Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of November 10, 2003 (the
"Effective Date"), is entered into by and among MBH Acquisition, Inc., a Nevada
corporation ("MBHAI"), MB Software Corporation, a Texas corporation and the
parent corporation of MBHAI ("MBS"), MB Holding Corporation, a Nevada
corporation (the "Company"), and all of the stockholders of the Company, which
stockholders are listed on the signature page hereto under the heading
"Stockholders" (each, a "Stockholder", and collectively, the "Stockholders").
RECITALS
WHEREAS, the board of directors of MBS, MBHAI and the Company have
adopted this Agreement and Plan of Merger, providing for the merger of MBHAI
with and into the Company (the "Merger") under the Nevada Revised Statutes (the
"NRS") in accordance with the provisions of this Agreement and have recommended
the Merger to their respective shareholders and members for approval;
WHEREAS, the parties intend for the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the Code (as defined
below).
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement but not otherwise defined shall
have the meanings ascribed thereto in Exhibit A attached hereto.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, MBHAI will be merged with and into the Company in
accordance with this Agreement, and the separate existence of MBHAI shall cease,
and the Company shall continue as the surviving entity and wholly owned
subsidiary of MBH. The Company as it exists from and after the Effective Time,
is sometimes referred to hereinafter as the "Surviving Company."
2.2 Effect of the Merger. Upon the effectiveness of the Merger, the
Surviving Company shall possess all the rights, privileges, immunities and
franchises, as well of a public as of a private nature, and be subject to all
the restrictions, disabilities and duties, of each of the Constituent Companies;
and all property, real, personal and mixed, and all debts due to any of the
Constituent Companies on whatever account, including subscriptions to shares,
and all other things in action and all and every other interest, of or belonging
to each of the Constituent Companies, shall be vested in the Surviving Company
without further act or deed and without any transfer or assignment having
occurred; and all property, rights, privileges, immunities and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Company as they were of the Constituent Companies, and the title
to any real estate vested by deed or otherwise in either of the Constituent
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Companies shall not revert or be in any way impaired by reason of the Merger;
but all rights of creditors and all liens upon any property of either of the
Constituent Companies shall be preserved unimpaired, and all debts, liabilities
and duties of the Constituent Companies shall thenceforth attach to the
Surviving Company, and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it; and all
other effects of the Merger specified in the NRS shall result therefrom.
2.3 Consummation of the Merger. As soon as practicable after the
satisfaction or waiver of the conditions to this Agreement, the parties hereto
will cause the Merger to be consummated by filing with the appropriate agency of
the State of Nevada properly executed Articles of Merger, substantially in the
form attached as Exhibit B, incorporating, to the extent required by the laws of
the State of Nevada, this Agreement.
2.4 Articles of Incorporation; Directors and Officers. The Articles of
Incorporation of the Company from and after the Effective Time shall be the
Articles of Incorporation of the Surviving Company until thereafter amended in
accordance with the provisions therein and as provided by the NRS. The directors
of the Company shall be the directors of the Surviving Company, until their
successors are duly elected and qualified, and the officers of the Company shall
be the officers of the Surviving Company holding such positions immediately
prior to the Effective Time until their respective successors are duly appointed
and qualified.
2.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, MBHAI or any holder of
any interest as a member of the Company or MBHAI:
(a) All shares of Company Common Stock shall automatically be converted
into the right to receive a proportionate share of an aggregate of 5,000,000
shares of duly authorized, validly issued, fully paid and non-assessable shares
of MBS Common Stock, without interest (the "Merger Price"), which proportionate
share is set forth in Exhibit C attached hereto.
(b) The outstanding shares of MBAI Common Stock shall be converted into
one thousand (1000) shares of the issued and outstanding common stock of the
Surviving Company.
2.6 Merger Payment Procedure. As soon as practicable after the
Effective Time, the Surviving Company will distribute to holders of record of
Company Common Stock so converted, a certificate representing the proportionate
share of MBS Common Stock due as a result of the Merger, as provided in Exhibit
C. In no event shall any holder of Company Common Stock be entitled to receive
interest on account of any shares of MBS Common Stock due as a result of the
Merger.
2.7 Closing of the Company Books. At the Effective Time, the books of
the Company shall be closed and no transfer of shares of Company Common Stock
shall thereafter be made.
2.8 Reorganization under Section 368(a) of the Code. The parties intend
that the Merger will qualify as a tax-free reorganization under Section 368(a)
of the Code and this Agreement are to be interpreted to that effect. Each party
agrees to render to the other parties reasonable assistance to preserve that tax
treatment, however, no representation is made by any party hereto as to whether
the transactions contemplated hereby will so qualify.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
STOCKHOLDERS
The Company and the Stockholders represent and warrant to MBHAI and MBS
that the statements contained in this Article III are true and correct as of the
date hereof and will be true and correct as of the Closing Date as if made on
such date, except as set forth in the Schedules delivered by the Company to MBS
concurrently herewith and which are attached hereto. Notwithstanding any
provision in this Agreement to the contrary, any representation or warranty made
by a Stockholder is made only with respect to the Company and himself or herself
and not with respect any other Stockholder.
3.1 Organization. The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Nevada. The Company
(a) is qualified or licensed in all jurisdictions where such qualification or
license is required to own and operate its properties and conduct its business
in the manner and at the places presently conducted; (b) holds all franchises,
grants, licenses, certificates, permits, consents and orders, all of which are
valid and in full force and effect, from all applicable United States and
foreign regulatory authorities necessary to own and operate its properties and
to conduct its business in the manner and at the places presently conducted; and
(c) has full power and authority (corporate and other) to own, lease and operate
its respective properties and assets and to carry on its business as presently
conducted and as proposed to be conducted, except, in each case, where the
failure to be so qualified or licensed or to hold such franchises, grants,
licenses, certificates, permits, consents and orders or to have such power and
authority would not, when taken together with all other such failures,
reasonably be expected to have a Material Adverse Effect with respect to the
Company, as the case may be. The Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
3.2 Capital Structure.
(a) As of the Effective Date, the authorized capital stock of the
Company consists of 1,000 shares of Company Common Stock, and no shares of
preferred stock, par value $0.01 per share. As of the Effective Date, (i) 1,000
shares of Company Common Stock and no shares of preferred stock were issued and
outstanding, (ii) no options or warrants for shares of Company Common Stock were
issued and outstanding; and (iii) no shares of Company Common Stock were held in
the treasury of the Company. All the outstanding shares of Company Common Stock
are duly authorized, validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having voting rights (or
convertible or exchangeable into securities having such rights) ("Company Voting
Debt") of the Company issued and outstanding. Except as set forth above, there
are no equity interests of the Company authorized, issued or outstanding and
there are no existing (i) options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible or exchangeable securities,
agreements, arrangements or commitments of any character, relating to the issued
or unissued equity interests of the Company, obligating the Company to issue,
transfer or sell or cause to be issued, transferred or sold any equity interest
or Company Voting Debt of, or other equity interest in, the Company, (ii)
securities convertible into or exchangeable for such equity interests or (iii)
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obligations of the Company or to grant, extend or enter into any such option,
warrant, call, preemptive right, subscription or other right, convertible
security, agreement, arrangement or commitment.
(b) There are no voting trusts, proxies, shareholders agreements or
other agreements or understandings to which the Company is a party with respect
to the voting or transfer of the equity interests or capital stock of the
Company. The Company is not a party to any agreement or obligation, contingent
or otherwise, to redeem, repurchase or otherwise acquire or retire any equity
interests of the Company, whether as a result of the transactions contemplated
by this Agreement or otherwise.
(c) The Company has not (i) made or agreed to make any split of its
equity interests or dividend, or issued or permitted to be issued any equity
interests, or securities exercisable for or convertible into equity interests,
of the Company, (ii), repurchased, redeemed or otherwise acquired any equity or
membership interests of the Company, or (iii) declared, set aside, made or paid
any dividends or other distributions on the outstanding equity interests of the
Company.
3.3 Authorization and Validity. Each of the Company and the
Stockholders has the appropriate power and authority and legal right to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery by the Company and the Stockholders of this Agreement and
the performance of their respective obligations hereunder have been duly
authorized by proper corporate and other proceedings, and this Agreement
constitutes the legal, valid and binding obligation of the Company and the
Stockholders enforceable against it and them in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
3.4 No Conflict; Government Consent. Neither the execution and delivery
by the Company or the Stockholders of this Agreement, nor the consummation of
the transactions therein contemplated, nor compliance with the provisions
thereof will violate (a) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Company or the Stockholders, or (b)
the Company's articles of incorporation or bylaws, (c) the provisions of any
indenture, instrument or agreement to which the Company is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of the Company pursuant to the
terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by the Company or the Stockholders is required to be
obtained by the Company or the Stockholders in connection with the execution and
delivery of this Agreement, or the legality, validity, binding effect or
enforceability of any of this Agreement. Except as set forth in Schedule 3.4, no
consent, approval or authorization of, or notice to, any other person or entity,
including, without limitation, parties to loans, contracts, leases or other
agreements, is required in connection with the execution, delivery and
performance of this Agreement by the Company or the Stockholders or the
consummation by it of the transactions contemplated hereby.
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3.5 Company Financial Statements.
(a) The Company has delivered to MBS the following financial statements
of the Company: (i) unaudited balance sheet of the Company as of December 31,
2002 and the related statements of operations, members' equity and cash flows
for the year ended December 31, 2002 and (ii) unaudited balance sheets of the
Company as of September 30, 2003 (the "Company's Latest Balance Sheet") and the
related statements of operations, members' equity and cash flows for the three
months then ended.
(b) Each of the unaudited financial statements of the Company have been
prepared in accordance with GAAP, applied on a consistent basis during the
relevant periods (except as may be disclosed in the notes thereto), and present
fairly the consolidated financial position and consolidated results of
operations and changes in cash flows of the Company as of the respective dates
or for the respective periods reflected therein, except, in the case of the
unaudited interim financial statements, for normal and recurring year-end
adjustments that are not material.
(c) Except as set forth in Schedule 3.5(c) and on the Company's Latest
Balance Sheet, or in the notes thereto, the Company does not have any
liabilities, debts, claims or obligations of any nature (whether accrued,
absolute, direct or indirect, contingent or otherwise, whether due or to become
due), and there is no existing condition or set of circumstances which would
reasonably be expected, individually or in the aggregate, to result in such a
liability.
3.6 Liabilities and Obligations. Except as set forth in Schedule 3.6,
the Financial Statements reflect all liabilities of the Company, accrued,
contingent or otherwise (known or unknown and asserted or unasserted), arising
out of transactions effected or events occurring on or prior to the date hereof.
All reserves shown in the Financial Statements are appropriate, reasonable and
sufficient to provide for losses thereby contemplated. Except as set forth in
the Financial Statements, the Company is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity.
3.7 Employee Matters.
(a) Schedule 3.7(a) contains a complete and accurate list of the names,
titles and cash compensation, including without limitation wages, salaries,
bonuses (discretionary and formula) and other cash compensation (the "Cash
Compensation") of all employees of the Company who are currently compensated at
a rate in excess of $50,000 per year and who earned in excess of such amount
during the Company's preceding fiscal year. In addition, Schedule 3.7(a)
contains a complete and accurate description of (i) all increases in Cash
Compensation of employees of the Company during the current and immediately
preceding fiscal years of the Business and (ii) any promised increases in Cash
Compensation of employees of the Company that have not yet been effected.
(b) Schedule 3.7(b) contains a complete and accurate list of all
compensation plans, arrangements or practices (the "Compensation Plans")
sponsored by the Company or to which the Company contributes on behalf of its
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employees, other than Employee Benefit Plans listed in Schedule 3.7(a). The
Compensation Plans include without limitation plans, arrangements or practices
that provide for severance pay, deferred compensation, incentive, bonus or
performance awards, and stock ownership or stock options.
(c) Schedule 3.7(c) contains a complete and accurate list of all
employment agreements (the "Employment Agreements") to which the Company is a
party with respect to its employees or is otherwise obligated.
(d) Schedule 3.7(d) contains a complete and accurate list of all
employee manuals, policies, procedures and work-related rules (the "Employee
Policies and Procedures") that apply to employees of the Company.
(e) The Company: (i) has been and is in compliance with all laws,
rules, regulations and ordinances respecting employment and employment
practices, terms and conditions of employment and wages and hours; and (ii) is
not liable for any arrears of wages or penalties for failure to comply with any
of the foregoing. The Company has not engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin, age
or handicap in its employment conditions or practices. There are no: (i) unfair
labor practice charges or complaints or racial, color, religious, sex, national
origin, age or handicap discrimination charges or complaints pending or
threatened against the Company before any federal, state or local court, board,
department, commission or agency nor does any basis therefor exist; or (ii)
existing or threatened labor strikes, disputes, grievances, controversies or
other labor troubles affecting the Company, nor does any basis therefor exist.
(f) The Company has never been a party to any agreement with any union,
labor organization or collective bargaining unit. No employees of the Company
are represented by any union, labor organization or collective bargaining unit.
To the best knowledge of the Company, the employees of the Company have no
intention to and have not threatened to organize or join a union, labor
organization or collective bargaining unit.
(g) All employees of the Company are citizens of, or are authorized to
be employed in, the United States.
3.8 Employee Benefit Plans.
(a) Schedule 3.8(a) contains a complete and accurate list of all
employee benefit plans (the "Employee Benefit Plans") (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) sponsored by the Company or to which the Company contributes or may
be obligated to contribute on behalf of its employees and all Employee Benefit
Plans previously sponsored or contributed to on behalf of the Company's or
Shareholder's employees within the three years preceding the date hereof. Each
Employee Benefit Plan has been administered and maintained in compliance with
all laws, rules and regulations. No Employee Benefit Plan is currently the
subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency. No prohibited transactions
(within the meaning of Section 4975 of the Code) have occurred with respect to
any Employee Benefit Plan. No threatened or pending claims, suits or other
proceedings exist with respect to any Employee Benefit Plan other than normal
benefit claims filed by participants or beneficiaries.
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(b) The Company has received a favorable determination letter or ruling
from the Internal Revenue Service for each Employee Benefit Plan intended to be
qualified within the meaning of Section 401(a) of the Code and/or tax-exempt
within the meaning of Section 501(a) of the Code. No proceedings exist or have
been threatened that could result in the revocation of any such favorable
determination letter or ruling. No accumulated funding deficiency (within the
meaning of Section 412 of the Code), whether waived or unwaived, exists with
respect to any Employee Benefit Plan or any plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B) of the Code) in
which the Company is a member (a "Controlled Group"). With respect to each
Employee Benefit Plan subject to Title IV of ERISA, the assets of each such plan
are at least equal in value to the present value of accrued benefits determined
on an ongoing basis as of the date hereof. With respect to each Employee Benefit
Plan described in Section 501(c)(9) of the Code, the assets of each such plan
are at least equal in value to the present value of accrued benefits as of the
date hereof. Neither the Company or any member of a Controlled Group has any
liability to pay excise taxes with respect to any Employee Benefit Plan under
applicable provisions of the Code or ERISA. Neither the Company nor any member
of a Controlled Group is or ever has been obligated to contribute to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(c) No facts or circumstances exist that would result in the imposition
of liability against Purchaser by the Pension Benefit Guaranty Corporation as a
result of any act or omission by the Company or any member of a Controlled
Group. No reportable event (within the meaning of Section 4043 of ERISA) for
which the notice requirement has not been waived has occurred with respect to
any Employee Benefit Plan subject to the requirements of Title IV of ERISA. the
Company has no obligation or commitment to provide medical, dental or life
insurance benefits to or on behalf of any of its employees who may retire or any
of its former employees who have retired from employment with the Company
(d) Schedule 3.8(d) contains a complete and accurate list of all claims
made (without identifying specific individuals) under any medical or dental care
plan or commitment offered by the Company to its employees involving
hospitalization, medical or dental care claims that have exceeded $5,000 per
year for an individual during the Company's current fiscal year or any of
Shareholder three fiscal years preceding the date hereof.
3.9 Title; Leased Assets. A description of all interests in real
property owned by the Company (collectively, the "Real Property") is set forth
in Schedule 3.9(a). Except as set forth in Schedule 3.9(a), the Company has
good, valid and marketable title to all the Real Property. Except as set forth
in Schedule 3.9(b), the Company has good, valid and marketable title to all
tangible and intangible personal property owned by it (collectively, the
Personal Property"). A list of all leases of real and personal property to which
the Company is a party, either as lessor or lessee, are set forth in Schedule
3.9(c). All such leases are valid and enforceable in accordance with their
respective terms except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. Except for those assets acquired since September 30, 2003,
all tangible and intangible assets used in the conduct of the business of the
Company are reflected in the Financial Statements in a manner that is in
conformity with generally accepted accounting principles applied on a consistent
basis with prior periods. the Company owns, leases or otherwise possesses a
right to use all assets used in the conduct of the business of the Company,
which will not be impaired by the consummation of the transactions contemplated
hereby.
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3.10 Commitments.
(a) Except as set forth in Schedule 3.10, the Company has not entered
into, nor are the Membership Interests, or the assets of the Company bound by,
whether or not in writing, any (i) partnership or joint venture agreement; (ii)
deed of trust or other security agreement; (iii) guaranty or suretyship,
indemnification or contribution agreement or performance bond; (iv) employment,
consulting or compensation agreement or arrangement, including the election or
retention in office of any director or officer; (v) labor or collective
bargaining agreement; (vi) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent to
another; (vii) deed or other document evidencing an interest in or contract to
purchase or sell real property; (viii) agreement with dealers or sales or
commission agents, public relations or advertising agencies, accountants or
attorneys; (ix) lease of real or personal property, whether as lessor, lessee,
sublessor or sublessee; (x) agreement between the Company and any affiliate of
the Company; (xi) agreement relating to any material matter or transaction in
which an interest is held by a person or entity that is an affiliate of the
Company; (xii) any agreement for the acquisition of services, supplies,
equipment or other personal property and involving more than $25,000 in the
aggregate; (xiii) powers of attorney; (xiv) contracts containing noncompetition
covenants; (xv) any other agreement or commitment not made in the ordinary
course of business or that is material to the business or financial condition of
the Company.
All of the foregoing are hereinafter collectively referred to as the
"Commitments." There are no existing defaults, events of default or events,
occurrences, acts or omissions that, with the giving of notice or lapse of time
or both, would constitute defaults by the Company, and no penalties have been
incurred nor are amendments pending, with respect to the Commitments, except as
described in Schedule 3.10. The Commitments are in full force and effect and are
valid and enforceable obligations of the parties thereto in accordance with
their respective terms, and no defenses, off-sets or counterclaims have been
asserted or, to the best knowledge of the Company and Shareholders, may be made
by any party thereto, nor has the Company waived any rights thereunder. The
Company has not received notice of any default with respect to any Commitment.
(b) Except as contemplated hereby, neither the Company nor the
Stockholders has received notice of any plan or intention of any other party to
any Commitment to exercise any right to cancel or terminate any Commitment, and
neither the Company nor the Stockholders knows of any fact that would justify
the exercise of such a right. Neither the Company nor the Stockholders currently
contemplates, or has reason to believe any other person or entity currently
contemplates, any amendment or change to any Commitment. Except as listed in
Schedule 3.10, none of the customers or suppliers of the Company has refused, or
communicated that it will or may refuse, to purchase or supply goods or
services, as the case may be, or has communicated that it will or may
substantially reduce the amounts of goods or services that it is willing to
purchase from, or sell to, the Company.
3.11 Adverse Agreements. the Company is not a party to any agreement or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule or regulation that materially
and adversely affects, or so far as the Company or the Stockholders can now
foresee, may in the future materially and adversely affect, the condition
(financial or otherwise), operations, assets, liabilities, business or prospects
of the Company.
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3.12 Insurance. A list of all insurance policies of the Company are set
forth in Schedule 3.12. All of such policies are valid and enforceable policies,
issued by insurers of recognized responsibility in amounts and against such
risks and losses as is customary in the industry of the insured. Such insurance
shall be outstanding and duly in force without interruption up to and including
the Closing Date.
3.13 Patents, Trade-marks, Service Marks and Copyrights.
(a) The Company owns all patents, trade-marks, service marks and
copyrights, if any, necessary to conduct its business, or possesses adequate
licenses or other rights, if any, therefor, without conflict with the rights of
others. Set forth in Schedule 3.13 is a true and correct description of the
following (the "Proprietary Rights"): (i) all trade-marks, trade-names, service
marks and other trade designations, including common law rights, registrations
and applications therefor, and all patents, copyrights and applications
currently owned, in whole or in part, by the Company with respect to the
business of the Company, and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which the Company is a party
(including expiration date if applicable); and (ii) all agreements relating to
technology, know-how or processes that the Company is licensed or authorized to
use by others, or which it licenses or authorizes others to use.
(b) The Company has the sole and exclusive right to use the Proprietary
Rights without infringing or violating the rights of any third parties. Use of
the Proprietary Rights does not require the consent of any other person and the
Proprietary Rights are freely transferable. No claim has been asserted by any
person to the ownership of or right to use any Proprietary Right or challenging
or questioning the validity or effectiveness of any license or agreement
constituting a part of any Proprietary Right, and neither the Company nor any
Shareholder knows of any valid basis for any such claim. Each of the Proprietary
Rights is valid and subsisting, has not been cancelled, abandoned or otherwise
terminated and, if applicable, has been duly issued or filed.
(c) The Company and the Stockholders have no knowledge of any claim
that, or inquiry as to whether, any product, activity or operation of the
Company infringes upon or involves, or has resulted in the infringement of, any
proprietary right of any other person, corporation or other entity; and no
proceedings have been instituted, are pending or are threatened that challenge
the rights of the Company with respect thereto.
3.14 Trade Secrets and Customer Lists. The Company has the right to
use, free and clear of any claims or rights of others all trade secrets,
customer lists and proprietary information required for the marketing of all
merchandise and services formerly or presently sold or marketed by the Company.
The Company is not using or in any way making use of any confidential
information or trade secrets of any third party, including without limitation
any past or present employee of the Company.
3.15 Material Adverse Change. Since September 30, 2003, there has been
no change in the business, property, condition (financial or otherwise) or
results of operations of the Company which could reasonably be expected to have
a Material Adverse Effect with respect to the Company.
3.16 Taxes. The Company has filed all United States federal tax returns
and all other tax returns which are required to be filed and have paid all taxes
due pursuant to said returns or pursuant to any assessment received by the
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Company, except such taxes, if any, as are being contested in good faith and as
to which adequate reserves have been provided on the Company Latest Balance
Sheet and as to which no Lien exists. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Company in respect of any taxes or other
governmental charges are adequate. The Company is taxable as a "C" corporation
for federal income tax purposes.
3.17 Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
best knowledge of any of its officers, threatened against or affecting the
Company. The Company has no contingent obligations not provided for or disclosed
in the Company Latest Balance Sheet.
3.18 Material Agreements. Schedule 3.18 lists all agreements,
contracts, leases, licenses and other instruments to which the Company is a
party.
3.19 Compliance With Laws. The Company has complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof having jurisdiction over the
conduct of their respective businesses or the ownership of their respective
Property except for any failure to comply with any of the foregoing which could
not reasonably be expected to have a Material Adverse Effect with respect to the
Company.
3.20 Information Furnished to the Company and Stockholders. The Company
and each of the Stockholders have been provided with, and is familiar with, the
financial and other information regarding the business and operations of MBS,
including, but not limited to, the MBS SEC Documents that the Company and the
Stockholders deem necessary for evaluating the merits and risks of the
transactions contemplated by this Agreement. Each of the Stockholders are
knowledgeable and experienced in financial and business matters and is capable
of evaluating the merits and risks of the transactions contemplated by this
Agreement.
3.21 Investment Purposes. The Stockholders are acquiring the MBS Common
Stock for investment purposes and not with a view toward resale or distribution
thereof, and has no present intention of selling, granting any participation in,
or otherwise distributing the MBS Common Stock.
3.22 Restricted Securities. The Stockholders understand that the shares
of MBS Common Stock will be issued by MBS pursuant to an exemption from the
registration requirements of the Securities Act, and are characterized as
"restricted securities" under the Securities Act and may be resold without
registration under the Securities Act only in limited circumstances. In
connection with the foregoing, each of the Stockholders is familiar with Rule
144 and understand the resale limitations imposed thereby on the MBS Common
Stock.
3.23 Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
the Company or any of its officers, directors or agents or the Stockholders with
respect to the transactions contemplated by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES MBS AND MBHAI
MBS and MBHAI represent and warrant to the Company and the Stockholders
that the statements contained in the Article IV are true and correct as of the
date hereof and will be true and correct as of the Closing Date as if made on
such date, except as set forth in the Schedules delivered by MBS to the Company
concurrently herewith.
4.1 Organization. MBS is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Texas. MBHAI is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Nevada. Each of MBHAI and MBS (a) is qualified or licensed
in all jurisdictions where such qualification or license is required to own and
operate its properties and conduct its business in the manner and at the places
presently conducted; (b) holds all franchises, grants, licenses, certificates,
permits, consents and orders, all of which are valid and in full force and
effect, from all applicable United States and foreign regulatory authorities
necessary to own and operate its properties and to conduct its business in the
manner and at the places presently conducted; and (b) has full power and
authority (corporate and other) to own, lease and operate its respective
properties and assets and to carry on its business as presently conducted and as
proposed to be conducted, except, in each case, where the failure to be so
qualified or licensed or to hold such franchises, grants, licenses,
certificates, permits, consents and orders or to have such power and authority
would not, when taken together with all other such failures, reasonably be
expected to have a Material Adverse Effect with respect to MBHAI or MBS, as the
case may be. Except for MBS' ownership of the equity interest in MBHAI or as
otherwise as contemplated herein, neither MBHAI nor MBS directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
4.2 Capital Structure.
(a) As of the Effective Date, the authorized capital stock of MBS
consists of 20,000,000 shares of MBS Common Stock, and 5,000,000 shares of
preferred stock, par value $0.01 per share. As of the Effective Date, (i)
822,810 shares of MBS Common Stock and no shares of preferred stock were issued
and outstanding, (ii) options for 42,500 shares of MBS Common Stock were issued
and outstanding; and (iii) no shares of MBS Common Stock were held in the
treasury of the Company. All the outstanding shares of MBS Common Stock are duly
authorized, validly issued, fully paid and non-assessable. As of the Effective
Date, MBS is the sole stockholder of MBHAI. There are no bonds, debentures,
notes or other indebtedness having voting rights (or convertible or exchangeable
into securities having such rights) ("Voting Debt") of MBS or MBHAI issued and
outstanding. Except as set forth above, there are no equity interests of MBS or
MBHAI authorized, issued or outstanding and there are no existing (i) options,
warrants, calls, preemptive rights, subscriptions or other rights, convertible
or exchangeable securities, agreements, arrangements or commitments of any
character, relating to the issued or unissued equity interests of MBS or MBHAI,
obligating MBS or MBHAI to issue, transfer or sell or cause to be issued,
transferred or sold any equity interest or Voting Debt of, or other equity
interest in, MBS or MBHAI, (ii) securities convertible into or exchangeable for
such equity interests or (iii) obligations of MBS or MBHAI to grant, extend or
11
enter into any such option, warrant, call, preemptive right, subscription or
other right, convertible security, agreement, arrangement or commitment. MBS has
not granted to any Person any rights to have any securities registered under the
Securities Act.
(b) There are no voting trusts, proxies, shareholders agreements or
other agreements or understandings to which MBS is a party with respect to the
voting or transfer of the equity interests or capital stock of MBS. MBS is not a
party to any agreement or obligation, contingent or otherwise, to redeem,
repurchase or otherwise acquire or retire any equity interests of MBS, whether
as a result of the transactions contemplated by this Agreement or otherwise.
(c) MBS has not (i) made or agreed to make any split of its equity
interests or dividend, or issued or permitted to be issued any equity interests,
or securities exercisable for or convertible into equity interests, of MBS,
(ii), repurchased, redeemed or otherwise acquired any equity or membership
interests of MBS, or (iii) declared, set aside, made or paid any dividends or
other distributions on the outstanding equity interests of MBS.
4.3 Authorization and Validity. Each of MBHAI and MBS has the
appropriate power and authority and legal right to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by MBHAI and MBS of this Agreement and the performance of their respective
obligations hereunder have been duly authorized by proper corporate and other
proceedings, and this Agreement constitutes the legal, valid and binding
obligation of MBHAI and MBS enforceable against it and them in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally.
4.4 No Conflict; Government Consent. Neither the execution and delivery
by MBHAI and MBS of this Agreement, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
(a) any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on MBHAI or MBS, or (b) MBS' or MBHAI's articles of incorporation
or bylaws, (c) the provisions of any indenture, instrument or agreement to which
either MBHAI or MBS is a party or is subject, or by which it, or its Property,
is bound, or conflict with or constitute a default thereunder, or result in, or
require, the creation or imposition of any Lien in, of or on the Property of
MBHAI or MBS pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, adjudication, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by MBHAI, MBS or the MBS
Shareholder is required to be obtained by MBHAI or MBS in connection with the
execution and delivery of this Agreement, or the legality, validity, binding
effect or enforceability of any of this Agreement. Except as set forth in
Schedule 4.4, no consent, approval or authorization of, or notice to, any other
person or entity, including, without limitation, parties to loans, contracts,
leases or other agreements, is required in connection with the execution,
delivery and performance of this Agreement by MBHAI or MBS or the consummation
by it of the transactions contemplated hereby.
4.5 MBS Financial Statements.
(a) MBS has filed all forms, reports, statements, schedules,
registration statements and other documents required to be filed with the SEC
since January 1, 2000 (the "MBS SEC Documents"), each of which complied in all
material respects with the applicable requirements of the Securities Act, and
12
the rules and regulations promulgated thereunder, or the Exchange Act and the
rules and regulations promulgated thereunder, each as in effect on the date so
filed. No Subsidiary of MBS is required to file any form, report, statement,
schedule, registration statement or other document with the SEC. No MBS SEC
Document, when filed (or, if amended or superseded by a filing prior to the
Closing Date, on the date of such filing) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated financial statements
of MBS (including any related notes thereto) included in the MBS SEC Documents
have been prepared in accordance with GAAP, applied on a consistent basis during
the relevant periods (except as may be disclosed in the notes thereto), and
present fairly the consolidated financial position and consolidated results of
operations and changes in cash flows of MBS and its Subsidiaries as of the
respective dates or for the respective periods reflected therein, except, in the
case of the unaudited interim financial statements, for normal and recurring
year-end adjustments that are not material.
(c) Except as set forth in Schedule 4.5(c) and on the balance sheet of
MBS as of March 31, 2003 included in the MBS SEC Documents (the "MBS Latest
Balance Sheet"), or in the notes thereto, MBS does not have any liabilities,
debts, claims or obligations of any nature (whether accrued, absolute, direct or
indirect, contingent or otherwise, whether due or to become due), and there is
no existing condition or set of circumstances which would reasonably be
expected, individually or in the aggregate, to result in such a liability.
(d) MBHAI is a newly formed entity, formed for the purpose of the
Merger, and has no assets or liabilities of any kind whatsoever.
4.6 Material Adverse Change. Since June 30, 2003, there has been no
change in the business, property, condition (financial or otherwise) or results
of operations of MBS which could reasonably be expected to have a Material
Adverse Effect with respect to MBS.
4.7 Taxes. MBS has filed all United States federal tax returns and all
other tax returns which are required to be filed and have paid all taxes due
pursuant to said returns or pursuant to any assessment received by MBS, except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided on the MBS Latest Balance Sheet and as to
which no Lien exists. No tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves on
the books of MBS in respect of any taxes or other governmental charges are
adequate. MBS is taxable as a "C" corporation for federal income tax purposes.
4.8 Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
best knowledge of any of its officers, threatened against or affecting MBS. MBS
has no contingent obligations not provided for or disclosed in the MBS Latest
Balance Sheet.
13
4.9 Material Agreements. Schedule 4.9 lists all agreements, contracts,
leases, licenses and other instruments to which MBS is a party.
4.10 Compliance With Laws. MBS has complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof having jurisdiction over the
conduct of their respective businesses or the ownership of their respective
Property except for any failure to comply with any of the foregoing which could
not reasonably be expected to have a Material Adverse Effect with respect to
MBS.
4.11 Operations. MBHAI has ever had any operations.
4.12 Issuance of MBS Common Stock. The shares of MBS Common Stock to be
delivered to the Stockholders hereunder have been duly and validly authorized
and when issued in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable and will not have been issued in violation
of any statutory preemptive rights, or any other preemptive right, co-sale
right, right of first refusal or other similar right.
4.13 Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
MBHAI, MBS or any of its officers, directors or agents or the MBS Shareholder
with respect to the transactions contemplated by this Agreement.
ARTICLE V
CLOSING
5.1 Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxx
L.L.P., 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx, 00000 on or
before November 30, 2003, or such other date as mutually agreed to by the
parties (the "Closing Date")
5.2 MBHAI and MBS Conditions. The obligation of MBHAI and MBS to
consummate the transactions contemplated under this Agreement is subject to the
satisfaction, prior to or at the Closing, of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company and the Stockholders contained in Article III shall be true and
correct in all material respects and the covenants and agreements of such
parties set forth in Article VI shall have been complied with at and as of the
Closing Date as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein.
(b) Consents. The Company and the Stockholders shall have received all
approvals and consents required under its loan agreements, leases, and
indentures, shareholders agreements or other debt documents or contracts
necessary to consummate the transactions contemplated herein, including without
limitation, those set forth on Schedule 3.4.
(c) Acquisition of EnvoiiHealthcare, L.L.C. The Company shall have
completed the acquisition of EnvoiiHealthcare, L.L.C., a Nevada limited
liability company.
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(d) No Injunctions. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction prohibiting or imposing any condition on the consummation
of any of the transactions contemplated hereby.
5.3 The Company and the Stockholders Conditions. The obligation of the
Company and the Stockholders to consummate the transactions contemplated under
this Agreement is subject to the satisfaction, prior to or at the Closing, of
the following conditions:
(a) Representations and Warranties. The representations and warranties
of MBHAI and MBS contained in Article IV hereof shall be true and correct in all
material respects and the covenants and agreements of such parties set forth in
Article VI shall have been complied with at and as of the Closing Date as though
then made, except to the extent of changes caused by the transactions expressly
contemplated herein.
(b) Consents. The MBHAI and MBS shall have received all approvals and
consents required under their respective loan agreements, leases, and
indentures, shareholders agreements or other debt documents or contracts
necessary to consummate the transactions contemplated herein including without
limitation, those set forth on Schedule 4.4.
(c) No Injunctions. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction prohibiting or imposing any condition on the consummation
of any of the transactions contemplated hereby.
5.4 Closing Deliverables.
(a) At the Closing, the Company will have delivered or caused to be
delivered to MBS all of the following in form and substance satisfactory to MBS:
(i) a certificate of the secretary of the Company,
certifying (A) that a true, correct and complete copy
of the articles of incorporation of the Company is
attached, and (B) that a true, correct and complete
copy of the bylaws of the Company is attached;
(ii) copies of the resolutions unanimously and duly
adopted by the Company's board of directors,
authorizing the execution, delivery and performance
by the Company of this Agreement, and the
consummation of all of the other transactions
hereunder and thereunder, certified as of the Closing
Date by the secretary of the Company;
(iii) a certificate dated as of the Closing Date from an
officer of the Company and from each of the
Stockholders stating that the conditions specified in
Section 5.2 have been fully satisfied or waived by
the Company and the Stockholders, as applicable; and
(iv) a certificate of good standing and existence form the
Secretary of State of the State of Nevada, of a
recent date, with respect to the Company.
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(b) At the Closing, MBS will have delivered or caused to
be delivered to the Company and the Stockholders each
of the following in form and substance satisfactory
to the Company and the Stockholders:
(i) copies of the resolutions unanimously and duly
adopted by the boards of directors of MBS and of
MBHAI, respectively, authorizing the execution,
delivery and performance by MBS and MBHAI of this
Agreement, and the consummation of all of the other
transactions hereunder and thereunder, certified as
of the Closing Date by the secretary of MBS and
MBHAI, as applicable;
(ii) a certificate dated as of the Closing Date from an
officer of each of MBHAI and MBS stating that the
conditions specified in section 5.3 have been fully
satisfied or waived by MBHAI and MBS, as applicable;
(iii) certificates representing an aggregate of 5,000,000
shares of MBS Common Stock, issued to the
Stockholders in accordance with Section 2.5(a) above;
and
(iv) a certificate of existence and good standing from the
Secretaries of State of the States of Texas and
Nevada, each of a recent date, with respect to MBS
and MBHAI, as applicable.
ARTICLE VI
PRE-CLOSING COVENANTS
6.1 Covenants of MBS and MBHAI. After the Effective Date and until the
earlier of (a) the Closing Date or (b) the expiration or termination of this
Agreement, unless the Company shall otherwise consent in writing:
(a) Conduct of Business. MBS will carry on and conduct there respective
businesses in substantially the same manner as it is presently conducted and do
all things necessary to remain duly organized, validly existing and in good
standing in its jurisdiction of organization and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted. MBHAI will not conduct any business of any kind whatsoever.
(b) Compliance with Laws. Each of MBS and MBHAI will comply with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
6.2 Covenants of the Company. After the Effective Date and until the
earlier of (a) the Closing Date, or (b) the expiration or termination of this
Agreement, unless MBS shall otherwise consent in writing;
(a) Conduct of Business. the Company will carry on and conduct its
business in substantially the same manner as it is presently conducted and do
all things necessary to remain duly incorporated or organized, validly existing
and in good standing in its jurisdiction of incorporation or organization an
16
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted. Without limiting the generality of the
foregoing, the Company will not: (i) declare, pay or set aside for payment any
dividend or other distribution payable in cash, stock, property or otherwise in
respect of its equity ownership; or directly or indirectly redeem, purchase,
repurchase (except as required to consummate the transactions contemplated
herein) or otherwise acquire any the Company Common Stock or any securities or
obligations convertible into or exchangeable for any of its the Company Common
Stock, as the case may be; (ii)(A) incur or assume any debt or issue any debt
securities, except under its existing lines of credit, but not exceeding the
current credit limit under such lines of credit, (B) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, (C) make any loans or
advances to any person, other than with respect to extensions of credit to their
respective customers in the ordinary course of business consistent with past
practice, or (D) mortgage or pledge any of its assets, tangible or intangible,
or create any material Lien thereupon; (iii) enter into any lines of business or
otherwise commence operation of any business; or (iv) take any action or agree,
in writing or otherwise, to take any of the foregoing actions or any action
which would make any representation or warranty in Article IV hereof materially
untrue or incorrect.
(b) Compliance with Laws. The Company will comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject.
(c) Merger. Except as contemplated by this Agreement, the Company will
not merge or consolidate with or into any other Person.
(d) Dilution of Ownership. The Company will not consent to or approve
of the issuance of (i) any additional stock, securities or other equity
securities or interests, (ii) any instrument convertible voluntarily by the
Company or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such stock, securities or interests, or
(iii) any warrants, options, contracts or other commitments entitling any third
party to purchase or otherwise acquire any such stock, securities or interests.
6.3 Access. From the Effective Date until the Closing Date (or the
termination of this Agreement), each party shall afford to the other party and
such other party's representatives reasonable access, upon reasonable notice
during normal business hours, to all its properties, books, contracts,
commitments, personnel and records and shall furnish promptly to such other
party all information concerning its business, properties and personnel as may
reasonably be requested. All such information as may be furnished by or on
behalf of a party to another party or such other party's representatives
pursuant to this Section 6.3 shall be and remain confidential. No investigation
pursuant to this Section 6.3 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto.
6.4 Notification of Certain Matters. Each of the Company, MBHAI, MBS,
and the Stockholders shall promptly advise the other parties orally and in
writing of (a) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (b) the failure by it
to comply with or satisfy in any material respect any covenant, condition or
17
agreement to be complied with or satisfied by it under this Agreement or (c) any
event or change or impending occurrence of any event or change of which it has
knowledge and which has resulted, or which, insofar as can reasonably be
foreseen, is likely to result, in any of the conditions to the transactions
contemplated hereby set forth in Article V not being satisfied; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
ARTICLE VII
LIMITATION ON TRANSFER OF HOLDINGS COMMON STOCK
7.1 Restriction on Transfer. The shares of MBS Common Stock to be
issued to the Stockholders in the Merger will not be registered under the
Securities Act on the Closing Date and may not be transferred, sold or otherwise
disposed of by any Stockholder, except pursuant to an effective registration
statement under the Securities Act or in accordance with an exemption from the
registration requirements of the Securities Act.
7.2 Restrictive Legend. Each certificate representing shares of MBS
Common Stock issued by MBS to the Stockholders in accordance with Section 2.5
shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 UNDER THE ACT, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF
ANY STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
BY THE HOLDER WITHOUT COMPLIANCE WITH THE APPLICABLE
SECURITIES AND EXCHANGE COMMISSION RULES AND REGULATIONS.
7.3 Removal of Restrictive Legend. MBS agrees to remove such legend (or
any relevant portion thereof), by prompt delivery of substitute certificates
upon the request of the holder if at such time such legend (or portion thereof)
is no longer required for purposes of, or applicable pursuant to, the prior
provisions of this Article VIII.
ARTICLE VIII
INDEMNIFICATION; TERMINATION
8.1 Indemnification by the Stockholders. Each of the Stockholders
hereby agrees to defend, indemnify and hold MBS and its officers, directors,
shareholders, employees, successors, heirs, assigns, attorneys and
representatives harmless against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
18
of litigation or preparation therefor whether or not MBS is a party thereto)
which MBS may pay or incur arising out of or relating to a breach of any
representation, warranty or covenant of the Company or the Stockholders under
this Agreement. Notwithstanding the foregoing, a Stockholder's obligation to
indemnify MBS shall only apply to the extent (a) that the Company or such
Stockholder breached his representations, warranties or covenants (and not those
of any other Stockholder) and (b) of such Stockholder's Gross Proceeds.
8.2 Indemnification by MBS. MBS agrees to defend, indemnify and hold
the Company and the Stockholders, and their respective officers, directors,
shareholders, members, employees, successors, assigns, attorneys and
representatives harmless against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Company or the
Stockholder is a party thereto) which the Company or the Stockholders may pay or
incur arising out of or relating to a breach of any representation, warranty or
covenant of MBS under this Agreement.
8.3 Survival of Representations and Warranties. The representations and
warranties made by parties in this Agreement and in any certificate or schedule
furnished hereunder shall survive the Effective Time for a period of one (1)
year thereafter. None of the covenants or agreements in this Agreement shall
survive the Effective Time, except for those covenants and agreements contained
herein or therein that by their terms apply or are to be performed in whole or
in part after the Effective Time, including without limitation, the covenants
and agreements contained in Section 8.1 and 8.2 above.
8.4 Termination. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, prior to the Closing as follows:
(a) by mutual written consent of all the parties;
(b) by MBS or MBHAI in the event any of the conditions in Section 5.2
have not been satisfied on or before November 30, 2003 through no fault of MBHAI
or MBS; or
(c) by the Company in the event any of the conditions in Section 5.3
have not been satisfied on or before November 30, 2003, through no fault of the
Company or any of the Stockholders;
8.5 Effect of Termination. If this Agreement is terminated pursuant to
Sections 8.4 all rights and obligations of the parties hereunder shall terminate
without liability of any party to any other party.
ARTICLE IX
GENERAL PROVISIONS
9.1 Headings. Section headings in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
9.2 Expenses. Each of the parties shall bear their own expenses
(including reasonable attorneys' fees and time charges of attorneys) paid or
19
incurred by such party in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification, and administration of this
Agreement and the Merger.
9.3 Entire Agreement; Assignment. This Agreement and the attached
Exhibits and Schedules embodies the entire agreement and understanding among
MBHAI, MBS, the Company and the Stockholders and supersede all prior agreements
and understandings among such parties relating to the subject matter thereof.
This Agreement may not be assigned without the prior written consent of the
other parties.
9.4 Benefits of this Agreement. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.5 Amendment. No amendment or modification to this Agreement shall be
effective, unless in writing and signed by all the parties.
9.6 Severability. Any provision in this Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.
9.7 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party at
(a) its address or facsimile number set forth on the signature pages hereof or
(b) such other address or facsimile number as such party may hereafter specify.
Each such notice, request or other communication shall be effective (i) if given
by facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mail, certified or registered
with first class postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered (or, in the case of electronic transmission,
received) at the address specified in this Section.
9.8 Choice Of Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO ITS CHOICE OF LAWS
PROVISIONS.
9.9 Venue. THE EXCLUSIVE JURISDICTION FOR ANY CLAIM OR CONTROVERSY
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL
COURTS LOCATED IN DALLAS COUNTY, TEXAS AND EACH PARTY HERETO IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
9.10 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement may be executed and delivered by facsimile
copy.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MBH ACQUISITION, INC.
By:______________________________________
Name: Xxxxx X. Xxxxx
Title: President
Address: 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Fax: ___________________________________
MB SOFTWARE CORPORATION
By:______________________________________
Name: Xxxxx X. Xxxxx
Title: President
Address: 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Fax: ___________________________________
MB HOLDING CORPORATION
By:______________________________________
Name: Xxxxx X. Xxxxx
Title: President
Address: 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Fax: ___________________________________
21
STOCKHOLDERS:
_________________________________________
Xxxxx X. Xxxxx
Address:_________________________________
Fax:_____________________________________
_________________________________________
Xxxxxx Xxxxxxxx
Address:_________________________________
Fax:_____________________________________
22
EXHIBIT A
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DEFINITIONS
As used in this Agreement:
"Agreement" means this agreement, as it may be amended or modified and
in effect from time to time.
"Cash Compensation" is defined in Section 3.7(a).
"Closing" is defined in Section 5.1.
"Closing Date" is defined in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitments" is defined in Section 3.10.
"Company" is defined in the preamble to this Agreement.
"Company Voting Debt" is defined in Section 3.2.
"Company's Latest Balance Sheet" is defined in Section 3.5.
"Compensation Plans" is defined in Section 3.7(b).
"Constituent Companies" means the Company and MBHAI.
"Effective Date" is defined in the preamble to this Agreement.
"Effective Time" means the time at which the Articles of Merger are
filed with the Secretary of State of the State of Nevada, in accordance with the
NRS.
"Employee Benefit Plan" is defined in Section 3.8(a).
"Employee Policies and Procedures" is defined in Section 3.7(d).
"Employment Agreement" is defined in Section 3.7(c).
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and any rule and regulation issued thereunder.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
A-1
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied in a consistent manner.
"MBHAI" is defined in the preamble to this Agreement.
"MBS" is defined in the preamble to this Agreement.
"MBS Common Stock" means shares of MBS' common stock, $0.0001 par
value.
"MBS Latest Balance Sheet" is defined in Section 4.5(c).
"MBS SEC Documents" is defined in Section 4.5(a).
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"Material Adverse Effect" means, with respect to a Person, a material
adverse effect on (i) the business, Property, condition (financial or
otherwise), or results of operations of the Person taken as a whole, (ii) the
ability of the Person to perform its obligations under this Agreement, or (iii)
the validity or enforceability of this Agreement or the rights or remedies of
hereunder.
"Company Common Stock" means the Interests of the Stockholders in the
Company (with "Interests" being as defined in the Regulations of the Company,
dated as of November 11, 2002, as amended).
"Merger" is defined in the Recitals to this Agreement.
"NRS" is defined in the Recitals to the Agreement.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Personal Property" is defined in Section 3.9.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Property Rights" is defined in Section 3.13.
"Real Property" is defined in Section 3.9.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule and regulation issued thereunder.
A-2
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
"Substantial Portion" means, with respect to the Property of the
Company, Property which (a) represents more than 10% of the consolidated assets
of the Company as would be shown in the consolidated financial statements of the
Company as at the beginning of the twelve-month period ending with the month in
which such determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Company as
reflected in the financial statements referred to in clause (a) above.
"Surviving Company" is defined in Section 2.1.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes.
"Voting Debt" is defined in Section 4.2.
A-3
EXHIBIT B
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ARTICLES OF MERGER
[See attached document]
B-1
EXHIBIT C
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Exchange ratio
Shares of MB Holding
Name Corporation Shares of MBS Common Stock
---- ----------- --------------------------
Xxxxx X. Xxxxx 661 3,305,000
Xxxxxx Xxxxxxxx 339 1,695,000
1000 5,000,000
======== =============
C-1
SCHEDULES
---------
S-1
