsidiaries. The Company has all requisite corporate power and authority to
carry on its business, to own, lease or operate its properties in the places
where such business is now conducted and where such properties are now owned,
leased or operated, and to enter into, execute, deliver and perform its
obligations under this Agreement and is duly qualified to do business and is in
good standing in the State of New Jersey and in every other jurisdiction in
which the Company is required to be so qualified to conduct business.
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5.2 Capital Structure of Company.
With respect to the capital structure of the Company:
(a) on the date hereof and at the Closing Date the authorized
capital stock of the Company consists and will consist of 5,000 Company Shares
of which 1,000 voting and 960 non-voting shares are now, and on the Closing Date
will be, duly issued and outstanding and fully paid and nonassessable; no
Company Shares are held in its treasury or have otherwise been reacquired or
have been issued in violation of any preemptive rights;
(b) all of the Company Shares are now and on the Closing Date will
be owned and held of record and beneficially by the Shareholders as set forth on
the Schedule of Capitalization and Qualification, free and clear of all claims,
liens and encumbrances;
(c) except for an oral promise made to the Advisory Board, there are
not now, and on the Closing Date there will not be, any warrants, rights,
options, subscriptions or agreements to issue shares of capital stock,
securities convertible into capital stock or other securities of the Company;
and
(d) there is not now, and there will not be on the Closing Date any
liability for dividends declared or accumulated but unpaid with respect to any
securities of the Company.
5.3 Financial Statements, etc.
(a) The Financial Statements (i) are in accordance with the books
and records of the Company; (ii) present fairly the financial condition of the
Company as of the respective dates indicated and the results of operations for
the respective periods indicated: and (iii) have been prepared in accordance
with GAAP applied on a consistent basis except as noted therein.
(b) The Company does not have outstanding any indebtedness or
liability absolute or contingent, known or unknown, except as set forth on the
balance sheets included in the Financial Statements or as specifically
identified and disclosed on Schedule 4.11 hereto.
5.4 Properties.
The Company, does not own, lease or use any real property other than the
residence of Xxxxx Xxxxxxxx.
5.5 Patents, Trademarks and other Intellectual Property.
(a) The trademarks, trade names, copyrights, trade secrets or
processes, patents or applications for patents listed on the Schedule of Trade
Names, Patents and Copyrights are all either owned by the Company, or the
Company possesses enforceable rights and licenses to use the same (without
payment of any royalties except as specified in such Schedule), and the items
listed on such Schedule constitute all of the trademarks, trade names,
copyrights, patents and patent applications, trade secrets and processes
necessary for the conduct of, or use in, the business of the Company, as the
same is presently being conducted and
13
contemplated to be conducted. Such rights and licenses are adequate for the
conduct of the business presently conducted or contemplated to be conducted by
the Company.
(b) Except as set forth on the Schedule of Trade Names, Patents and
Copyrights, no service or product the Company provides or sells, or any
business, or the marketing or use by it or another of any such service or
product, will infringe any trademark, trade name, copyright or patent or other
intellectual property right, or is in conflict with any right of another. There
is no pending or, to the knowledge of the Company or the Shareholders,
threatened claim or litigation against the Company contesting its right to use
any of the trademarks and trade names or the validity of any of the copyrights
and patents or other intellectual property right of the Company, or asserting
its misuse of any thereof, which would deprive the Company of its right to
assert its rights thereunder or which would prevent the sale of any service or
product provided or sold by the Company.
5.6 Intangible Properties.
The Company owns no securities or other intangible property, except as
reflected in the Financial Statements or acquired in the ordinary course of
business since January 1, 1999, or except as set forth in the Schedule of
Financial Information or the Intellectual Property described on the Schedule of
Trade Name, Patents and Copyrights.
5.7 Schedules.
All documents and information contained in the Schedules furnished or
delivered by or on behalf of the Company or the Shareholders pursuant to the
provisions of Article 4 or Article 5 hereof are correct and complete and all
information required to be furnished or delivered pursuant thereto has been
furnished or delivered to Parent. The Company has furnished true and complete
copies of any document that is referred to in any Schedule or that has been
requested by Parent.
5.8 Corporate Records.
The minute books of the Company made available to Parent prior to the
Closing Date accurately reflect all corporate action taken by the directors and
shareholders of the Company or any committee of the Board of Directors of the
Company as described therein and contain true and accurate copies of or
originals of:
(a) the respective minutes of all meetings or consent actions of the
directors and shareholders;
(b) the Articles of Incorporation, as amended, of the Company; and
(c) the Bylaws and all amendments thereto of the Company. Nothing
contained in the Articles of Incorporation or the Bylaws, as each may have been
amended from time to time, or any such minutes prevents or adversely affects the
consummation of the transactions contemplated by this Agreement.
14
5.9 Litigation.
Except as set forth on the Schedule of Litigation, there are no actions,
suits or proceedings pending or, to the knowledge of the Company or the
Shareholders, threatened against or affecting the Company, at law or in equity
or admiralty, or before or by any federal, state, municipality or their
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. The Company is not now and will not be on the Closing Date,
in default concerning any order, writ, injunction or decree of any federal,
state, municipal court or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, and neither the Company
nor the Shareholders have any knowledge of any investigation pending or
threatened against or affecting the Company by any state or federal governmental
agency, department or instrumentality.
5.10 Absence of Changes.
(a) Since January 1, 1999, and except as contemplated by this
Agreement, as set forth in the Schedule of Transactions occurring Since January
1, 1999, there has not been (i) any change in the financial condition, assets,
liabilities, or business of the Company, excluding any change in the ordinary
course of business, but which ordinary course change has not, individually or in
the aggregate, been materially adverse; (ii) any damage, destruction or loss,
whether or not covered by insurance, adversely affecting the properties and
business of the Company; (iii) any increase in the compensation or rate of
compensation payable by the Company to any of its employees or agents, in the
formula for determining any bonus payment or arrangement made to or with any
such employees or agents, or increase in compensation with any such employees or
agents, or increase in compensation payable by formula, bonus or otherwise to
any of its officers and directors; (iv) any declaration or payment by the
Company of dividends or any distribution by the Company of any assets of any
kind whatsoever to its Shareholders, or as the purchase price of any of their
capital stock or in discharge or cancellation, whether in part or in whole, of
any indebtedness (whether in payment of principal, interest or otherwise) owing
to any of the same; (v) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind of any of the assets, tangible or intangible, of the
Company other than purchase money security interests arising in ordinary course
of business or pursuant to credit agreements disclosed in the Schedule of Debt,
Mortgages and Security Interests; (vi) any sale or transfer of any of the assets
of the Company, or any cancellation, forgiveness or compromise of an
indebtedness owed to or claims held by the Company, except in the ordinary
course of business; (vii) any sale, assignment or transfer by the Company of any
patents, trademarks, trade names, copyrights or other intangible assets; or
(viii) any amendment to or termination of any contract, agreement or license to
which the Company is a party, except in the ordinary course of business.
(b) The Company has complied in all material respects with, and is
not in default in any material respect under, any laws, ordinances,
requirements, regulations or orders applicable to its business; and the Company
is not subject to any judgment, order, writ, injunction or decree.
15
5.11 Correctness of Representations.
No representation or warranty the Shareholders in this Agreement or in any
statement, certificate or Schedule furnished by the Company or the Shareholders
pursuant hereto, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements made therein
not misleading as of the date hereof and the Closing Date. All such statements,
representations, warranties, certificates and Schedules shall be true and
complete on and as of the Closing Date, as though made on that date.
5.12 Brokers and Finders.
Except as set forth on Schedule 5.12, neither the Shareholders, the
Company, nor any of the officers, directors or employees of the Company has
employed or otherwise incurred in any manner any liability for any brokerage
fees, agents commissions or finder's fees concerning the transactions hereby.
All fees and expenses related to the transactions contemplated hereby will be
paid by the Shareholders.
5.13 Labor Matters.
(a) Except as disclosed in the Schedule of Contracts and
Commitments, the Company is not a party to nor does it have any obligations
under any agreement, collective bargaining or otherwise, with any party
regarding the rates of pay or working conditions of any of the employees of the
Company, nor is the Company obligated under any agreement to recognize or
bargain with any labor organization or union on behalf of its employees; and
none of the officers of the Company knows of any organizational activity among
any of its employees.
(b) Except as disclosed in the Schedule of Litigation, there are no
pending or, to the knowledge of the Company and the Shareholders, threatened
claims, investigations, charges, citations, hearings, consents, decrees or
litigation involving the Company with respect to wages, compensation, bonuses,
commissions or awards or payroll deductions; equal employment or human rights
violations regarding race, color, religion, sex, national origin, age, handicap,
veteran's status, marital status, disability or any other recognized attribute
under any applicable equal employment laws of any governmental entity
prohibiting discrimination; representation petitions or unfair labor practices,
grievances or arbitrations pursuant to current or expired collective bargaining
agreements; occupational safety and health; worker's compensation; wrongful
termination, negligent hiring, invasion of privacy or defamation; or
immigration.
(c) The Company is now and has been in material compliance with all
applicable federal and state laws and regulations concerning the
employer/employee relationship; and with all of its agreements relating to the
employment of its employees, including without limitation, provisions thereof
relating to employment discrimination, wages, bonuses, hours of work and the
payment of Social Security, Medicare and unemployment compensation taxes. The
Company has not received any notice that it is liable for any unpaid wages,
bonuses or commissions or any tax, penalty, assessment of forfeiture for failure
to comply with any of the foregoing.
16
5.14 Contractual Obligations.
Except as heretofore disclosed in the Schedules the Company is not a party
to, or is bound by, any contract constituting:
(a) any obligation, direct or indirect, to provide funds in respect
of or to guarantee or assume, any debt, obligation or dividend of any other
corporation of any person, association, partnership, joint venture or their
entity, except endorsements made in the ordinary course of business in
connection with the deposit of items for collection;
(b) any continuing contract or commitment for the purchase of
materials, supplies, equipment or services;
(c) any contract, agreement or understanding that adversely affects
its business; or
(d) any pension, profit-sharing, stock option, bonus,
hospitalization, deferred compensation, holiday, vacation, sick leave or similar
employee or officer benefit plan.
5.15 Power of Attorney.
The Company has not given any power of attorney regarding any of its
business, properties and assets, except for powers of attorney given in
connection with tax matters which are listed in the Schedules.
5.16 Condition of Equipment.
All items of personal property owned or leased by the Company shown on the
Schedule of Personal Property or reflected in the interim balance sheet of the
Company, included in the Financial Statements, are in good operating condition
and in a state of reasonable maintenance and repair, and all such machinery and
equipment, furniture and fixtures, leasehold improvements and personal property
are considered adequate and usable for the continued operation for the business
of the Company as the same is presently conducted.
5.17 No Default or Waiver of Rights.
Except as specifically set forth in the Schedules, with respect to any
lease, contract, plan or other instrument or arrangement, there is no default or
claim or to the knowledge of the Company or Shareholders, purported or alleged
default or claim, or no state of facts which, with notice or lapse of time, or
both, would constitute a default in any material obligation on the part of the
Company to be performed under any lease, contract, plan or other arrangement to
which the Company is a party, and the Company has in all respects performed, and
on the Closing Date shall have performed, all the obligations required to be
performed by it as of such date under the leases, contracts, plans, or other
arrangements to which it is a party. The Company has not waived any material
right under any such leases, contracts, plans or other arrangements since
January 1, 1999.
17
5.18 Indebtedness to Officers, Directors and the Shareholders.
Except as disclosed in the Schedule of Transactions or Arrangements with
Affiliates and the Shareholders, the Company is not now, nor on the Closing Date
will be, indebted to any of those persons who are on the date hereof or on the
Closing Date will be shareholders, officers, directors or Affiliates of the
Company, or to their respective spouses, children or relatives closer than first
cousins, in any amount whatsoever other than for salaries or for services
rendered.
5.19 ERISA.
The Company and each Employee Benefit Plan is in compliance with ERISA and
provisions of the Code applicable to employee benefit plans. No Employee Benefit
Plan, if any, which is subject to the minimum funding standards of ERISA or the
Code has incurred any accumulated funding deficiency within the meaning of ERISA
or the Code. The Company has not incurred any liability to the Pension Benefit
Guaranty Corporation in connection with any Employee Benefit Plan, if any, which
is subject to Title IV of ERISA. The assets of each Employee Benefit Plan that
are subject to Title IV of ERISA, if any, are sufficient to provide the benefits
under such Employee Benefit Plan which the Pension Benefit Guaranty Corporation
would guarantee the payment thereof if such Employee Benefit Plan terminated,
and are also sufficient to provide all their benefits due under the Employment
Benefit Plan. No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing concerning any Employee Benefit Plans, if any, which
is subject to Title IV of ERISA, except for those listed on the Schedule of
Employee Benefit Plans. No Employee Benefit Plan or any trustee or administrator
thereof has engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) that would subject any Employee Benefit Plan,
any trust created therein, any trustee or administrator thereof, any party
dealing with any Employee Benefit Plan, or any such trust to the liability set
forth in Section 409(a) of ERISA or to the tax or penalty on prohibited
transactions imposed by Section 502 of ERISA or Section 4975 of the Code.
5.20 Employee Benefit Plans.
The Company has no employee pension benefit plans other than profit
sharing plans and thrift plans disclosed on the Schedule of Employee Benefit
Plans. The Company has made all contributions due for each of the profit sharing
plans and thrift plans and, to the extent, if any, such contributions have not
been so made but are required to be accrued, has shown such accrual on the
Financial Statements.
5.21 Governmental Approval.
No authorization, consent or approval of any public body, governmental
authority or agency is necessary or required as to the Shareholders or the
Company as a condition to the validity of this Agreement and the consummation of
the transactions contemplated hereby.
5.22 Authority; Noncontravention.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have duly and validly been authorized by the
Board of Directors of the
18
Company and by the Shareholders of the Company; no further corporate action of
any nature is required pursuant to the Articles of Incorporation and Bylaws of
the Company. This Agreement constitutes the valid and binding obligation of the
Company and the Shareholders, except as may be limited by bankruptcy, insolvency
or other laws affecting creditors rights generally or as may be modified by a
court of equity in an action for specific performance. Shareholders have the
absolute and unrestricted right, power and authority and capacity to execute and
deliver this Agreement and to perform their obligations as contemplated herein.
This Agreement and the consummation of the transactions contemplated hereby will
not violate any provisions of law, conflict with, result in a breach of any of
the terms, conditions or provisions of, constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any of the Company Shares
or any of the properties or assets of the Shareholders or of the Company,
pursuant to any corporate charter, bylaw, indenture, mortgage, lease, agreement
or other instrument to which the Shareholders or the Company is a party or by
which they are bound, or result in the acceleration of the maturity of any
payment date of any indebtedness of the Company or increase or adversely affect
the obligations of the Company or any of its subsidiaries thereunder.
5.23 Taxes.
All federal, state, and other tax and informational returns of the Company
and each Employee Benefit Plan required by law to be filed have been duly filed,
and all federal, state, and other taxes, assessments, and other governmental
charges or levies upon the Company and any of its properties, income, profits,
and assets that are due and payable have been paid, except for any such taxes,
assessments and other governmental charges or levies the payment of which the
Company is contesting in good faith by appropriate proceedings and for which
adequate reserves have been provided on the books of the Company. The Financial
Statements contain adequate accruals for all taxes not yet due and payable.
5.24 Environmental Matters.
With respect to each of the real properties listed on the Schedule of Real
and Personal Property:
(a) The properties do not contain, in, on or under, including,
without limitation, the soil and groundwater thereunder, any Hazardous Materials
in violation of Environmental Laws or in amounts that have given or are
reasonably expected to give rise to any liability of the Company under
Environmental Laws.
(b) The properties and all of the Company's operations and
facilities at the properties are in compliance in all material respects with all
Environmental Laws, and there is no contamination or violation of any
Environmental Law which has interfered, or is reasonably expected to interfere,
with the continued operation of any of the properties or is reasonably expected
to materially impair the financial condition of the Company.
(c) The Company has not received from any governmental authority any
complaint, notice of violation, alleged violation, investigation or advisory
action or notice of potential liability regarding matters of environmental
protection or permit compliance under
19
applicable Environmental Law with regard to the properties, nor does any
Shareholder have knowledge that any governmental authority is contemplating
delivering to the Company any such notice. There has been no pending or
threatened complaint, notice of violation, alleged violation, investigation or
notice of potential liability under Environmental Laws with regard to any of the
properties.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the properties by the Company in violation
of any Environmental Laws or in a manner that has given or could reasonably be
expected to give rise to material liability of the Company under Environmental
Laws, nor have any Hazardous Materials been transported or disposed of from any
of the properties by the Company to any other location in material violation of
any Environmental Laws or in a manner that has given or could reasonably be
expected to give rise to material liability of the Company under Environmental
Laws.
(e) There has been no release or threat of release by the Company of
Hazardous Materials into the environment at or from any of the properties, or
arising from or relating to the operations of the Company, in violation of
Environmental Laws or in amounts that has given or could reasonably be expected
to give rise to material liability of the Company under Environmental Laws.
5.25 Y2K Compliance.
Each system, comprised of software, hardware, databases or embedded
control systems owned by the Company or in which the Company has a proprietary
interest will not be materially adversely affected by the Year 2000 problem.
5.26 Public Information.
Shareholders have received the copies of the prospectus included in the
Parent's Registration Statement on Form S-1 and documents incorporated by
referenced therein as filed with the Securities and Exchange Commission.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF PARENT
The obligations of Parent to consummate the transactions provided for
herein are at the option of Parent, subject to the satisfaction, in all material
respects, of the following conditions on or prior to the Closing Date:
6.1 Compliance by the Shareholders and the Company.
All the terms, covenants and conditions of this Agreement to be complied
with and performed by the Shareholders or the Company on or before the Closing
Date shall have been fully complied with and performed.
20
6.2 Certificate Regarding Representations and Warranties.
The representations and warranties of the Shareholders contained in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though all such representations and warranties had been made on and as
of that date and the Shareholders shall deliver a certificate to that effect at
the Closing.
6.3 Approval of Legal Matters.
All actions, proceedings, instruments and documents deemed necessary or
appropriate by Parent or its general counsel to effectuate this Agreement and
the consummation or the transactions contemplated hereby, or incidental thereto,
and all other related legal matters, shall have been approved by such general
counsel. The transactions contemplated herein shall comply with statutes and
laws pertaining thereto, including without limitation laws, rules and
regulations promulgated under the Securities Act, by the Federal Trade
Commission or by the Securities and Exchange Commission.
6.4 Escrow Agreement.
The Shareholders shall have executed and delivered an Escrow Agreement in
the form of Exhibit 6.4 hereto.
6.5 Accuracy of Schedules.
Examination by Parent shall not have disclosed any material inaccuracy in
the representations and warranties of the Shareholders set forth in Article 4
and Article 5 hereof or in the Schedule delivered to Parent pursuant to Article
4 and Article 5 hereof.
6.6 Litigation.
No suit shall, at the Closing Date, be pending or threatened before any
court, governmental agency, bureau, board or other authority in which the
transactions contemplated by this Agreement are sought to be restrained or in
connection with which damages or other relief is sought, or in which any
material claim shall be asserted against the Company which, in the good faith
judgment of Parent, makes consummation of the Merger inadvisable or impossible.
6.7 Resignations of Directors and Officers of the Company.
If requested by Parent, Parent shall have received a written instrument
signed by each of the directors and officers of the Company resigning from all
official positions of the Company to which they have been elected or appointed,
effective the Closing Date.
6.8 Employment and Consulting Agreements.
Each of Xx. Xxxxxxxx and Xx. Xxxxxx Xxxxxxxx shall have executed and
delivered Employment Agreements, and Xx. Xxxxx shall have executed and delivered
a Consulting Agreement, each in the form attached hereto as Exhibit 6.8.
21
6.9 Noncompetition Agreements.
Each of the Shareholders and Xx. Xxxxxx Xxxxxxxx shall have executed and
delivered Noncompetition Agreements, in the forms attached hereto as Exhibit
6.9.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Shareholders as follows:
7.1 Organization and Good Standing.
Parent is a corporation duly organized, existing and in good standing
under the laws of the State of Delaware. Sub is a corporation duly organized,
existing and in good standing under the laws of the State of New Jersey. Each of
Parent and Sub has full corporate power to carry on its business, to own and
operate its properties and assets and to consummate the transactions
contemplated by this Agreement.
7.2 Correctness of Representations.
No representations or warranties of Parent in this Agreement contain any
untrue statement of a material fact or omit or a material fact necessary to make
the statements made therein not misleading. The representations and warranties
of Parent set forth in this Agreement shall be true in all material respects on
and as of the Closing Date as though such representations and warranties were
made on and as of such date.
7.3 Authority; Noncontravention.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have duly and validly been authorized by the
Board of Directors of each of Parent and Sub and the shareholders of Sub; no
further corporate action of any nature is required pursuant to the Articles of
Incorporation and Bylaws of each of Parent and Sub; and this Agreement
constitutes the valid and binding obligation of each of Parent and Sub, except
as may be limited by bankruptcy, insolvency or other laws affecting creditors
rights generally or as may be modified by a court of equity in an action for
specific performance. The execution, delivery and performance of this Agreement
will not violate or result in default under any provision of the Articles of
Incorporation or Bylaws of each of Parent and Sub; or any material commitment,
indenture, license or other obligation to which Parent is a party or by which it
is bound and will not, to the best knowledge of Parent, contravene any law, rule
or regulation of any administrative agency or governmental body or any order,
writ, injunction or decree of any court, administrative agency or governmental
agency applicable to of each of Parent and Sub.
7.4 Brokers and Finders.
Neither Parent, Sub nor any of their officers, directors or employees has
employed or otherwise incurred in any manner any liability for any brokerage
fees, agents commissions or finder's fees concerning the transactions hereby.
22
7.5 Capitalization and Parent Shares.
The authorized and issued equity securities of Parent are as set forth in
the 10-Q of Parent with respect to the period ended March 31, 1999, a copy of
which, together with the annual report of Parent, has been delivered to
Shareholders. The Parent Shares to be issued to the Shareholders under this
Agreement have been duly authorized, and when issued, will be validly issued and
fully paid and nonassessable.
7.6 Financial Capacity.
Xxxxxxxxxxx.xxx (US) Ltd. has the financial capacity to perform all of its
obligations under the Employment and Consulting Agreements.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SHAREHOLDERS
The obligation of the Company and Shareholders to consummate the
transactions provided for herein is subject to the satisfaction, in all material
respects, of the following conditions on or prior to the Closing Date:
8.1 Compliance by Parent.
All the terms, covenants and conditions of this Agreement to be complied
with and performed by Parent on or before the Closing Date shall have been
complied with and performed in all material respects.
8.2 Certificate Regarding Representations and Warranties.
The representations and warranties of Parent contained herein shall be
true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on and as of the Closing Date and Parent shall have delivered a certificate
of its officers to such effect at Closing.
8.3 Escrow Agreement.
Parent and Sub shall have executed and delivered an Escrow Agreement
substantially in the form of Exhibit 6.4 hereto.
8.4 Litigation.
No suit shall, at the Closing Date, be pending or threatened before any
court, governmental agency, bureau, board or other authority in which the
transactions contemplated by this Agreement are sought to be restrained or in
connection with which damages or other relief is sought, or in which any
material claim shall be asserted against Parent which, in the good faith
judgment of the Shareholders, makes consummation of the Merger inadvisable or
impossible.
23
8.5 Employment Agreements.
The Parent and the Company shall have executed and delivered each of the
Employment and Consulting Agreements referenced in Section 6.8 hereof.
8.6 Noncompetition Agreements.
The Parent and the Company shall have executed and delivered each of the
Noncompetition Agreements referenced in Section 6.9 hereof.
8.7 Advisory Board.
Parent shall have issued an aggregate of 20,000 Parent Shares to members
of the Advisory Board, to be delivered at Closing as set forth on Schedule 8.7.
ARTICLE 9
INDEMNIFICATION BY SHAREHOLDERS
9.1 Indemnification by Shareholders.
The Shareholders, jointly and severally, agree to indemnify and to save
and hold harmless Parent of, from, against and in respect of any and all claims,
demands, actions or causes of action asserted against, and all losses, costs,
damages and expenses, including reasonable attorney's fees and the expenses of
all actions, suits, proceedings, demands, and judgments, together with all
costs, fees and expenses (including attorneys' fees and the expenses of all
actions, suits, proceedings, demands and judgments) of enforcing this indemnity
("Attorneys Fees and Expenses") suffered, paid or incurred by Parent by reason
of or resulting from (a) a breach of any representation or warranty by
Shareholders contained in or made pursuant to this Agreement, (b) a breach of
any covenant or agreement of the Shareholders (other than a representation and
warranty) contained in or made pursuant to this Agreement, or (c) any liability
or obligation of the Company arising out of or in connection with the operation
of the business of the Company prior to the Closing Date; (collectively,
"Claims" and individually, a "Claim"), except to the extent such liability or
obligation is (i) adequately accrued or reserved in the determination of Working
Capital under Section 2.3 of this Agreement; (ii) satisfied by delivery of
Parent Shares as contemplated by Sections 5.2(c) and 8.7; or (iii) related to or
arises out of the substance of any content posted on a web-site created or
maintained by the Company prior to Closing.
9.2 Limitations - Time.
The Shareholders' obligation to indemnify Parent as provided in Section
9.1 of this Agreement is subject to the condition that Parent shall have
notified the Shareholders of the Claim for which such indemnity is sought,
specifying in reasonable detail the factual basis of the Claim to the extent
then known by Parent, on or before the second anniversary of the Closing Date;
provided, however, that notwithstanding the foregoing Parent may give notice of
Claim arising from or based on (i) the breach of any representation, warranty or
covenant regarding tax matters at any time prior to the expiration of the
applicable statute of limitations, (ii) matters
24
described in Sections 5.1, 5.2, or 5.22, (iii) any covenant or obligation to be
performed after the Closing, or (iv) with respect to Section 9.1(c), at any time
after the Closing Date.
9.3 Limitations on Amount - Shareholders.
(a) To the extent that the aggregate of all Claims made by Parent is
finally determined to be an amount less than $25,000, the Shareholders shall not
be obligated to make any payment with respect to those Claims unless and until
the aggregate amount of such Claims for which the Shareholders have not
previously indemnified Parent is equal to or greater than an aggregate of
$25,000, and in that event, subject to the provisions of Section 9.3(b) hereof,
Shareholders shall be liable hereunder for the full amount of all such Claims.
(b) The Shareholders' obligation to indemnify Parent from Claims
pursuant to Section 9.1 for damages shall be limited to fifty percent (50%) of
the Merger Consideration deliverable to the Shareholders hereunder valued as of
the date of Closing.
9.4 Procedure for Indemnification - Third Party Claims.
(a) Parent shall give notice to the Shareholders of any Claim
arising from the assertion of liability by third parties promptly after Parent
receives notice or becomes aware thereof, but the failure to notify the
Shareholders will not relieve the Shareholders of any liability they may have to
Parent, except to the extent that the Shareholders demonstrate that the defense
of such Claim has been prejudiced by such failure to give notice.
(b) The Shareholders will undertake the defense thereof by
representatives acceptable to Parent unless Parent has given notice that the
Claim is being defended by an insurer of Parent or the Company. All costs and
expenses of such defense (including Attorneys Fees and Expenses), and any
settlement or compromise resulting from the defense of any Claim, shall be paid
for by the Shareholders to the extent not fully paid or reimbursed, as
appropriate, by insurer.
(c) In the event the Shareholders, within a reasonable time after
receipt of notice of any such Claim, but in no event more than thirty (30) days
after the receipt of such notice, fail to defend, Parent will have the right to
undertake the defense, compromise or settlement of such Claim on behalf of and
for the account and risk of the Shareholders.
(d) Any judgment, award, settlement or compromise of any Claim,
whether the contest or defense thereof is undertaken by the Shareholders or
Parent, shall be binding on the parties hereto, and the amount thereof
(including Attorneys Fees and Expenses), shall be prima facie evidence of the
amount which the Shareholders are obligated to indemnify Parent with respect to
that Claim. In the event of payment by Parent of a Claim which neither Parent
nor the Shareholders elect to contest or defend as provided above, the actual
amount of such payment, including Attorneys Fees and Expenses, shall be prima
facie evidence of the amount which the Shareholders are obligated to indemnify
Parent with respect to that Claim.
25
9.5 Procedure for Indemnification of Other Claims.
Unless such claim is contested by the Shareholders, the Shareholders,
jointly and severally, shall promptly upon written notice thereof given by
Parent, pay and reimburse Parent on demand the amount of any Claim which is
indemnifiable by the Shareholders pursuant to Section 9.1 hereof not covered by
Section 9.4 above. If the Claim is contested, the parties shall have such
remedies available at law or under the Escrow Agreement. The amount actually
paid, including reasonable Attorneys Fees and Expenses, shall be prima facie
evidence of the amount which the Shareholders are obligated to indemnify Parent
hereunder with respect to such Claim.
9.6 Tax Indemnity.
In the event that a determination is made by the Internal Revenue Service,
which is no longer being disputed by the Parent or the Shareholders, that the
Merger described herein fails to qualify as a reorganization within the meaning
of IRC Section 368(a), then Parent shall pay to the Shareholders, pro rata in
accordance with their respective ownership of Company Stock, an amount equal to
fifty percent (50%) of the "Additional Tax Liability" as hereinafter defined.
Additional Tax Liability shall mean an amount equal to the federal and state tax
due based on the fair market value of the stock consideration received pursuant
to the merger, increased by any related interest and penalties.
9.7 Escrow; Remedies Not Exclusive.
In addition to other remedies available at law or in equity, Parent shall
be entitled to make a Claim against any Parent Shares or other property held
under the Escrow Agreement to satisfy the payment of any Claim hereunder. The
remedies provided in this Article 9 shall not be exclusive or limit any
equitable remedies (including, without limitation, specific performance or
injunctive relief) that may be available to the parties hereunder.
ARTICLE 10
MISCELLANEOUS
10.1 Actions Pending Closing.
(a) The parties hereto shall use their best efforts to comply with,
perform and satisfy all the terms, covenants and conditions of this Agreement to
be complied with, performed and satisfied by them on or before the Closing Date.
In addition, the Company and the Shareholders will use their best efforts to
ensure there are no material or adverse changes to employee relations at the
Company.
(b) The Shareholders shall cause the Company to close its permanent
books and records as of the Closing Date in order to permit the Company's
taxable income for the tax periods ending on the date immediately preceding the
Closing Date to be reported on that date. The Shareholders shall prepare and
file all federal and state income tax returns for the Company for all tax
periods ending on or before the Closing Date, in a timely manner.
(c) From the date hereof to the Closing Date, except to the extent
Parent shall otherwise consent in writing, the Company and the Shareholders
shall:
26
(i) operate the Company's business as presently operated and
only in the ordinary course and use their best efforts to preserve intact
its good will, reputation and present business organization and to
preserve relationships with persons having business dealings with it;
(ii) maintain all of the Company's properties in good order
and condition, reasonable wear and use excepted;
(iii) take all steps necessary to maintain the Company's
intangible assets;
(iv) pay all liabilities and other obligations of the Company
and collect all accounts receivable in accordance with past business
practices;
(v) comply with all laws applicable to the conduct of the
business of the Company;
(vi) not take any action which would constitute a breach of
the representations and warranties contained in Article 4 of this
Agreement;
(vii) not enter into any settlement regarding any claim,
dispute or other cause of action except for settlements of customer
disputes made by the Company in the ordinary course of business;
(viii) not sell or otherwise dispose of any assets of the
Company; and
(ix) submit all contracts which are outside the normal course
of business or which involve a capital expenditure in excess of $5,000 to
Parent for its approval.
10.2 Failure of Conditions to Obligations of Parent.
In the event any condition precedent of Article 6 of this Agreement is not
met at the time of Closing, then Parent, at its option, may (i) by notice
written at the Closing terminate this Agreement; or (ii) waive the condition
precedent and consummate the Closing, in which case the Shareholders shall be
relieved of all further liability to Parent arising only out of such waived
condition precedent. In the event this Agreement is terminated or the
transaction does not close pursuant to this Section 10.2, all further
obligations of the parties will terminate other than the obligations in Sections
10.7 and 10.10, which survive; provided, however, that if this Agreement is
terminated because of the Shareholders or the Company's material failure to
comply with their respective obligations under this Agreement, Parent's right to
pursue all legal remedies will survive such termination unimpaired, and if this
Agreement is terminated because of Parent's or Sub's material failure to comply
with their respective obligations under this Agreement, the Shareholders' and
the Company's right to pursue all legal remedies will survive such termination
unimpaired.
27
10.3 Survival of Representations.
(a) All statements contained in any document, certificate or other
instrument delivered by or on behalf of Parent, the Shareholders or the Company
pursuant hereto, shall be deemed representations and warranties hereunder by
Parent, the Shareholders or the Company, as the case may be. All
representations, warranties and agreements made by Parent, the Shareholders or
the Company shall survive the Closing for the periods specified in Section 9.2
hereof for the assertion of claims. Any inspection or audit of the inventories,
properties, financial condition or other matters relating to the Company and its
business conducted pursuant to this Agreement shall in no way limit, affect or
impair the ability of Parent to rely upon the representations, warranties,
covenants and agreements of the Shareholders set forth herein.
(b) Nothing contained in the foregoing shall relieve any officer or
director of Parent, the Shareholders or the Company of any liability or limit
any liability that he may have on account of common law fraud or purposeful
misrepresentation in connection with the delivery of any certificate required to
be delivered under the terms hereof, which certificate is untrue in any material
respect.
10.4 Resale of Parent Shares; Securities Act.
(a) Each of the Shareholders acknowledges that he, she or it may be
deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act (although nothing contained herein should
be construed as an admission of such fact) and that, if in fact such Shareholder
were an affiliate of the Company under the Securities Act, his, her or its
ability to sell, assign or transfer the Parent Shares received in exchange for
any Company Shares pursuant to the Merger hereof may be restricted unless such
transaction is registered under the Securities Act or an exemption from such
registration, such as that provided by Rules 144 and 145(d) promulgated under
the Securities Act, is available.
(b) Each of the Shareholders hereby covenants that he or she will
not sell, assign or transfer any of the Parent Shares received in exchange for
Company Shares pursuant to the Merger hereof except (x) pursuant to an effective
Registration Statement under the Securities Act, or (y) in a transaction which,
in the opinion of independent counsel reasonably satisfactory to Parent, is not
required to be registered under the Securities Act. Parent agrees that the
counsel identified on Schedule 10.4(b) is acceptable.
(c) Each of the Shareholders understands that Parent may instruct
its transfer agent to withhold the transfer of any Parent Shares, but that upon
receipt of such opinion, the transfer agent will effect the transfer of the
shares indicated as disposed of in such opinion. Each of the Shareholders
acknowledges that appropriate legends will be placed on certificates
representing Parent Shares received pursuant to the Merger, which legends will
be removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from independent counsel
reasonably satisfactory to Parent to the effect that such legends are no longer
required for purposes of the Securities Act. Parent agrees that the counsel
identified on Schedule 10.4(b) is acceptable.
28
(d) Notwithstanding anything herein to the contrary, the
shareholders agree that they shall not sell, assign or transfer at any time the
Parent Shares in any manner so that such disposition causes the transactions
contemplated by this Agreement to fail to qualify as a reorganization under
Section 368 of the Code.
(e) The restrictions on transferability set forth herein shall be in
addition to those restrictions and limitations set forth in the Escrow
Agreement.
10.5 Access and Information.
For as long as reasonably may be necessary, Parent shall afford or cause
to be afforded to the Shareholders, or any Affiliate of the Shareholders,
reasonable access to all the books and records of the Company relating to the
business of the Company prior to the Closing Date as they reasonably may request
and for a legitimate business purpose. All originals of such books and records
of the Company shall remain in the possession and control of Parent from and
after the Closing Date. Should the Shareholders request copies of any such
material, Parent shall furnish or cause to be furnished to the Shareholders all
such copies so requested for which the Shareholders agree to pay Parent all
reasonable costs and expenses incurred in the production of such documents.
10.6 Assignment.
Except as set forth above, this Agreement shall not be assignable by any
of the parties hereto without the written consent of the others; and nothing
contained in this Agreement, express or implied, is intended to confer upon any
person or entity, other than the parties hereto and their successors in interest
and permitted assignees, any rights or remedies under or by reason of this
Agreement unless so stated to the contrary.
10.7 Confidentiality of Information.
(a) All parties agree to strictly limit disclosure of the proposed
acquisition to those persons who have a need to know. Those persons include key
employees, attorneys, accountants, officers, directors, investment advisors,
stockholders and others similarly situated with a need to know.
(b) Parent understands and agrees that it will be receiving and
reviewing confidential and proprietary information of the Company. Prior to the
Closing and, if the Closing shall not occur: (i) Parent agrees to strictly limit
access to such information to those individuals having a need to know and to use
its best efforts to prevent any other disclosure of such information, and (ii)
Parent also agrees not to utilize in any manner, other than as allowed herein,
any confidential or proprietary information obtained from the Company.
Confidential and proprietary information shall not include information that (i)
was known to Parent prior to disclosure by the Company, (ii) is or becomes
generally available to the public other than by breach of this Agreement, (iii)
otherwise becomes lawfully available on a non-confidential basis from a third
party who is not under an obligation of confidence to the Company, or (iv) is
independently developed by Parent.
29
(c) If Parent discloses confidential information of Parent to the
Company, the Company and the Shareholders agree that such information will be
held confidential and protected in the same manner as described above for the
Company confidential information.
(d) Except for filings required by law, prior to the Closing, the
parties agree that all information contained in any press releases and other
announcements concerning any aspect of the acquisition shall be mutually agreed
upon in writing prior to any such release or announcement being made.
(e) Neither the Company nor the Shareholders, nor any officer,
agent, director or employee of the Company shall furnish, either directly or
indirectly, any information including, but not limited to, any term of this
Agreement not otherwise publicly announced, to any current or prospective
acquirer of the Company. Further, neither the Company nor the Shareholders shall
seek other offers or negotiate with others with respect to any other proposed
sale of the Company or of any significant Company assets.
10.8 Construction.
This Agreement shall be construed and enforced in accordance with the laws
of the State of New Jersey, without giving effect to conflicts of laws
provisions.
10.9 Amendment.
This Agreement may be amended, supplemented or interpreted at any time by
a written instrument executed by the parties hereto.
10.10 Expenses.
Each party hereto shall pay its own expenses incident to this Agreement
and the transactions contemplated hereby, including all fees and expenses of
their counsel, provided that the Shareholders shall pay the legal and accounting
expenses of the Company incurred in connection with this Agreement and the
transactions contemplated hereby.
10.11 Notices.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have duly been given if delivered or if
mailed, by United States certified or registered mail, prepaid to the parties or
their assignees at the following addresses (or at such other addresses as shall
be given in writing by the parties to one another) with a copy to:
Parent: Xxxxxxxxxxx.xxx, Ltd.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx XX 12
Bermuda
Attn: Xxxxxx X. Xxxxxxxx, CEO
30
Copy: Xxxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: E. Xxxxxxx Xxxxxx, General Counsel
Company: Cyber-Tech, Inc.
00 Xxxxx Xxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Shareholders: Xxxxx Xxxxxxxx
00 Xxxxx Xxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Xxxxxx X. Xxxxx
000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Copy: Xxxxxx X. Xxxxxxx
Xxxxx, Xxxxxxx
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Notices delivered in person shall be effective on the date of delivery.
Notices delivered by mail as aforesaid shall be effective upon the third
calendar day subsequent to the postmark date thereof.
10.12 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.13 Entire Agreement.
This Agreement and the certificates, schedules and other documents
delivered pursuant hereto or incorporated by reference herein contain the entire
agreement between the parties hereto concerning to the transaction contemplated
herein and supersede all prior agreements or understandings between the parties
hereto relating to the subject matter hereof. No oral representation, agreement
or understanding made by any party hereto shall be valid or binding upon such
party or any other party hereto.
10.14 Captions and Section Headings.
Captions and section headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing it.
31
10.15 Income Tax Filings.
Each party hereto agrees to file, and cooperate in the preparation and
filing of, all statements of fact and other matters required to be filed
pursuant to this reorganization, including without limitation filings required
pursuant to Internal Revenue Service Regulation 1.368-3(a).
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
32
IN WITNESS WHEREOF, the parties hereto have duly executed and sealed this
Agreement as of the day and year first written.
XXXXXXXXXXX.XXX, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CYBER-TECH, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SHAREHOLDERS
-------------------------------------
Xxxxx Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxx, M.D.
MCNS MERGER SUBSIDIARY II, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
33
