EXHIBIT 99.1
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MERGER AGREEMENT
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THIS MERGER AGREEMENT (the "Agreement") is entered into this 3rd day of
October 2003, by and among NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation
("NeoMedia"), SECURE SOURCE TECHNOLOGIES, INC., a Delaware corporation ("Secure
Source"), and the individuals listed on Schedule A attached hereto
(individually, a "Shareholder" and collectively, the "Shareholders").
RECITALS:
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A. The Shareholders own all of the outstanding capital stock of Secure
Source. The authorized capital stock of Secure Source consists of 10,000 shares
of common stock, par value $0.01 per share, 10,000 of which are issued and
outstanding (the "Secure Source Common Stock").
B. The Shareholders desire to transfer and exchange the Secure Source
Common Stock for newly-issued shares of common stock, par value $0.01 per share,
of NeoMedia (the "NeoMedia Common Stock"), on the terms and conditions set forth
herein and NeoMedia desires to consummate such transfer and exchange pursuant to
the terms and conditions set forth herein.
C. Upon the terms and subject to the conditions set forth in this
Agreement, Secure Source shall merge with and into NeoMedia (the "Merger"), with
NeoMedia being the surviving entity.
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual premises herein set forth
and certain other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. THE MERGER AND RELATED TRANSACTIONS.
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1.1. MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law (the "DGCL") and other applicable law, on the
Closing Date (as defined below), Secure Source shall be merged with and into
NeoMedia, which shall be the surviving corporation (hereinafter sometimes
referred to as the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware. As of the Closing, (as
defined below), the separate existence of Secure Source shall cease. On the
Closing Date and by virtue of the Merger and without any action on the part of
the Shareholders, all of the then issued and outstanding shares of capital stock
of Secure Source shall be automatically canceled and shall entitle the
Shareholders to receive the Merger Consideration (as defined below) set forth in
Section 1.2 hereof.
1.2. MERGER CONSIDERATION AND PAYMENT.
1.2.1. MERGER CONSIDERATION. In consideration of the Merger,
NeoMedia shall issue newly-issued shares of NeoMedia Common Stock to the
Shareholders (the "NeoMedia Shares," also hereinafter sometimes referred to as
the "Merger Consideration") in the denominations set forth opposite each
Shareholder's name on Schedule A attached hereto in exchange for all of the
Secure Source Common Stock. The total number of shares of NeoMedia Common Stock
to be issued to the Shareholders shall be equal to three million five hundred
thousand (3,500,000) shares.
1.2.2. MANNER OF PAYMENT. At Closing, three million five hundred
thousand (3,500,000) shares of NeoMedia Common Stock shall be issued and
delivered to the Shareholders.
1.3. CLOSING. The parties to this Agreement shall file Articles of
Merger (as defined below) pursuant to applicable law, cause the Merger to become
effective and consummate the other transactions contemplated by this Agreement
(the "Closing") no later than October 8 2003; provided, in no event shall the
Closing occur prior to the satisfaction of the conditions precedent set forth in
Sections 6, 7 and 8 hereof. The date of the Closing is referred to herein as the
"Closing Date." The Closing shall take place at the offices of counsel to
NeoMedia, or at such other place as may be mutually agreed upon by NeoMedia and
the Shareholders. At the Closing, (i) the Shareholders shall deliver to NeoMedia
the original stock certificates representing the Secure Source Common Stock,
together with stock powers duly executed in blank; and (ii) NeoMedia shall
deliver to the Shareholders stock certificates representing the NeoMedia Common
Stock.
1.4. PLAN OF MERGER; ARTICLES OF MERGER. The parties to this Agreement
shall cause Secure Source and NeoMedia to enter into a plan of merger on the
date hereof, a copy of which is attached hereto as Exhibit "B" (the "Plan of
Merger"), and, at the Closing, to execute the Articles of Merger in the form
attached hereof as Exhibit "C" (the "Articles of Merger"). The Articles Merger
shall be filed with the Secretary of State of Delaware on the Closing Date in
accordance with the DGCL.
1.5. APPROVAL OF MERGER. By his, her or its execution of this
Agreement, each Shareholder hereby ratifies, approves and adopts the Plan of
Merger for all purposes under applicable law. On or before the execution of this
Agreement, the respective Boards of Directors of NeoMedia and Secure Source
shall have approved this Agreement, the Plan of Merger and the transactions
contemplated hereby and thereby.
2. ADDITIONAL AGREEMENTS.
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2.1. ACCESS AND INSPECTION, ETC. Secure Source and the Shareholders
have allowed and shall allow NeoMedia and its authorized representatives full
access during normal business hours from and after the date hereof and prior to
the Closing Date to all of the properties, books, contracts, commitments and
records of Secure Source for the purpose of making such investigations as
NeoMedia may reasonably request in connection with the transactions contemplated
hereby, and shall cause Secure Source to furnish NeoMedia such information
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concerning its affairs as NeoMedia may reasonably request. Secure Source and the
Shareholders have caused and shall cause the personnel of Secure Source to
assist NeoMedia in making such investigation and shall use their best efforts to
cause the counsel, accountants, and other non-employee representatives of Secure
Source to be reasonably available to NeoMedia for such purposes. The
Shareholders shall cause Secure Source to comply with all obligations of Secure
Source under this Agreement.
2.2. CONFIDENTIAL TREATMENT OF INFORMATION. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Exhibits and Schedules hereto), all
matters relating hereto and all data and information obtained with respect to
the other parties or their business, except such data or information as is
published or is a matter of public record, or as compelled by legal process. In
the event this Agreement is terminated pursuant to Section 10 hereof, each party
shall promptly return to the other(s) any statements, documents, schedules,
exhibits or other written information obtained from them in connection with this
Agreement, and shall not retain any copies thereof.
2.3. PUBLIC ANNOUNCEMENTS. After the date hereof and prior to the
Closing, none of the parties hereto shall make any press release, statement to
employees or other disclosure of this Agreement or the transactions contemplated
hereby without the prior written consent of the other parties, except as may be
required by law. Neither Secure Source nor the Shareholders shall make any such
disclosure unless NeoMedia shall have received prior notice of the contemplated
disclosure and has had adequate time and opportunity to comment on such
disclosure, which shall be satisfactory in form and content to NeoMedia and its
counsel.
2.4. SECURITIES LAW COMPLIANCE. The issuance of the NeoMedia Shares to
the Shareholders hereunder shall not be registered under the Securities Act of
1933, as amended (the "1933 Act"), by reason of the exemption provided by
Section 4(2) thereof, and such shares may not be further transferred unless such
transfer is registered under applicable securities laws or, in the opinion of
NeoMedia's counsel, such transfer complies with an exemption from such
registration. All certificates evidencing the NeoMedia Shares to be issued to
the Shareholders shall be legended to reflect the foregoing restriction.
2.5. PIGGY-BACK REGISTRATION RIGHTS. Subject to the terms and
conditions of this Agreement, NeoMedia shall notify the holder of Registrable
Securities (as defined below) in writing at least ten (10) days prior to the
filing of any registration statement under the 1933 Act for purposes of a public
offering of securities of NeoMedia (including, but not limited to, registration
statements relating to secondary offerings of securities of NeoMedia, but
excluding any registration statement relating to any employee benefit plan) and
will afford each such holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such holder. Each
holder of Registrable Securities desiring to include in any such registration
statement, all of part of the Registrable Securities held by it shall, within
ten (10) days after the above-described notice from NeoMedia, so notify NeoMedia
in writing. Such notice shall state the intended method of disposition of the
Registrable Securities held by such holder. If a holder decides not to include
all of its Registrable Securities in the registration statement thereafter filed
by NeoMedia, such holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by NeoMedia with respect to offerings of
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its securities, all upon the terms and conditions set forth herein. "Registrable
Securities" means the NeoMedia Shares issuable to the Shareholders pursuant to
this Agreement.
2.6. LOCK-UP PERIOD. Each Shareholder hereby acknowledges and agrees
that for a period commencing on the date hereof and expiring one (1) year from
the Closing Date (the "Lock-up Period"), he, she or it shall not, directly or
indirectly, issue, offer, agree or offer to sell, sell, grant an option for the
purchase or sale of, transfer, pledge, assign, hypothecate, distribute or
otherwise encumber or dispose of in excess of an aggregate five hundred thousand
(500,000) shares of the NeoMedia Shares during the first month such shares are
eligible for resale pursuant to an effective registration statement filed by
NeoMedia on behalf of the Shareholders nor in excess of an aggregate six hundred
thousand (600,000) shares of the NeoMedia Shares in any one (1) month period
following the first month after such shares are eligible for resale pursuant to
such registration statement.
2.7. BEST EFFORTS. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use its best efforts in good faith to
take or cause to be taken as promptly as practicable all reasonable actions that
are within its power to cause to be fulfilled those conditions precedent to its
obligations or the obligations of the other parties to consummate the
transactions contemplated by this Agreement that are dependent upon its actions.
2.8. FURTHER ASSURANCES. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including,
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of Secure Source
Common Stock and to consummate the transactions contemplated by this Agreement.
2.9. CONSULTING AGREEMENT. Subject to the terms and conditions
provided in this Agreement, NeoMedia and shareholders shall use their best
efforts in good faith to negotiate, as soon as reasonably practicable following
the successful consummation of the Merger, a consulting agreement with respect
to consulting services to be provided by such individuals to NeoMedia.
2.10. NONCOMPETITION.
2.10.1. COMPETITIVE BUSINESS. From and after the Closing Date and
for a period of one (1) year thereafter (the "Restricted Period"), no
Shareholder shall directly or indirectly compete with the Surviving Corporation
by owning, managing, controlling or participating in the ownership, management
or control of or be employed by or engaged in any Competitive Business (as
defined herein) in any location in the United States in which the Surviving
Corporation are doing business. As used herein, a "Competitive Business" is any
other corporation, partnership, proprietorship, firm or other business entity
which is engaged in a "core business of the Surviving Corporation." A "core
business of the Surviving Corporation" is providing technology, systems and
solutions that link physical objects to the Internet.
2.10.2. NON-INTERFERENCE. From and after the date hereof, no
Shareholder shall induce or solicit any employee of NeoMedia or any person doing
business with NeoMedia or to terminate his or her employment or business
relationship with NeoMedia or otherwise interfere with any such relationship.
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2.10.3. CONFIDENTIALITY. The Shareholders agree and acknowledge
that, by reason of the nature of the Shareholders' ownership interest in Secure
Source, each Shareholder will have or may have access to and become informed of
confidential and secret information which is a competitive asset of the
Surviving Corporation ("Confidential Information"), including, without
limitation, technology, any lists of customers, financial statistics, research
data or any other statistics and plans contained in profit plans, capital plans,
critical issue plans, strategic plans or marketing or operation plans or other
trade secrets of the Surviving Corporation and any of the foregoing which belong
to any person or company but to which the Shareholders have had access by reason
of their relationship with the Surviving Corporation. The Shareholders agree
faithfully to keep in strict confidence, and not, either directly or indirectly,
to make known, divulge, reveal, furnish, make available or use any such
Confidential Information. The Shareholders acknowledge that all manuals,
instruction books, price lists, information and records and other information
and aids relating to the Surviving Corporation's business, and any and all other
documents containing Confidential Information furnished to the Shareholders by
the Surviving Corporation or otherwise acquired or developed by the
Shareholders, shall at all times be the property of the Surviving Corporation.
Upon the termination of this Agreement, each Shareholder shall return to the
Surviving Corporation any such property or documents which are in their
possession, custody or control, but the Shareholders' obligation of
confidentiality shall survive such termination and unless any such Confidential
Information shall have become, through no fault of the Shareholder, generally
known to the trade. The obligations of the Shareholder under this subsection are
in addition to, and not in limitation or preemption of, all other obligations of
confidentiality which the Shareholder may have to the Surviving Corporation
under general legal or equitable principles. Notwithstanding the above, however,
the Surviving Corporation acknowledges that each Shareholder may have extensive
experience in the general industry in which the Surviving Corporation operates,
and these restrictions are not intended to prevent a Shareholder from using his
knowledge of the industry. These restrictions only apply to confidential
information which is owned by the Surviving Corporation, or was learned by a
Shareholder as a shareholder of the Surviving Corporation.
2.10.4. REMEDIES. It is expressly agreed by the Shareholders and
NeoMedia that the provisions in this Section 2 are reasonable for purposes of
preserving for NeoMedia its business, goodwill and Confidential Information. It
is also agreed that if any provision is found by a court having jurisdiction to
be unreasonable because of scope, area or time, then that provision shall be
amended to correspond in scope, area and time to that considered reasonable by a
court and as amended shall be enforced and the remaining provisions shall remain
effective. In the event any breach of these provisions by any Shareholder, the
parties recognize and acknowledge that a remedy at law will be inadequate and
NeoMedia may suffer irreparable injury. The Shareholders consent to injunctive
and other appropriate equitable relief without the posting of a bond upon the
institution of proceedings therefor by NeoMedia in order to protect NeoMedia's
rights. Such relief shall be in addition to any other relief to which NeoMedia
may be entitled at law, in equity, or under any other agreement between each
Shareholder and NeoMedia. The provisions of this Section 2.10 (including the
subsections) shall survive the termination of this Agreement.
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2.11. CERTAIN TAX MATTERS.
(a) SECTION 338(H)(10) ELECTION. Secure Source and the
Shareholders will join with NeoMedia in making an election under Code
ss.338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code") (and
any corresponding election under state, local, and foreign tax law) with respect
to the Merger (a "Section 338(h)(10) Election").
(b) ALLOCATION OF MERGER CONSIDERATION. NeoMedia and the
Shareholders agree that the Merger Consideration and the liabilities of Secure
Source (plus other relevant items) will be allocated to the assets of Secure
Source for all purposes (including tax and financial accounting) in a manner
consistent with the fair market values set forth on Schedule 2.11 hereto.
NeoMedia, Secure Source and the Shareholders shall file all tax returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such values.)
(c) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
NeoMedia shall prepare or cause to be prepared and filed or cause to be filed
all tax returns for Secure Source for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. To the extent permitted by
applicable law, the Shareholders shall include any income, gain, loss, deduction
or other tax items for such periods on their tax returns in a manner consistent
with the Schedule K-1s furnished by Secure Source to the Shareholders for such
periods. The Shareholders shall reimburse NeoMedia for any taxes of Secure
Source with respect to such period within fifteen (15) days after payment by
NeoMedia or Secure Source.
(d) COOPERATION ON TAX MATTERS.
(i) NeoMedia, Secure Source and the Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of tax returns pursuant to this Section 2.11 and
any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Secure Source and the Shareholders agree (A) to
retain all books and records with respect to tax matters pertinent to Secure
Source relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by
NeoMedia or any Shareholder, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, Secure Source or any Shareholder, as the case
may be, shall allow the other party to take possession of such books and
records.
(ii) NeoMedia and the Shareholders further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other person as may be necessary to
mitigate, reduce or eliminate any tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
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2.12. RELEASE OF CLAIMS BY EACH SHAREHOLDER. Effective as of the
Closing Date, and except for any obligations arising out of this Agreement, each
Shareholder, and his successors, predecessors, assigns, agents, advisors, legal
representatives, partners and all persons acting by, through or under him,
hereby release Secure Source and each of its successors, predecessors, assigns,
agents, advisors, officers, directors, employees, legal representatives,
partners and all persons acting by, through or under each of them, from any and
all claims, obligations, causes of action, actions, suits, contracts,
controversies, agreements, promises, damages, demands, costs, attorneys' fees
and liabilities of any nature whatsoever from the beginning of time up to and
including the Closing Date, in law or at equity, whether known now or on the
Closing Date, anticipated or unanticipated, suspected or claimed, fixed or
contingent, liquidated or unliquidated, arising out of, in connection with or
relating to any matter, cause or thing whatsoever.
2.13. NO-SHOP. From the date hereof until the termination of this
Agreement, neither Secure Source nor any Shareholder shall, directly or
indirectly, make, solicit, initiate or encourage submission of proposals or
offers from any persons (including any of their employees or officers) relating
to an Acquisition Proposal. As used herein, "Acquisition Proposal" means any
proposal or offer involving a liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or substantially all of
the assets of, or equity interest in, the Company or other similar transaction
or business combination involving Secure Source. Each of Secure Source and each
Shareholder shall immediately cease and cause to be terminated all discussions
or negotiations with third parties with respect to any Acquisition Proposal, if
any, exiting on the date hereof.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SHAREHOLDERS.
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To induce NeoMedia to enter into this Agreement and to consummate the
transactions contemplated hereby, Secure Source and the Shareholders jointly and
severally represent and warrant to and covenant with NeoMedia as follows:
3.1. ORGANIZATION; COMPLIANCE. Secure Source is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Secure Source is: (a) entitled to own or lease its properties and to carry on
its business as and in the places where such business is now conducted, and (b)
duly licensed and qualified in all jurisdictions where the character of the
property owned by it or the nature of the business transacted by it makes such
license or qualification necessary, except where the failure to do so would not
result in a material adverse effect on Secure Source. Schedule 3.1 lists all
locations where Secure Source has an office or place of business and the nature
of the ownership interest in such property (fee, lease, or other).
3.2. CAPITALIZATION AND RELATED MATTERS.
(a) Secure Source has an authorized capital consisting of
10,000 shares of common stock, $0.01 par value per share, 10,000 of which are
issued and outstanding at the date hereof. All shares of Secure Source Common
Stock are duly and validly issued, fully paid and nonassessable. No shares of
Company
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Common Stock (i) were issued in violation of the preemptive rights of any
shareholder, or (ii) are held as treasury stock.
(b) Except as set forth in Schedule 3.2(b), there are not
outstanding any securities convertible into capital stock of Secure Source nor
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, such capital
stock or securities convertible into such capital stock. Secure Source: (i) is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its capital stock; or (ii) has no liability
for dividends or other distributions declared or accrued, but unpaid, with
respect to any capital stock.
(c) The Shareholders are, and will be at Closing, the record
and beneficial owner of Ten Thousand (10,000) shares of Company Common Stock,
free and clear of all claims, liens, options, agreements, restrictions, and
encumbrances whatsoever and no Shareholder is a not party to any agreement,
understanding or arrangement, direct or indirect, relating to Secure Source
Common Stock, including, without limitation, agreements, understandings or
arrangements regarding voting or sale of such stock.
3.3. SUBSIDIARIES. Secure Source owns (a) no shares of capital stock
of any other corporation, including any joint stock company, and (b) no other
proprietary interest in any company, partnership, trust or other entity,
including any limited liability company.
3.4. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
(a) This Agreement is a valid and binding agreement of
Secure Source and the Shareholders, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy or similar laws
affecting the enforcement of creditors' rights generally, and the availability
of equitable remedies. Secure Source and the Shareholders have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the documents to be delivered by them in connection with the
Closing and to perform their obligations under this Agreement.
(b) Except as set forth in Schedule 3.4, the execution and
delivery of this Agreement by Secure Source and the Shareholders does not, and
the consummation of the transactions contemplated hereby will not, constitute a
breach or violation of the charter or bylaws of Secure Source, or a default
under any of the terms, conditions or provisions of (or an act or omission that
would give rise to any right of termination, cancellation or acceleration under)
any note, bond, mortgage, lease, indenture, agreement or obligation to which
Secure Source or any Shareholder is a party, pursuant to which Secure Source or
any Shareholder otherwise receives benefits, or to which any of the properties
of Secure Source or any Shareholder is subject, or violate any judgment, order,
decree, statute or regulation applicable to Secure Source or any Shareholder or
by which any of them may be subject.
3.5. CORPORATE RECORDS. The statutory records, including the stock
register and minute books of Secure Source, fully reflect all issuances,
transfers and redemptions of its capital stock, currently show and will
correctly show the total number of shares of its capital stock issued and
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outstanding on the date hereof and on the Closing Date, the charter or other
organizational documents and all amendments thereto, the bylaws as amended and
currently in force. To the knowledge of the Shareholders, the books of account,
minute books, stock record, books, and other records of Secure Source, all of
which have been made available to NeoMedia, are complete and correct and have
been maintained in accordance with sound business practices. The minute books of
Secure Source contain accurate and complete records of all meetings held of, and
corporate action taken by, the Shareholders, the Board of Directors, and
committees of the Boards of Directors of Secure Source, and no meeting of any
such Shareholders, Board of Directors, or committee has been held for which
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in the possession of Secure
Source.
3.6. FINANCIAL STATEMENTS.
(a) Secure Source and the Shareholders have delivered to
NeoMedia the unaudited balance sheet of Secure Source as of July 31, 2003, (the
"Balance Sheet") and the related statements of income, shareholders' equity and
cash flows of Secure Source for the period ended July 31, 2003. All the
foregoing financial statements, and any financial statements delivered pursuant
to Section 3.6(c) below, are referred to herein collectively as the "Company
Financial Statements."
(b) Secure Source Financial Statements have been and will be
prepared in accordance with GAAP throughout the periods involved, subject, in
the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Balance Sheet), applied on a
consistent basis, and fairly reflect and will reflect in all material respects
the financial condition of Secure Source as at the dates thereof and the results
of the operations of Secure Source for the periods then ended, and are true and
complete and are consistent with the books and records of Secure Source.
(c) Until Closing, Secure Source will furnish to NeoMedia
unaudited interim financial statements of Secure Source for each month
subsequent to July 31, 2003 as soon as practicable but in any event within
thirty (30) days after the close of any such month.
3.7. LIABILITIES. Secure Source has no debt, liability or obligation
of any kind, whether accrued, absolute, contingent or otherwise, except: (a)
those reflected on the Balance Sheet, including the notes thereto, and (b)
liabilities incurred in the ordinary course of business since incorporating in
July 31, 2003, none of which have had or will have a material adverse effect on
the financial condition of Secure Source.
3.8. ABSENCE OF CHANGES. Except as described in Schedule 3.8, from
July 31, 2003 to the date of this Agreement:
(a) there has not been any adverse change in the business,
assets, liabilities, results of operations or financial condition of Secure
Source or in its relationships with suppliers, customers, employees, lessors or
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others, other than changes in the ordinary course of business, none of which,
singularly or in the aggregate, have had or will have a material adverse effect
on the business, properties or financial condition of Secure Source;
(b) there has not been any: (i) change in Secure Source's
authorized or issued capital stock, retirement, or other acquisition by Secure
Source of any shares of any such capital stock; (ii) a declaration or payment of
any dividend or other distribution or payment in respect of shares of capital
stock, except as set forth on Schedule 3.28; (iii) amendment to the Articles of
Incorporation or Bylaws of Secure Source; (iv) increase by Secure Source of any
bonuses, salaries, or other compensation to any shareholder, director, officer,
or (except in the ordinary course of business) employee or entry into any
employment, severance, or similar agreement with any director, officer, or
employee; (v) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of Secure
Source; (vi) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any asset or property of Secure Source
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of Secure Source; (vii) cancellation or waiver of any
claims or rights with a value to Secure Source in excess of $10,000; (viii)
material change in the accounting methods used by Secure Source; or (ix)
agreement, whether oral or written, by Secure Source to do any of the foregoing;
and
(c) Secure Source has complied with the covenants and
restrictions set forth in Section 5 to the same extent as if this Agreement had
been executed on, and had been in effect since, July 31, 2003.
3.9. TITLE TO PROPERTIES. Secure Source has good and marketable title
to all of its properties and assets, real and personal, including, but not
limited to, those reflected in the Balance Sheet (except as since sold or
otherwise disposed of in the ordinary course of business, or as expressly
provided for in this Agreement), free and clear of all encumbrances, liens or
charges of any kind or character except: (a) those securing liabilities of
Secure Source incurred in the ordinary course (with respect to which no default
exists); (b) liens of 2003 real estate and personal property taxes; and (c)
imperfections of title and encumbrances, if any, which, in the aggregate (i) are
not substantial in amount; (ii) do not detract from the value of the property
subject thereto or impair the operations of Secure Source; and (iii) do not have
a material adverse effect on the business, properties or assets of Secure
Source.
3.10. COMPLIANCE WITH LAW. The business and activities of Secure
Source has at all times been conducted in accordance with its Articles of
Incorporation and Bylaws and any applicable law, regulation, ordinance, order,
License (as defined below), permit, rule, injunction or other restriction or
ruling of any court or administrative or governmental agency, ministry, or body,
except where the failure to do so would not result in a material adverse effect
on Secure Source.
3.11. TAXES. Secure Source has duly filed all federal, state, and
material local and foreign tax returns and reports, and all returns and reports
of all other governmental units having jurisdiction with respect to taxes
imposed on it or on its income, properties, sales, franchises, operations or
employee benefit plans or trusts, all such returns were complete and accurate
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when filed, and all taxes and assessments payable by Secure Source have been
paid to the extent that such taxes have become due. Secure Source has withheld
proper and accurate amounts from its employees for all periods in full
compliance with the tax withholding provisions of applicable foreign, federal,
state and local tax laws. There are no waivers or agreements by Secure Source
for the extension of time for the assessment of any taxes. There are not now any
examinations of the income tax returns of Secure Source pending, or any proposed
deficiencies or assessments against Secure Source of additional taxes of any
kind.
3.12. REAL PROPERTIES. Secure Source does not have any interest in any
real property, except for the Leases (as defined below).
3.13. LEASES OF REAL PROPERTY. All leases pursuant to which Secure
Source is a lessee of any real property (the "Leases") are listed in Schedule
3.13 and are valid and enforceable in accordance with their terms. There is not
under any of such Leases any material default or any claimed material default by
Secure Source or any event of default or event which with notice or lapse of
time, or both, would constitute a material default by Secure Source and in
respect to which Secure Source has not taken adequate steps to prevent a default
on its part from occurring. The copies of the Leases heretofore furnished to
NeoMedia are true, correct and complete, and such Leases have not been modified
in any respect since the date they were so furnished, and are in full force and
effect in accordance with their terms. Secure Source is lawfully in possession
of all real properties of which they are a lessee (the "Leased Properties").
3.14. CONTINGENCIES. Except as disclosed on Schedule 3.14, there are
no actions, suits, claims or proceedings pending, or to the knowledge of the
Shareholders threatened against, by or affecting, Secure Source in any court or
before any arbitrator or governmental agency that may have a material adverse
effect on Secure Source or which could materially and adversely affect the right
or ability of any Shareholder to consummate the transactions contemplated
hereby. To the knowledge of the Shareholders, there is no valid basis upon which
any such action, suit, claim, or proceeding may be commenced or asserted against
Secure Source. There are no unsatisfied judgments against Secure Source and no
consent decrees or similar agreements to which Secure Source is subject and
which could have a material adverse effect on Secure Source.
3.15. INTELLECTUAL PROPERTY RIGHTS. To its knowledge, Secure Source
has: (a) the right to use the name Secure Source Technologies, Inc. and the use
of such name does not conflict with or infringe upon the rights of any other
person. Secure Source is not, and will not be, subject to any liability, direct
or indirect, for infringement damages, royalties, or otherwise, by reason of (a)
the use of the name "Secure Source Technologies, Inc." in or outside the United
States or (b) the business operations of Secure Source, at any time prior to the
Closing Date. Secure Source has not registered the name "Secure Source
Technologies" for trademark or use rights with any state or federal agency for
exclusive use. The state of Delaware granted incorporation under the name Secure
Source Technologies, Inc.
3.16. MATERIAL CONTRACTS. Schedule 3.16 contains a complete list of
all contracts of Secure Source, which involve consideration in excess of the
equivalent of $10,000 or have a term of one year or more (the "Material
Contracts"). Secure Source has delivered to NeoMedia a true, correct and
complete copy of each of the written contracts, and a summary of each oral
11
contract, listed on Schedule 3.16. Except as disclosed in Schedule 3.16: (a)
Secure Source has performed all material obligations to be performed by it under
all such contracts, and is not in material default thereof, and (b) no condition
exists or has occurred which with the giving of notice or the lapse of time, or
both, would constitute a material default by Secure Source or accelerate the
maturity of, or otherwise modify, any such contract, and (c) all such contracts
are in full force and effect. No material default by any other party to any of
such contracts is known or claimed by Secure Source or any Shareholder to exist.
3.17. INSURANCE. Schedule 3.17 contains a complete list of all
policies of insurance presently maintained by Secure Source all of which are,
and will be maintained through the Closing Date, in full force and effect; and
all premiums due thereon have been paid and Secure Source has not received any
notice of cancellation with respect thereto. Secure Source has heretofore
delivered to NeoMedia or its representatives a true, correct and complete copy
of each such insurance policy.
3.18. EMPLOYMENT AND LABOR MATTERS. Schedule 3.18 sets forth the name,
position, employment date, and 2002 compensation (base and bonus) of each
employee of Secure Source who earned $25,000 or more in 2002 or is anticipated
to earn $25,000 or more in 2003. Secure Source is not a party to any collective
bargaining agreement (whether industry wide or on a company level) or agreement
of any kind with any union or labor organization. There has not been any attempt
by any union or other labor organization to organize the employees of Secure
Source at any time in the past five (5) years. Except as disclosed in Schedule
3.18, Secure Source is not a party to or bound by any employment contract,
consulting agreement, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement. Secure Source is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with Secure
Source, nor does Secure Source have a present intention to terminate the
employment of any of the foregoing.
3.19. EMPLOYEE BENEFIT MATTERS.
(a) Except as disclosed in Schedule 3.19, Secure Source does
not provide, nor is it obligated to provide, directly or indirectly, any
benefits for employees other than salaries, sales commissions and bonuses,
including, but not limited to, any pension, profit sharing, stock option,
retirement, bonus, hospitalization, insurance, severance, vacation or other
employee benefits (including any housing or social fund contributions) under any
practice, agreement or understanding.
(b) Each employee benefit plan maintained by or on behalf of
Secure Source or any other party (including any terminated pension plans) which
covers or covered any employees or former employees of Secure Source
(collectively, the "Employee Benefit Plan") is listed in Schedule 3.19. Secure
Source has delivered to NeoMedia true and complete copies of all such plans and
any related documents. With respect to each such plan: (i) no litigation,
administrative or other proceeding or claim is pending, or to the knowledge of
the Shareholders, threatened or anticipated involving such plan; (ii) there are
no outstanding requests for information by participants or beneficiaries of such
plan; and (iii) such plan has been administered in compliance in all material
respects with all applicable laws and regulations.
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(c) Secure Source has timely made payment in full of all
contributions to all of the Employee Benefit Plans which Secure Source was
obligated to make prior to the date hereof; and there are no contributions
declared or payable by Secure Source to any Employee Benefit Plan which, as of
the date hereof, has not been paid in full.
3.20. Possession of Franchises, Licenses, Etc. Secure Source: (a)
possess all material franchises, certificates, licenses, permits and other
authorizations (collectively, the "Licenses") from governmental authorities,
political subdivisions or regulatory authorities that are necessary for the
ownership, maintenance and operation of its business in the manner presently
conducted; (b) are not in violation of any provisions thereof; and (c) have
maintained and amended, as necessary, all Licenses and duly completed all
filings and notifications in connection therewith.
3.21. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3.21: (i)
Secure Source is not in violation, in any material respect, of any Environmental
Law (as defined below); (ii) Secure Source has received all permits and
approvals with respect to emissions into the environment and the proper
collection, storage, transport, distribution or disposal of Wastes (as defined
below) and other materials required for the operation of its business at present
operating levels; and (iii) Secure Source is not liable or responsible for any
material clean up, fines, liability or expense arising under any Environmental
Law, as a result of the disposal of Wastes or other materials in or on the
property of Secure Source (whether owned or leased), or in or on any other
property, including property no longer owned, leased or used by Secure Source.
As used herein, (a) "Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute, law,
ordinance, code, rule, regulation, order or decree (foreign or domestic)
regulating, relating to, or imposing liability or standards of conduct
concerning, Wastes, or the environment; and (b) "Wastes" means and includes any
hazardous, toxic or dangerous waste, liquid, substance or material (including
petroleum products and derivatives), the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.
3.22. INVENTORIES. At Closing, Secure Source and the Shareholders will
deliver to NeoMedia a complete and accurate list, as of a date not more than
five (5) business days prior to the Closing Date, of the products, materials and
supplies and spare parts (the "Inventory") then owned by Secure Source. Except
as otherwise provided on Schedule 3.22, the Inventory, as of the Closing Date:
(a) will represent items of a quality and quantity usable and saleable in the
ordinary course of business at the book value reflected as of the Closing Date,
(b) will be free from defects, (c) will not be obsolete, (d) will conform in all
material respects to customary trade standards for such inventory in Secure
Source's current markets and (e) will be sold, subject to any applicable
reserves for inventory obsolescence shown on Secure Source's books and records
(which reserves are adequate and calculated consistent with past practice),
within two hundred forty (240) days of the Closing Date for an amount at least
equal to its book value. There are no express or implied warranty obligations of
Secure Source which, singularly or in the aggregate, will have a material
13
adverse effect on the business, properties or financial condition of Secure
Source. As of closing, Secure Source has no inventory items.
3.23. ACCOUNTS RECEIVABLE. On the Closing Date, Secure Source and the
Shareholders will deliver to NeoMedia a complete and accurate list, as of a date
not more than five (5) business days prior to the Closing Date, of the accounts
and notes receivable due to Secure Source (including, without limitation,
receivables from advances to employees and the Shareholders), which includes an
aging of all accounts and notes receivable showing amounts due in thirty (30)
day aging categories (collectively, the "Accounts Receivables"). As of the
Closing Date, the Accounts Receivables: (a) will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business; (b) will be current and collectible net of any applicable
reserves shown on Secure Source's books and records (which reserves are adequate
and calculated consistently with past practice); (c) subject to such reserves,
will be collected in full, without any set-off, within one hundred fifty (150)
days after the Closing Date; and (d) are not and will not be subject to any
contest, claim, defense or right of set-off, other than rebates and returns in
the ordinary course of business. As of closing, Secure Source has no accounts
receivable.
3.24. AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as
disclosed on Schedule 3.24, and except as disclosed in Secure Source Financial
Statements, Secure Source is not a party to any contract, agreement, lease or
transaction with, or any other commitment to, (a) any Shareholder, (b) any
person related by blood, adoption or marriage to any Shareholder, (c) any
director or officer of Secure Source, (d) any corporation or other entity in
which any of the foregoing parties has, directly or indirectly, at least five
percent (5.0%) beneficial interest in the capital stock or other type of equity
interest in such corporation or other entity, or (e) any partnership in which
any such party is a general partner or a limited partner having a five percent
(5%) or more interest therein (any or all of the foregoing being herein referred
to as a "Related Party" and, collectively, as the "Related Parties"). Without
limiting the generality of the foregoing, except as set forth in Schedule 3.24,
and except as disclosed in Secure Source Financial Statements no Related Party,
directly or indirectly, owns or controls any assets or properties which are used
in the business of Secure Source.
3.25. BUSINESS PRACTICES. Except as disclosed on Schedule 3.25, Secure
Source has not, at any time, directly or indirectly, made any contributions or
payment, or provided any compensation or benefit of any kind, to any municipal,
county, state, federal or foreign governmental officer or official, or any other
person charged with similar public or quasi-public duties, or any candidate for
political office. Secure Source's books, accounts and records (including,
without limitation, customer files, product packaging and invoices) accurately
describe and reflect, in all material respects, the nature and amount of Secure
Source's products, purchases, sales and other transactions. Without limiting the
generality of the foregoing, Secure Source has not engaged, directly or
indirectly, in: (a) the practice known as "double-invoicing;" or (b) the
incorrect or misleading labeling, marketing or sale of refurbished goods as new
goods or the sale of rebuilt goods as original manufactured equipment.
3.26. CONDITION AND SUFFICIENCY OF ASSETS. The buildings and equipment
leased or owned by Secure Source are generally in good operating condition and
repair, and are adequate for the uses to which they are being put. The buildings
and equipment of Secure Source are sufficient for the continued conduct of
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Secure Source's business after the Closing in substantially the same manner as
conducted prior to the Closing.
3.27. ACCOUNTING SYSTEM. Secure Source's accounting software is owned
or licensed by Secure Source, free and clear of all claims, liens and
encumbrances, and the transactions contemplated hereby will not result in a
breach of any license or other agreement with respect to the accounting
software. Secure Source's accounting software is in good working order and
condition, free from defects (latent and patent), has been maintained in
accordance with the manufacturer's recommended maintenance program, if any, and
is suitable for maintaining the books and records of Secure Source and all other
purposes for which it is intended.
3.28. DIVIDENDS AND OTHER DISTRIBUTIONS. Schedule 3.28 sets forth the
dates and amounts of all dividends and other distributions declared, paid or
payable by Secure Source to the Shareholders between January 1, 2001 and the
date hereof, which Schedule 3.28 shall be updated as of the Closing Date to set
forth all dividends and other distributions through the Closing Date.
3.29. LITIGATION. There is no suit, action or proceeding pending, and
no person has overtly-threatened in a writing delivered to Secure Source or the
Shareholders to commence any suit, action or proceeding, against or affecting
Secure Source that would, individually or in the aggregate, have a material
adverse effect on Secure Source, nor is there any judgment, decree, injunction,
or order of any governmental entity or arbitrator outstanding against, or, to
the knowledge of Secure Source, pending investigation by any governmental entity
involving, Secure Source or any Shareholders that individually or in the
aggregate would have a material adverse effect on Secure Source.
3.30. FULL DISCLOSURE. No representation or warranty of the
Shareholders contained in this Agreement, and none of the statements or
information concerning Secure Source contained in this Agreement and the
Schedules, contains or will contain as of the date hereof and as of the Closing
Date any untrue statement of a material fact nor will such representations,
warranties, covenants or statements taken as a whole omit 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.
4. REPRESENTATIONS AND WARRANTIES OF NEOMEDIA.
To induce the Shareholders to enter into this Agreement and to consummate
the transactions contemplated hereby, NeoMedia represents and warrants to and
covenants with the Shareholders as follows:
4.1. ORGANIZATION. NeoMedia is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. NeoMedia
is entitled to own or lease its properties and to carry on its business as and
in the places where such business is now conducted, and NeoMedia is duly
licensed and qualified in all jurisdictions where the character of the property
owned by it or the nature of the business transacted by it makes such license or
15
qualification necessary, except where such failure would not result in a
material adverse effect on NeoMedia.
4.2. CAPITALIZATION AND RELATED MATTERS.
(a) NeoMedia has authorized capital stock consisting of
1,000,000,000 shares of common stock, par value $0.01 per share, of which
205,581,109 (unaudited) shares were issued and outstanding as of the date
hereof, and 24,547,511 shares of preferred stock, par value $0.01 per share,
none of which are issued. The NeoMedia Shares will be, when issued, duly and
validly authorized and fully paid and non-assessable, and will be issued to the
Shareholder free of all encumbrances, claims and liens whatsoever.
(b) Except as set forth in Schedule 4.2, and except for
employee stock options to purchase shares of the NeoMedia's Common Stock,
NeoMedia does not have outstanding any securities convertible into capital
stock, nor any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock or securities convertible into its capital stock.
4.3. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
(a) Subject to NeoMedia's Board of Directors approval
contemplated by Section 7.6 hereof and the approval of the shareholders of
NeoMedia at a special meeting of shareholders to be held on September 24, 2003
with respect to an increase in the authorized NeoMedia Common Stock, the
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby have been duly and validly authorized and approved by
NeoMedia and this Agreement is a valid and binding agreement of NeoMedia,
enforceable against NeoMedia in accordance with its terms, except as such
enforcement may be limited by bankruptcy or similar laws affecting the
enforcement of creditors' rights generally, and the availability of equitable
remedies.
(b) The execution and delivery of this Agreement by NeoMedia
does not, and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the charter or bylaws of NeoMedia, or a
default under any of the terms, conditions or provisions of (or an act or
omission that would give rise to any right of termination, cancellation or
acceleration under) any material note, bond, mortgage, lease, indenture,
agreement or obligation to which NeoMedia or any of its subsidiaries is a party,
pursuant to which any of them otherwise receive benefits, or by which any of
their properties may be bound.
4.4. FINANCIAL STATEMENTS. NeoMedia has delivered or will deliver to
Secure Source the consolidated audited balance sheets of NeoMedia as of December
31, 2002, the consolidated unaudited balance sheet as of June 30, 2003, the
consolidated audited statement of income for the two fiscal years ended December
31, 2002, and the unaudited statement of income for the six (6) months ended
June 30, 2003 (collectively, the "NeoMedia Financial Statements"). The NeoMedia
Financial Statements have been prepared in accordance with GAAP, applied on a
consistent basis (except that the unaudited statements do not contain all the
16
disclosures required by GAAP), and fairly reflect in all material respects the
consolidated financial condition of NeoMedia and its subsidiaries as at the
dates thereof and the consolidated results of NeoMedia's operations for the
periods then ended. Since June 30, 2003, there has been no material adverse
change in the assets or liabilities, in the business or condition, financial or
otherwise, of NeoMedia, or in its results of operations.
4.5. LIABILITIES. Neither NeoMedia nor any of its subsidiaries has any
material debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, except (a) those reflected on the NeoMedia Financial
Statements, including the notes thereto, and (b) liabilities incurred in the
ordinary course of business since June 30, 2003, none of which have had or will
have a material adverse affect on the financial condition of NeoMedia and its
subsidiaries taken as a whole.
4.6. CONTINGENCIES. There are no actions, suits, claims or proceedings
pending or, to the knowledge of NeoMedia's management, threatened against, by or
affecting NeoMedia or any of its subsidiaries in any court or before any
arbitrator or governmental agency which could have a material adverse effect on
NeoMedia or its subsidiaries or which could materially and adversely affect the
right or ability of NeoMedia to consummate the transactions contemplated hereby.
To the knowledge of NeoMedia, there is no valid basis upon which any such
action, suit, claim or proceeding may be commenced or asserted against NeoMedia
or its subsidiaries. There are no unsatisfied judgments against NeoMedia and no
consent decrees or similar agreements to which NeoMedia or its subsidiaries is
subject and which could have a material adverse effect on NeoMedia or its
subsidiaries or which could materially and adversely affect the right or ability
of NeoMedia to consummate the transactions contemplated hereby.
4.7. FULL DISCLOSURE. No representation or warranty of NeoMedia
contained in this Agreement, and none of the statements or information
concerning NeoMedia contained in this Agreement and the Schedules, contains or
will contain as of the date hereof and as of the Closing Date any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit 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.
5. CONDUCT OF BUSINESS OF SECURE SOURCE PENDING CLOSING.
Secure Source and the Shareholders covenant and agree that between the
date hereof and the Closing Date:
5.1. BUSINESS IN THE ORDINARY COURSE. Except as set forth in Schedule
5.1, the business of Secure Source shall be conducted only in the ordinary
course, and consistent with past practice. Without limiting the generality of
the foregoing, and except as set forth in Schedule 5.1 or as otherwise approved
in writing by NeoMedia:
(a) Secure Source shall not enter into any contract,
agreement or other arrangement which would constitute a Material Contract,
except for contracts to sell or supply goods or services to customers in the
ordinary course of business at prices and on terms substantially consistent with
the prior operating practices of Secure Source;
17
(b) except for sales of personal property in the ordinary
course of its business, Secure Source shall not sell, assign, transfer,
mortgage, convey, encumber or otherwise dispose of, or cause the sale,
assignment, transfer, mortgage, conveyance, encumbrance or other disposition of
any of the assets or properties of Secure Source or any interest therein;
(c) Secure Source shall not acquire any material assets,
except expenditures made in the ordinary course of business as reasonably
necessary to enable Secure Source to conduct its normal business operations and
to maintain its normal inventory of goods and materials, at prices and on terms
substantially consistent with current market conditions and prior operating
practices;
(d) Secure Source shall maintain in full force and effect
all insurance policies referred to in Section 3.17 hereof or other insurance
equivalent thereto;
(e) the books, records and accounts of Secure Source shall
be maintained in the usual, regular and ordinary course of business on a basis
consistent with prior practices and in accordance with GAAP;
(f) Secure Source shall use its best efforts to preserve its
business organization, to preserve the good will of its suppliers, customers and
others having business relations with Secure Source, and to retain the services
of key employees and agents of Secure Source after the Closing Date on terms
acceptable to NeoMedia;
(g) except as they may terminate in accordance with the
terms of this Agreement, Secure Source shall keep in full force and effect, and
not cause a default of any of its obligations under, each of its contracts and
commitments;
(h) Secure Source shall duly comply in all material respects
with all laws applicable to it and to the conduct of its business;
(i) Secure Source shall not create, incur or assume any
liability or indebtedness, except in the ordinary course of business consistent
with past practices;
(j) Secure Source shall not make or commit to make any
capital expenditures in excess of Ten Thousand Dollars ($10,000) in the
aggregate;
(k) other than as contemplated in this Agreement, Secure
Source shall not apply any of its assets to the direct or indirect payment,
discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of the Shareholder or any Related Party; and
(l) neither Secure Source nor the Shareholders shall take or
omit to take any action which would render any of the Shareholders'
representations or warranties untrue or misleading, or which would be a breach
of any of the Shareholders' covenants.
18
5.2. NO MATERIAL CHANGES. Secure Source shall not, without the prior
written consent of NeoMedia which consent shall not be unreasonably withheld,
materially alter its organization, capitalization, or financial structure,
practices or operations. Without limiting the generality of the foregoing:
(a) no change shall be made in the Articles of Incorporation
or Bylaws of Secure Source;
(b) no change shall be made in the authorized or issued
capital stock of Secure Source;
(c) Secure Source shall not issue or grant any right or
option to purchase or otherwise acquire any of its capital stock or other
securities;
(d) no dividend or other distribution or payment shall be
declared or made with respect to any of the capital stock of Secure Source; and
(e) no change shall be made affecting the banking
arrangements of Secure Source.
5.3. COMPENSATION. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent of Secure Source, and no bonus or profit-sharing payment or
other arrangement (whether current or deferred) shall be made to or with any
such director, officer, employee or agent, except in the ordinary course of
business and consistent with prior practices.
5.4. NOTIFICATION. Each party to this Agreement shall promptly notify
the other parties in writing of the occurrence, or threatened occurrence, of any
event that would constitute a breach or violation of this Agreement by any party
or that would cause any representation or warranty made by the notifying party
in this Agreement to be false or misleading in any respect. The Shareholders
will promptly notify NeoMedia of any event of which the Shareholders obtain
knowledge which could have a material adverse effect on the business, assets,
financial condition or prospects of Secure Source. The Shareholders shall have
the right to update the Schedules to this Agreement immediately prior to
Closing; provided, if such update discloses any breach of a representation,
warranty, covenant or obligation of the Shareholders and/or Secure Source,
NeoMedia shall have the right to then exercise its available rights and remedies
hereunder.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligation of the Shareholders and NeoMedia to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, on
or before the Closing, of each of the following conditions; any or all of which
may be waived in whole or in part by the joint agreement of NeoMedia Company and
the Shareholders:
6.1. ABSENCE OF ACTIONS. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
19
involving NeoMedia, any of its subsidiaries, the Shareholders or Secure Source
when considered in light of the effect of the within transactions) shall
constitute a violation of law or give rise to material liability on the part of
the Shareholders, Secure Source or NeoMedia or its subsidiaries.
6.2. CONSENTS. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including, without limitation, the consents listed on
Schedule 6.2.
7. CONDITIONS TO OBLIGATIONS OF NEOMEDIA.
All obligations of NeoMedia to consummate the transactions contemplated by
this Agreement are subject to the fulfillment and satisfaction of each and every
of the following conditions on or prior to the Closing, any or all of which may
be waived in whole or in part by NeoMedia:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
the Shareholders in connection with the transactions contemplated by this
Agreement shall be true, correct and complete in all material respects (except
for representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
7.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The Shareholders and
Secure Source shall have performed and complied with all material agreements and
conditions required by this Agreement to be performed or complied with by him
and/or by Secure Source prior to or on the Closing Date.
7.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of Secure Source
shall have occurred, no substantial part of the assets of Secure Source not
substantially covered by insurance shall have been destroyed due to fire or
other casualty, and no event shall have occurred which has had or will have a
material adverse effect on the business, assets, financial condition or
prospects of Secure Source.
7.4. CERTIFICATE OF THE SHAREHOLDERS. The Shareholders shall have
executed and delivered, or caused to be executed and delivered, to NeoMedia one
or more certificates, dated the Closing Date, certifying in such detail as
NeoMedia may reasonably request to the fulfillment and satisfaction of the
conditions specified in Sections 7.1 through 7.3 above.
7.5. BOARD APPROVAL. This Agreement and the transactions contemplated
hereby shall have been approved by the unanimous approval of the NeoMedia's
Board of Directors.
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7.6. SATISFACTORY RESULTS OF INSPECTION. The results of the inspection
referred to in Section 2.1 hereof shall be satisfactory to the NeoMedia in its
sole discretion.
7.7. CONVERSION OF SECURITIES. The Shareholders and Secure Source
shall have converted all securities convertible into shares of common stock of
Secure Source, including, but not limited to, debt, preferred stock, warrants or
options, prior to the Closing and shall provide NeoMedia with documentation, as
requested by NeoMedia, evidencing such conversions.
7.8. TERMINATION OF MANAGEMENT AGREEMENTS. The Shareholders and Secure
Source shall have terminated any and all management agreements in effect and
shall provide NeoMedia with documentation, as requested by NeoMedia, evidencing
such terminations.
8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.
All of the obligations of the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment and satisfaction
of each and every of the following conditions on or prior to the Closing, any or
all of which may be waived in whole or in part by the Shareholders:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 4 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
NeoMedia in connection with the transactions contemplated by this Agreement
shall be true and correct in all material respects (except for representations
and warranties which are by their terms qualified by materiality, which shall be
true, correct and complete in all respects) when made and shall be deemed to be
made again at and as of the Closing Date and shall be true at and as of such
time in all material respects (except for representations and warranties which
are by their terms qualified by materiality, which shall be true, correct and
complete in all respects).
8.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. NeoMedia shall have
performed and complied with all material agreements and conditions required by
this Agreement to be performed or complied with by NeoMedia prior to or on the
Closing Date.
8.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of NeoMedia and its
subsidiaries, taken as a whole, shall have occurred, no substantial part of the
assets of NeoMedia and its subsidiaries, taken as a whole, shall have been
destroyed due to fire or other casualty, and no event shall have occurred which
has had, or will have a material adverse effect on the business, assets,
financial condition or prospects of NeoMedia and its subsidiaries, taken as a
whole.
8.4. CERTIFICATE OF NEOMEDIA. NeoMedia shall have delivered to the
Shareholders a certificate, executed by an executive officer and dated the
Closing Date, certifying to the fulfillment and satisfaction of the conditions
specified in Sections 8.1 through 8.3 above.
21
9. INDEMNITY.
9.1. INDEMNIFICATION BY SHAREHOLDERS. Subject to Section 9.5, the
Shareholders (hereinafter, collectively, called the "Shareholder Indemnitors")
shall jointly and severally defend, indemnify and hold harmless NeoMedia and its
direct and indirect NeoMedia corporations, subsidiaries (including Secure Source
after Closing) and affiliates, their officers, directors, employees, attorneys
and agents (hereinafter, collectively, called "NeoMedia Indemnitees") against
and in respect of any and all loss, damage, liability, fine, penalty, cost and
expense, including reasonable attorneys' fees and amounts paid in settlement
(collectively, "NeoMedia Losses"), suffered or incurred by any NeoMedia
Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of the Shareholders contained in this Agreement
or in any certificate, schedule, instrument or document delivered to NeoMedia by
or on behalf of the Shareholders or Secure Source pursuant to the provisions of
this Agreement (without regard to materiality thresholds contained therein); and
(b) any liabilities of Secure Source of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, (i) existing as of the date of the Balance
Sheet, and required to be shown therein in accordance with GAAP, to the extent
not reflected or reserved against in full in the Balance Sheet; or (ii) arising
or occurring between July 31, 2003 and the Closing Date, except for liabilities
arising in the ordinary course of business, none of which shall have a material
adverse effect on Secure Source.
9.2. INDEMNIFICATION BY NEOMEDIA. Subject to Section 9.5, NeoMedia
(hereinafter called the "NeoMedia Indemnitor") shall defend, indemnify and hold
harmless the Shareholders (hereinafter called "Shareholder Indemnitees") against
and in respect of any and all loss, damage, liability, cost and expense,
including reasonable attorneys' fees and amounts paid in settlement
(collectively, "Shareholder Losses"), suffered or incurred by Shareholder
Indemnitees by reason of or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of NeoMedia contained in this
Agreement or in any other certificate, schedule, instrument or document
delivered to the Shareholders by or on behalf of NeoMedia pursuant to the
provisions of this Agreement (without regard to materiality thresholds contained
therein); and
(b) any liabilities of Secure Source of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, arising from NeoMedia's ownership or
operation of Secure Source after Closing, but only so long as such liability is
not the result of an act or omission of Secure Source or any Shareholder
occurring prior to the Closing. NeoMedia Losses and Shareholder Losses are
sometimes collectively referred to as "Indemnifiable Losses."
9.3. DEFENSE OF CLAIMS.
22
(a) Each party seeking indemnification hereunder (an
"Indemnitee"): (i) shall provide the other party or parties (the "Indemnitor")
written notice of any claim or action by a third party arising after the Closing
Date for which an Indemnitor may be liable under the terms of this Agreement,
within ten (10) days after such claim or action arises and is known to
Indemnitee, and (ii) shall give the Indemnitor a reasonable opportunity to
participate in any proceedings and to settle or defend any such claim or action.
The expenses of all proceedings, contests or lawsuits with respect to such
claims or actions shall be borne by the Indemnitor. If the Indemnitor wishes to
assume the defense of such claim or action, the Indemnitor shall give written
notice to the Indemnitee within ten (10) days after notice from the Indemnitee
of such claim or action, and the Indemnitor shall thereafter assume the defense
of any such claim or liability, through counsel reasonably satisfactory to the
Indemnitee, provided that Indemnitee may participate in such defense at their
own expense, and the Indemnitor shall, in any event, have the right to control
the defense of the claim or action.
(b) If the Indemnitor shall not assume the defense of, or if
after so assuming it shall fail to defend, any such claim or action, the
Indemnitee may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitee, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitee for the
amount of all expenses, legal and otherwise, incurred by the Indemnitee in
connection with the defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered against any
Indemnitee in any action covered by the indemnification hereunder, or any lien
attaches to any of the assets of any of the Indemnitee, the Indemnitor shall
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of the Indemnitor, an appeal is
taken under which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
Indemnitee is compelled to do so.
9.4. WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
9.5. LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. TIME LIMITATION. No party shall be responsible hereunder
for any Indemnifiable Loss unless the Indemnitee shall have provided such party
with written notice containing a reasonable description of the claim, action or
circumstances giving rise to such Indemnifiable Loss within three (3) years
after the Closing Date (the "Indemnity Notice Period"); provided, however, that:
23
(a) with respect to any Indemnifiable Loss resulting or arising
from any breach of a representation or warranty of the Shareholders relating to
taxes, or any tax liability of Secure Source arising or relating to periods
prior to the Closing Date, the Indemnity Notice Period shall extend for the full
duration of the statute of limitations; and
(b) there shall be no limit on the Indemnity Notice Period for
indemnity claims: (i) against the Shareholders for Indemnifiable Losses arising
or resulting from a breach of a representation or warranty relating to
Environmental Laws, or any liability which relates to the handling or disposal
of Wastes or the failure to comply with any Environmental Law; (ii) against the
Shareholders for Indemnifiable Losses arising or resulting from foreign,
federal, state and/or local taxes; (iii) against the Shareholders for
Indemnifiable Losses arising or resulting from any employee benefit-type claims
of Secure Source; and (iv) against any party based on fraud or intentional
breach or misrepresentation.
9.5.2. BASKET. No party shall have any liability hereunder for
Indemnifiable Losses after the Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnifiable Losses for which the Shareholders or NeoMedia, as applicable, are
responsible under this Agreement exceeds Twenty Five Thousand Dollars ($25,000)
(the "Basket"); provided that once such Basket is exceeded for the Shareholders
or NeoMedia, as applicable, the responsible party or parties shall be
responsible for all Indemnifiable Losses, from the first dollar as if such
Basket never existed; and further provided that this Section 9.5.2 shall not
limit in any respect indemnity claims: (a) based upon fraud or intentional
breach or intentional misrepresentation; (b) arising from a breach by the
NeoMedia Indemnitor of any covenant contained in this Agreement; (c) arising
from a breach by the Shareholders of any representation or warranty contained in
Section 3.2 hereof; or (d) related to any tax or tax liability of Secure Source
for periods prior to the Closing Date.
10. TERMINATION.
10.1. TERMINATION. This Agreement may be terminated at any time on or
prior to the Closing:
(a) By mutual consent of NeoMedia and the Shareholders; or
(b) At the election of NeoMedia if: (i) the Shareholders have
breached or failed to perform or comply with any of their representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 7 is not satisfied as and when
required by this Agreement; or (iii) the Closing has not been consummated by
October 15, 2003; or
(c) At the election of the Shareholders if: (i) NeoMedia has breached or
failed to perform or comply with any of its representations, warranties,
covenants or obligations under this Agreement; or (ii) any of the conditions
precedent set forth in Section 6 or 8 is not satisfied as and when required by
this Agreement; or (iii) if the Closing has not been consummated by October 15,
2003.
10.2. MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("Termination Notice") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("Terminating Party") to the
24
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (a) its obligations under Sections 2.2 and
2.3; or (b) liability for its intentional breach of any representation, warranty
or covenant contained herein, or its intentional failure to comply with the
terms and conditions of this Agreement or to perform its obligations hereunder.
11. MISCELLANEOUS.
11.1. NOTICES.
(a) All notices, requests, demands, or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given upon receipt if delivered in person, or upon the expiration of four (4)
days after the date sent, if sent by federal express (or similar overnight
courier service) to the parties at the following addresses:
(i) If to NeoMedia: NeoMedia Technologies, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
with a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
(ii) If to a Shareholder: The name and address as listed on the
Schedule A attached hereto.
(iii) with a copy to: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxx Xxxxxx XX
Xxxxxxxxxx, XX 00000
(b) Notices may also be given in any other manner permitted by law,
effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
25
11.2. SURVIVAL. Except as provided in the next sentence, the
representations, warranties, agreements and indemnifications of the parties
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement shall survive any investigation heretofore or
hereafter made by the parties and the consummation of the transactions
contemplated herein and shall continue in full force and effect after the
Closing, subject to the limitations of Section 9.5. The representations,
warranties and agreements of Secure Source contained in this Agreement shall not
survive the Closing.
11.3. COUNTERPARTS; INTERPRETATION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the parties with respect to the matters covered hereby. All Schedules
hereto shall be deemed a part of this Agreement. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular section or paragraph. References to
"including" means including without limiting the generality of any description
preceding such term. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person other than the parties
hereto any rights or remedies under or by reason of this Agreement.
11.4. GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Florida, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or federal
courts in Xxx County, Florida, U.S.A. Each of the parties hereby irrevocably
submits to the jurisdiction of any state or federal court sitting in Xxx County,
Florida. Each party hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
any such action in Xxx County, Florida.
11.5. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, and successors; provided,
however, that no Shareholder may assign this Agreement or any rights hereunder,
in whole or in part.
11.6. PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
26
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
11.7. WAIVER. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
11.8. HEADINGS. The headings as to contents of particular paragraphs
of this Agreement are inserted for convenience only and shall not be construed
as a part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.9. EXPENSES. Except as otherwise expressly provided herein, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by NeoMedia or the
Shareholder as each party incurs such expenses, and none of such expenses shall
be charged to or paid by Secure Source.
11.10. FINDER'S FEES. NeoMedia represents to the Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by the NeoMedia to be paid for or on account of the transactions
contemplated hereby. The Shareholders represent to NeoMedia that no broker,
agent, finder or other party has been retained by Shareholders or Secure Source
in connection with the transactions contemplated hereby and that no other fee or
commission has been agreed by the Shareholders or Secure Source to be paid for
or on account of the transactions contemplated hereby.
11.11. GENDER. Where the context requires, the use of the singular
form herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.12. ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
11.13. ATTORNEYS' FEES. In the event of any litigation arising under
the terms of this Agreement, the prevailing party or parties shall be entitled
to recover its or their reasonable attorneys' fees and court costs from the
other party or parties.
11.14. OPPORTUNITY TO HIRE COUNSEL; ROLE OF XXXXXXXXXXX & XXXXXXXX
LLP. The Shareholders acknowledges that they have been advised and have been
given an opportunity to hire counsel with respect to this Agreement and the
transactions contemplated hereby. The Shareholders further acknowledges that the
27
law firm of Xxxxxxxxxxx & Xxxxxxxx LLP has solely represented the NeoMedia in
connection with this Agreement and the transactions contemplated hereby and no
other person.
11.15. TIME IS OF THE ESSENCE. It is understood and agreed among the
parties hereto that time is of the essence in this Agreement and this applies to
all terms and conditions contained herein.
11.16. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
28
IN WITNESS WHEREOF, the parties have executed this Agreement to be duly
executed by their duly authorized officers as of the day and year first above
written.
NEOMEDIA TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------
Title: President, COO & Acting CEO
---------------------------
SECURE SOURCE TECHNOLOGIES, INC.
By: /s/ Xxx Xxxxxx
-------------------------
Name: Xxx Xxxxxx
-------------------------
Title: President
---------------------------
SHAREHOLDERS:
Name: /s/ Xxx Xxxxxx
-------------------------
Xxx Xxxxxx
Name: /s/ Xxxx Xxxxxxx
-------------------------
Xxxx Xxxxxxx
29
SCHEDULE A
MERGER CONSIDERATION
LIST OF SECURE SOURCE SHAREHOLDERS
NAME ADDRESS NEOMEDIA SHARES
Schedule 1
EXHIBIT B
---------
PLAN OF MERGER
--------------
The following Plan of Merger is submitted in compliance with Title 8,
Section 251 of the Delaware General Corporation Law:
1. SURVIVING CORPORATION. The name of the surviving corporation is
Neomedia Technologies, Inc., a Delaware corporation (the "Surviving
Corporation").
2. MERGING CORPORATION. The name of the merging corporation is Secure
Source Technologies, Inc., a Delaware corporation (the "Merging
Corporation").
3. TERMS AND CONDITIONS OF MERGER. The terms and conditions of the merger
are as set forth in that certain Merger Agreement dated October 3,
2003, by and among the Surviving Corporation, the Merging Corporation
and the Shareholders identified therein, a true and correct copy of
which is attached hereto as Exhibit A (the "Merger Agreement").
4. CONVERSION OF SHARES. The manner and basis of converting the shares of
the Merging Corporation into shares, or other securities of the
Surviving Corporation or, in whole or in part, into cash or other
property and the manner and basis of converting rights to acquire
shares of the Merging Corporation into rights to acquire shares,
obligations, or other securities of the Surviving Corporation or, in
whole or in part, into cash or other property are as set forth in the
Merger Agreement.
5. EFFECTIVE DATE. The merger shall become effective (the "Effective
Date") upon filing of the Certificate of Merger with the Secretary of
State of Delaware.
6. EFFECT OF MERGER. Upon the Effective Date of the merger, the Merging
Corporation shall be merged with and into the Surviving Corporation
such that from the Effective Date, the separate existence of the
Merging Corporation shall cease. The Surviving Corporation shall
continue its corporate existence under the laws of the State of
Delaware.
[SIGNATURES ON FOLLOWING PAGE]
2
NEOMEDIA TECHNOLOGIES, INC.,
a Delaware corporation
BY: /s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx, President, COO & Acting CEO
DATE: 10/3/03
SECURE SOURCE TECHNOLOGIES, INC.
a Delaware corporation
BY : /s/ Xxxxxxxx X. Xxxxxx
-----------------------
Xxxxxxxx X. Xxxxxx
DATE: 10/3/03
3
EXHIBIT C
---------
CERTIFICATE OF MERGER
OF SECURE SOURCE TECHNOLOGIES, INC., A DELAWARE CORPORATION,
WITH AND INTO
NEOMEDIA TECHNOLOGIES, INC., A DELAWARE CORPORATION
Pursuant to Title 8, Section 251 of the Delaware General Corporation Law, the
undersigned corporations have executed the following Certificate of Merger:
FIRST: The name of the surviving corporation is NEOMEDIA TECHNOLOGIES, INC., a
Delaware corporation, and the name of the corporation being merged with and into
this surviving corporation is SECURE SOURCE TECHNOLOGIES, INC., a Delaware
corporation.
SECOND: The Agreement of Merger has been approved, adopted, certified, executed
and acknowledged by each of the constituent corporations pursuant to Title 8,
Section 251 of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is NEOMEDIA TECHNOLOGIES, INC., a
Delaware corporation.
FOURTH: The Certificate of Incorporation of the surviving corporation shall be
its Certificate of Incorporation. No amendments shall be effected by the merger.
FIFTH: The merger is to become effective on the date of filing of this
Certificate of Merger with the Secretary of State of Delaware.
SIXTH: The Agreement of Merger is on file at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxxx, XX 00000, the office of the surviving corporation.
SEVENTH: A copy of the Agreement of Merger will be furnished by the surviving
corporation on request, without cost, to any stockholder of the constituent
corporations.
IN WITNESS WHEREOF, said surviving and merging corporations have caused this
Certificate of Merger to be signed by an authorized officer, this 8th day of
October, A.D., 2003.
NEOMEDIA TECHNOLOGIES, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
--------------------------
NAME: Xxxxxxx X. Xxxxxx
ITS: President, COO, Acting CEO
SECURE SOURCE TECHNOLOGIES, INC.
BY : /s/ Xxx Xxxxxx
--------------------------
NAME: Xxx Xxxxxx
ITS : President
4
SCHEDULE 2.11
-------------
ALLOCATION OF MERGER CONSIDERATION
----------------------------------
SCHEDULE 3.2(A)
---------------
OUTSTANDING SECURITIES CONVERTIBLE INTO CAPITAL STOCK OF SECURE SOURCE
----------------------------------------------------------------------
NONE
----
SCHEDULE 3.8
------------
ABSENCE OF MATERIAL ADVERSE CHANGES
-----------------------------------
NO ADVERSE CHANGES
------------------
SCHEDULE 3.13
-------------
LEASE OF REAL PROPERTY
----------------------
NONE
----
SCHEDULE 3.14
-------------
CONTINGENCIES
-------------
NONE
----
SCHEDULE 3.17
-------------
INSURANCE
---------
NOT APPLICABLE
--------------
SCHEDULE 3.18
-------------
EMPLOYMENT AND LABOR MATTERS
----------------------------
NOT APPLICABLE
--------------
SCHEDULE 3.19
-------------
EMPLOYEE BENEFIT MATTERS - NO EMPLOYEES
---------------------------------------
NOT APPLICABLE
--------------
5
SCHEDULE 3.21
-------------
ENVIRONMENTAL MATTERS
---------------------
NOT APPLICABLE
--------------
SCHEDULE 3.28
-------------
DIVIDENDS AND OTHER DISTRIBUTIONS
---------------------------------
NONE
----
SCHEDULE 3.24
-------------
AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES
------------------------------------------------
NONE
----
SCHEDULE 3.25
-------------
BUSINESS PRACTICES
------------------
THERE HAVE BEEN NO PAYMENTS TO ANY GOVERNMENTAL OFFICIALS
---------------------------------------------------------
SCHEDULE 3.28
-------------
DIVIDENDS AND OTHER DISTRIBUTIONS
---------------------------------
NONE
----
6
