AGREEMENT AND PLAN OF REORGANIZATION
This Plan and Agreement of Reorganization ("Plan"), is made this 1st day of May,
1996, between NDS Software, Inc., a Nevada corporation ("NDS"), Visual Listings,
Inc., a California corporation ("VLI"), and Xxxx Xxxxxx and stockholders of VLI,
being the owners of record of all of the issued and outstanding stock of VLI
(hereinafter collectively called "Stockholders" and individually"Stockholder").
Whereas NDS wishes to acquire and the Stockholders wish to transfer all of the
issued and outstanding stock of VLI in a transaction intended to qualify as a
reorganization within the meaning of IRC Section 368(a)(1)(B), as amended;
Whereas, the parties hereto desire that VLI stock be exchanged for NDS stock
on the date and at the time herein provided; and,
Whereas, the parties hereto desire to set forth certain representations,
warranties and covenants herein contained;
Now, therefore, NDS and the Stockholders adopt this plan of reorganization
upon the terms and conditions as follows:
ARTICLE I
Exchange
1.1 Number of Shares. The Stockholders agree to transfer to NDS at the Closing
100,000 shares of the common stock of VLI, no par value, in exchange for an
aggregate of 280,000 shares of voting common stock of NDS, $.001 par value per
share, to be issued to the Stockholders at Closing in the numbers shown opposite
their names in Exhibit "A". The Stockholders and VLI agree to retire or satisfy
the notes payable by VLI to the Stockholders as set forth in VLI's balance sheet
(totaling $134,500) dated December 31, 1995, with a portion of the NDS shares
exchanged hereunder. In addition, NDS agrees to assume responsibility for the
VLI trade debt & notes of approximately $65,000 - $105,000 as listed in VLI's
balance sheet upon this Plan becoming effective.
1.2 Delivery of Certificates by Stockholders. The transfer of VLI shares by
the Stockholders shall be effected at the Closing by the delivery to NDS of
certificates representing the transferred shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures guaranteed by
a national bank and with all necessary transfer tax and other revenue stamps,
acquired at the Stockholder's expense, affixed.
1.3 Change in Conversion Ratio. NDS expects to register the shares of NDS
shares exchanged herein during the last quarter of 1996 to allow such shares to
be sold as free trading shares. At the time of such registration, if the market
value of the NDS shares is below $2.50 per share, NDS will issue additional
shares to the Stockholders equivalent to such value. In the event the number of
shares as so determined results in fractional shares, said number will be
rounded upward to the next higher whole number of shares.
1.4 Restrictions on NDS Stock. The Stockholders acknowledge, and irrespective
of any other term or provision herein, that the NDS stock exchanged hereunder is
restricted stock and subject to Securities and Exchange Commission "Rule 144".
No warranties or representations by NDS are made nor shall be implied herein
that such restrictions will be removed except by compliance with the applicable
requirements of Rule 144 or the Securities Act of 1933.
1.5 Purchase Option. The Stockholders and VLI acknowledge that NDSis entering
into this transaction with a concurrent expectation of obtaining additional
capital financing, and that NDS has provided the Stockholders and VLI with all
pertinent facts concerning the method and goals regarding NDS's capital finance
plan. If, within three hundred sixty five (365) days from the execution hereof,
NDSis unable to obtain additional capital financing in the amount of $1.5M, and
upon written notice thereof by NDS, the parties agree that Xxxx Xxxxxx has the
right to purchase 100% of the ownership of the VLI subsidarary in exchange for
280,000 shares of NDS common stock plus $25,000. This Purchase Option can only
be exercised in the event NDSis not able to obtain the $1.5M financing within
the 365 day period. This Purchase Option is void upon NDS obtaining the $1.5M
financing. In the event NDS transfers or sells its
investment in VLI, Xxxx Xxxxxx would have the first right of refusal to match
any such offer within the five year period.
1.6 Infusion of Capital into VLI. Additional capital shall be infused into VLI
on a basis mutually agreeable between the Board of Directors of NDS and Xxxx
Xxxxxx.
ARTICLE II
Closing/Effective Date
The Closing contemplated by Section 1.1 shall be held on May 8, 1996, at the
principal offices of NDS, unless another place or time is agreed upon in writing
by the parties. This Plan shall become effective upon the filing of the
"Articles of Exchange" pursuant to applicable law and subject to the conditions
set forth herein.
ARTICLE III
Representations and Warranties of the Stockholder and VLI
3 1 Corporate Status. VLI is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Califomia.
3.2 Capitalization. The authorized capital stock of VLI consists solely of 1
Million shares of common stock, no par value, of which 100,00 shares are issued
and outstanding, all fully paid and nonassessable, and the shares to be
transferred at the Closing constitute all of the outstanding shares of VLI and
VLI has issued no other shares.
3.3 investment Intent. The Stockholders are acquiring the NDS shares to be
transferred to them under this Agreement for investment and not with a view to
the sale or distribution thereof, and the Stockholders have no commitment or
present intention to sell or otherwise dispose of such stock.
3.4 Financial Statements. All financial statements prepared by or on behalf of
VLI and submitted to NDS and all books of account and records of VLI are true
and correct, have been prepared in conformity with generally accepted accounting
principles, correctly reflect
valid transactions and values, and present a true and correct statement, as of
their respective dates, of VLI's financial condition.
3.5 Undisclosed Liabilities. VLI had no liabilities of any nature except to
the extent reflected or reserved against VLI's latest financial statements
attached hereto as Exhibit "B".
3.6 Interim Changes. There has been no material adverse change in the
condition of VLI since the date of the financial records submitted to NDS,
except those arising from the normal and regular conduct of business of VLI.
3.7 Litigation. There is no litigation or proceeding pending, or to
Stockholder's knowledge threatened, against or relating to VLI, its properties
or business, except as set forth in a list certified by the president of VLI and
delivered to NDS.
3.8 Title to Property. VLI has good and marketable title to all properties and
assets, real, personal, and proprietary, and VLI's patents, patent applications,
copyrights, trade-marks and trade-names are valid and in good standing wherever
VLI sells products or services. VLI has not sold or granted any interest,
whether in total or in part, in any of its properties described herein to any
person or entity and the use of such properties do not conflict in any way with
the trade-marks, trade-names, or other proprietary rights of any other person or
entity. There are no liens, mortgages, pledge, or encumbrance with respect to
the properties described herein.
3.9 Title to Shares. The Stockholders are the owners, free and clear of liens
and encumbrances, of the number of VLI shares which the Stockholders have
contracted to exchange.
3.10 Access to Books and Records. From the date of this Agreement to the
Closing, the Shareholders will cause VLI (1) to give to NDS and its
representatives full access during normal business hours to all of its offices,
books, records, contracts, and other corporate documents and properties so that
NDS may inspect and audit them, and (2) to furnish such information concerning
VLI's properties and affairs as NDS may reasonably request.
3.11 Confidentiality. Until the Closing (and permanently if there is no
Closing), the Stockholders and their representatives will keep confidential any
information which they obtain
from NDS concerning its properties, assets, proprietary assets, and business.
If this transaction is not completed, the Stockholders will return to NDS all
written matter with respect to NDS obtained by them in connection with the
negotiation or consummation of this Agreement.
3.12 Corporate Authority. VLI has full corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder, and will deliver
to NDS at the Closing a certified copy of resolutions of its Board of Directors
authorizing execution of this Agreement by its officers and performance
thereunder. This Agreement constitutes a valid and binding obligation of VLI and
performance hereunder will not violate any provision of VLI's Articles of
Incorporation, Bylaws, or other agreements or commitments.
ARTICLE IV
Representations and Warranties of NDS
4.1 Corporate Status. NDS is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada.
4.2 Capitalization. The authorized capital stock of NDS consists solely of 50
million shares of common stock, nominal par value, of which 3,829,848 shares are
issued and outstanding. The NDS stock to be issued to Stockholders hereunder
will, upon the issuance thereon, be duly and validly issued, all fully paid and
nonassessable.
4.3 Annual Reports. NDS has heretofore delivered to the Stockholders true and
correct copies of its annual reports and consolidated financial statements for
each year. There have been have been no material adverse changes in the
condition of NDS, except those arising from the normal and regular conduct of
business of NDS, since the date of the financial documents provided by NDS.
4.4 Investment Intent. NDS is acquiring the VLI shares to be transferred to it
under this Agreement for investment and not with a view to the sale or
distribution thereof, and NDS has no commitment or present intention to
liquidate VLI or to sell or otherwise dispose of its stock.
4.5 Corporate Authority. NDS has full corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder, and will deliver
to the Stockholders at the Closing a certified copy of resolutions of its Board
of Directors authorizing execution of this Agreement by its officers and
performance thereunder. This Agreement constitutes a valid and binding
obligation of NDS and performance hereunder will not violate any provision of
NDS's Articles of Incorporation, Bylaws, or other agreements or commitments.
4.6 Access to Books and Records. From the date of this Agreement to the
Closing, NDS will (1) give to the Stockholders and their representatives full
access during normal business hours to all of its offices, books, records,
contracts, and other corporate documents and properties so that the Stockholders
may inspect and audit them, and (2) furnish such information concerning NDS's
properties and affairs as the Stockholder may reasonably request.
4.7 Confidentiality. Until the Closing (and permanently if there is no
Closing), NDS will keep confidential any information which they obtain regarding
VLI concerning its properties, assests, proprietary assets, and business. If
this transaction is not completed, NDS will return to VLI or the Stockholders as
appropriate, all written matter with respect to VLI obtained by NDS in
connection with the negotiation or consummation of this Agreement.
ARTICLE V
Actions of Parties Pending Closing
5.1 Approvals. Within 7 days from the date of this Plan, or such longer period
as the parties shall agree upon in writing, this Plan shall be submitted for
approval and adoption by the holders of NDS and VLI Common Shares if and as may
be required by and pursuant to the applicable provisions of the laws of the
States of Nevada and California. If this Plan shall be so approved and adopted,
NDS and VLI shall, subject to the provisions herein, immediately proceed to
effectuate this Plan. If this Plan shall not be so approved and adopted, it
shall without further action by the parties, other than certification to the
other constituent corporation of the results of the vote by the Secretary or
Clerk, as the case may be, of the constituent corporation the Stockholders of
which shall not have approved or adopted this Plan,
be canceled without liability from either party to the other in accordance
with Paragraph 12.2 herein.
5.2 Conduct Business. Prior to the Closing and pending the effective date
hereof, neither VLI, NDS, nor the Stockholders, without the prior written
consent of the other parties, will declare or pay any dividend on any shares of
its capital stock in excess of the amount paid thereon in the preceding calendar
quarter year, or make any other distribution of its assets, except in the
ordinary course of business, or increase the number of its shares of capital
stock outstanding except by reason of the conversion or redemption of presently
outstanding Class A Preferred Stock or Class B Convertible Stock of NDS. The
record dates for determining the holders of VLI Common Shares and the holders of
NDS Common Shares entitled to receive such dividends as the Board of Directors
of VLI and the Board of Directors of NDS, respectively, may, subject to the
preceding sentence, declare prior to the Closing, shall be the date hereof, and
no other dates.
5.3 Due Diligence. Subsequent to the execution of this Plan and prior to
Closing, the parties to this Agreement shall be responsible for their own due
diligence with regard to the extent and cost thereof; provided, however, that
the parties shall disclose all information necessary to comply with the terms
and provisions otherwise set forth in this Agreement.
ARTICLE VI
Articles of Exchange
Upon the approval and adoption of this Plan as provided in Article V, and
subject to the any other provisions herein, Articles of Exchange complying with
the applicable provisions of the laws of the States of Nevada and California, as
applicable, shall be duly executed by the appropriate officers of NDS and VLI
and shall be filed with the appropriate offices of the States of Nevada and
California. Immediately upon the completion of such filings, this Plan shall
become effective
ARTICLE VII
Directors and Officers
7.1 Directors and Officers of NDS. Upon this Plan becoming effective, the
Directors and Officers of NDS shall be the same as the Directors and Officers of
NDS in office immediately prior to this Plan, and their respective terms of
office shall not be changed, except that Xxxx Xxxxxx shall be appointed as the
fifth Director of the Board of Directors of NDS.
7.2 Directors and Officers of VLI. Upon this Plan becoming effective, the
Directors and Officers of VLI shall be determined according to the Articles of
Incorporation or Bylaws of VLI, or as amended, except that Xxxx Xxxxxx shall
remain as President of VLI pursuant to a five (5) year employment agreement
mutually agreeable to NDS and Xxxx Xxxxxx. In addition, Mr. Xxxxx Xxxxxxxx shall
be offered a continuing role as advisor to VLI subject to an employment
agreement mutually agreeable to NDS and Xxxx Xxxxxx.
ARTICLE VIII
Conditions Precedent - NDS
All obligations of NDS under this agreement are subject, at NDS's option, to
the fulfillment, before or at the Closing, of each of the following conditions:
8.1 Representations and Warranties True at Closing. The Stockholders'
representations and warranties contained in this Agreement shall be deemed to
have been made again at and as of the Closing and shall then be true in all
material respects.
8.2 Due Performance. The Stockholders shall have performed and complied with
all the terms and conditions required by this Agreement to be performed or
complied with by them before the Closing.
8.3 Opinion of Counsel. The Stockholders shall have delivered to NDS an
opinion of VLI's legal counsel, dated as of the Closing, to the effect that (1)
the representations in Article III, Paragraphs 3.1, 3.2, 3.4 through 3.9, and
3.12, are correct and that counsel knows of no inaccuracy in the
representations; and (2) the stock certificates, stock powers, and other
instruments delivered to NDS at the Closing are proper in form and substance,
are validly issued, fully paid, and nonassessable, and will vest in NDS good
title to all of the issued and outstanding
shares of capital stock of VLI, free and clear as to all liens, charges, and
encumbrances, and not subject to any adverse claim.
8.4 Books and Records. The Stockholders shall have caused VLI to make
available to NDS all books and records of VLI as requested by NDS, including
minute books and stock transfer records.
8.5 Revocation of Prior Authorizations. The Stockholders shall have delivered
to NDS certified copies of resolutions of VLI's Board of Directors revoking as
of the Closing all prior authorization, powers of attorney, designations, and
appointments relating to the signing of checks, borrowing of funds, access to
corporate safe-deposit boxes and other similar matters, to the extent requested
by NDS.
8.6 Resignations. There shall have been delivered to NDS the signed
resignations of such directors of VLI as NDS shall request, dated as of the
Closing.
8.7 Officer's Certificate. NDS shall have been furnished with a certificate
signed by the President and Secretary of VLI, dated as of the Closing,
certifying that there has been no material adverse change in the financial
condition, business, or properties of VLI.
ARTICLE IX
Conditions Precedent- Stockholders and VLI
All obligations of the Stockholders and VLI under this agreement are subject,
at the Stockholder's and VLI's option, to the fulfillment, before or at the
Closing, of each of the following conditions:
9.1 Representations and Warranties True at Closing. ~DS's representations and
warranties contained in this Agreement shall be deemed to have been made again
at and as of the Closing and shall then be true in all material respects.
9.2 Due Performance. NDS shall have performed and complied with all the terms
and conditions required by this Agreement to be performed or complied with by it
before the Closing.
9.3 Officer's Certificate. NDS shall have been furnished with a certificate
signed by the President and Secretary of NDS, dated as of the Closing,
certifying that there has been no material adverse change in the financial
condition, business, or properties of NDS.
ARTICLE X
Indemnification
10.1 Indemnification by the Stockholders. The Stockholders agree to indemnify,
defend, and hold NDS harmless from and against any loss, damage, or expense,
including attorney's fees, suffered or arising from (1) any breach by the
Stockholders of this Agreement, or (2) any inaccuracy in or breach of any of the
representations, warranties, or covenants by the Stockholders herein, provided,
however, that NDS shall give notice of any claims hereunder within twenty-four
months beginning on the date of the Closing. No loss, damage, or expense shall
be deemed to have been sustained by NDS to the extent of insurance proceeds paid
to, or tax benefits realizable by NDS or VLI as a result of the event giving
rise to such right to indemnification.
10.2 Indemnification by the Stockholders and VLI. The Stockholders, VLI, and
Xxxx Xxxxxx personally, agree to indemnify, defend, and hold NDS harmless from
and against any loss, damage, or expense, including attorney's fees, suffered or
arising from that certain obligation identified as a deferred income item in
VLI's balance sheet dated December 31, 1995, and described as the deposit from
First Franklin in the amount of $176,600. The parties acknowledge that this item
has been categorized as non-collectible and NDS intends to write off such item
as may be recommended by VLI.
10.3 Indemnification by NDS. NDS agrees to indemnify, defend, and hold the
Stockholders harmless from and against any loss, damage, or expense, including
attorney's fees, suffered or arising from (1) any breach by NDS of this
Agreement, or (2) any inaccuracy in or breach of any of the representations,
warranties, or covenants by NDS herein.
10.4 Defense of claims. Upon obtaining knowledge thereof, the indemnified
party shall promptly notify the indemnifying party of any claim which has given
or could give rise to a
right of indemnification under this Agreement. If the right of indemnification
relates to a claim asserted by a third party against the indemnified party, the
indemnifying party shall have the right to employ counsel acceptable to the
indemnified party to cooperate in the defense of any such claim. If the
indemnifying party does not elect to defend any such claim, the indemnified
party shall have no obligation to do so.
ARTICLE XI
Non-competition
The Stockholders agree that for a period of five (5) years from the Closing,
they will not directly or indirectly solicit business from, engage in business
with, or divert business from any of VLI's current or future customers, and that
they will not participate as a shareholder, partner, employee, consultant, or
otherwise in any enterprise engaging in activities that would violate this
Article if engaged in by them directly. The Stockholders acknowledge and confirm
that this covenant is made to induce NDS to enter into this Agreement and is
required by NDS for the purpose of preserving the business and goodwill of VLI
for the benefit of NDS. This provision will become null & void in the event Xx.
Xxxxxx exercises his purchase option as reflected in section 1.5 of this
agreement. The Stockholders and NDS represent and confirm that no part of the
NDS shares to be issued under this Agreement have been allocated to this
covenant and that no separate consideration or value for this covenant had been
otherwise agreed upon by the parties, and they agree that they will not take any
position in their federal income tax returns that is inconsistent with this
representation.
ARTICLE XlI
General Provisions
12.1 Notice of Claims. Each of the parties hereto shall give the other
immediate notice of any claim, event or transaction which would or does
materially and adversely affect the business, properties, operations or
financial condition of the constituent corporations.
12.2 Termination. This Agreement may be terminated: (1) by mutual consent in
writing; (2) by either the Stockholders of NDS if there has been a material
breach of any warranty or covenant by other parties; or (3) by either the
Stockholders of NDS if the Closing shall not have taken place, unless adjourned
by mutual consent in writing by the date set forth in Article II herein. In the
event of termination or abandonment of this Plan, each party shall pay the costs
and expenses incurred by it in connection with this Agreement and no party shall
be liable to any other party for any cost, expense, damage, or loss of
anticipated profits whatsoever incurred or claimed, and the obligations and
liabilities assumed hereunder shall be released, except as otherwise provided
herein.
12.3 No Other Rights in Third Parties. Except as otherwise expressly provided
in this Plan, nothing expressed or implied in this Plan is intended, or shall be
construed, to confer upon or to give any person, firm or corporation, other than
NDS and VLI and their respective Stockholders, any rights or remedies under or
by reason of this Plan.
12.4 Notice. Notices to or for the respective parties shall be given in
writing and delivered in person or mailed by certified or registered mail,
addressed to the respective party at the address as set out below, or at such
other address as either party may elect to provide in advance in writing, to the
other party:
NDS Software, Inc. Visual Listings, Inc.
Xxxx Xxxxxxx, President Xxxx Xxxxxx, President
0000 Xxxx Xxxxx, Xxxxx X 0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxx, XX 00000
12.5 Governing Law. This Plan shall be construed and governed by the laws of
the State of Nevada and jurisdiction shall vest exclusively in the Ninth
Judicial District Court in and for the State of Nevada, located in Xxxxxxx
County. The parties acknowledge and agree that this Agreement is executed and to
be performed in Xxxxxxx County, State of Nevada.
12.6 Surrender of Rights. Upon the Closing, the holders of VLI Common Shares
shall cease to have any rights in respect of the stock, except such rights, if
any, as they may have under the Corporation Laws of the State of California and
except as otherwise provided herein.
12.7 Further Assurances. At any time, and from time to time, after the
Closing, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
12.8 Waiver. Any failure on the part of either party hereto to comply with any
of their obligations, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
12.9 Brokers. Each of the parties represents to the other parties that no
broker or finder has acted for them in connection with this Agreement and agrees
to indemnify and hold harmless the other parties against any fee, loss, or
expense arising out of claims by brokers or finders employed or alleged to have
been employed by such party.
12.10. Assignment. This Agreement and all of the terms and conditions hereof
shall inure to the benefit of, and be binding upon, the parties hereto and their
heirs, executors, administrators, successors, and assigns; provided, however,
that assignment by either party of its rights under this Agreement without the
written consent of the other party shall be null and void.
12.11 Entire Agreement This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto and contains all of the
covenants and agreements between the parties with respect to this matter. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement or promise not contained in this Agreement shall be
binding. Any modification of this Agreement will be effective only if it is in
writing, signed by the party to be charged specifically referencing this
Agreement.
12.12 Interpretation. Whenever possible, each provision ofthisAgreement shall
be interpreted in such manner as to be valid and effective under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and have caused the respective
corporate seals to be affixed on this Agreement the day and year first above
written.
NDS SOFTWARE, INC., a VISUAL LISTINGS, INC., a
Nevada Corporation, California Corporation,
By:/s/ XXXX XXXXXXX By:/s/ XXXX XXXXXX
------------------------- ----------------------------
XXXX XXXXXXX XXXX XXXXXX
President President
STOCKHOLDER STOCKHOLDER
/s/ Xxxx Xxxxxx /s/ Xxxxx Xxxxxxxx
------------------------- ----------------------------
Xxxx Xxxxxx Xxxxx Xxxxxxxx
STOCKHOLDER
/s/ Xxxxxxx Xxxxxx
-------------------------
Xxxxxxx Xxxxxx
