[DESCRIPTION] EX 2.4
Agreement and Plan of Merger--Softkat
AGREEMENT AND PLAN OF MERGER
AMONG
ESYNCH CORPORATION,
IN-US SOFTKAT ACQUISITION CORPORATION,
AND
SOFTKAT, INC.
DATED AS OF NOVEMBER 17, 1998
AGREEMENT AND PLAN
OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is
made as of this 17th day of November, 1998, by and among ESYNCH
CORPORATION, a Delaware corporation ("ESYNCH"), IN-US SOFTKAT
ACQUISITION CORPORATION, a Delaware corporation ("Acquisition Sub");
SOFTKAT, INC., a California corporation ("Softkat"); and the present
or former stakeholders of Softkat identified as such on the
signature pages hereto ("Softkat Holders").
WHEREAS, the parties desire to adopt a plan of
reorganization intended to effect a tax-free Merger under
SectionSection 361(a) and 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), pursuant to which Softkat will
merge with Acquisition Sub, with Softkat being the surviving
corporation, and all of the capital stock of Softkat will be
cancelled in exchange for voting stock of ESYNCH (the "Merger");
WHEREAS, the Boards of Directors of ESYNCH, Acquisition
Sub and Softkat, and the shareholder(s) of Acquisition Sub and
Softkat each (i) has determined that this Agreement and the
transactions contemplated hereby, including the Merger (as defined
hereinafter) are fair to it and in its best interests, and (ii)
approved this Agreement and the transactions contemplated hereby,
including the Merger, all on the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, for good and valuable considerations,
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including
court costs and attorneys' fees and expenses, in each case (a) net
of any insurance recoveries (except to the extent such recoveries
increase the cost of insurance, through retrospective adjustments or
otherwise), and (b) net of any tax benefit, after taking into
account any tax detriment, of any indemnity.
"CGCL" means the California General Corporation Law.
"Dissenting Shares" shall have the meaning given in Section 1300 et
seq. of the CGCL.
"Effective Time" means the time the Merger becomes effective in
accordance with the CGCL.
"EXCHANGE RATIO" MEANS THE NUMBER THAT IS FOUND BY EXECUTING THE
FOLLOWING CALCULATION: (I) 720,000 ESYNCH NEW COMMON SHARES;
DIVIDED BY (II) THE NUMBER OF FULLY-DILUTED SOFTKAT SHARES.
"Excluded Shares" shall mean any Softkat Shares held of record as of
the Effective Time by ESYNCH or any subsidiary of ESYNCH.
"Fully-Diluted Softkat Shares" means the sum of (a) the number of
Softkat Common Shares issued and outstanding, plus (b) the number of
Softkat Common Shares that are subject to issuance upon exercise or
conversion of outstanding preferred stock, stock warrants, stock
options, conversion rights and other similar rights, whether or not
such warrants, options and rights are currently exercisable or
convertible or are subject to any contingency, in each case
determined as of the Closing Date.
"ESYNCH Old Common Shares" means shares of Common Stock, par value
$.001 per share, of ESYNCH as authorized and classified prior to the
Reclassification.
"ESYNCH Contingent Common Shares" means ESYNCH New Common Shares as
authorized as of immediately after the effectiveness of the
Reclassification and issuable pursuant to Section 2(b)(iii) of this
Agreement, subject to proportional adjustments in the event of the
reclassification or merger or the like in which the ESYNCH New
Common Shares are exchanged for or converted into a different kind
or amount of securities or property after the Reclassification.
"ESYNCH New Common Shares" means the shares of common stock, par
value $.001 per share, as have been authorized and reclassified as
of immediately after the effectiveness of the Reclassification.
"ESYNCH Series I Preferred Shares" means shares of Series I
Convertible Preferred Stock, par value $0.001 per share, of ESYNCH,
on substantially the terms and conditions of the Certificate of
Designation of Series I Preferred Stock, which is attached hereto as
Exhibit A, subject to proportional adjustments in the event of the
reclassification or merger or the like after the Reclassification in
which the ESYNCH Series I Preferred Shares or ESYNCH New Common
Shares are exchanged for or converted into a different kind or
amount of securities or property.
"ESYNCH Shares" means collectively ESYNCH Series I Preferred Shares,
the ESYNCH New Common Shares, and the ESYNCH Contingent Common
Shares, and any securities or other property into which the
foregoing may be converted, exchanged or reclassified, in one or
more transactions (adjusted in number, kind and price in accordance
with their respective rights or designations as provided in the
ESYNCH certificate of incorporation and designations, as amended).
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith, and all applications, registrations,
and renewals in connection therewith, (c) all copyrightable works,
all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all trade secrets and confidential
business information (including ideas, research and development,
know-how, compilations, compositions, processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals), (e) all computer software (including
data and related documentation), source code, algorithms, and object
code, and (f) all other proprietary rights, and (g) all copies and
tangible embodiments thereof (in whatever form or medium).
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due), including any liability for Taxes.
"Reclassification" means the one-for-ten reverse stock split of the
ESYNCH Old Common Shares which was effective as of November 9, 1998
in which each 10 ESYNCH Old Common Shares were exchanged for 1
ESYNCH New Common Share, subject to payment in lieu of fractional
shares, as further described in the Restated Certificate of
Incorporation of ESYNCH attached hereto as Exhibit B, and pursuant
to which all then outstanding ESYNCH Series H Preferred Shares, par
value $.001 (the "ESYNCH Series H Preferred Shares"), were
automatically converted into 56 1/4 ESYNCH New Common Shares, and
the ESYNCH Series H Preferred Shares are no longer issued and
outstanding.
"Softkat Holder" means a holder of Softkat Shares, Softkat Warrants
or Softkat Subordinated Notes, or such holder's representative, as
identified on the signature pages hereto.
"Softkat Subordinated Notes" means the $800,000 in original
principal amount of subordinated indebtedness of Softkat represented
by promissory notes.
"Softkat Warrants" means the warrants to purchase originally an
aggregate of 1,031,625 Softkat Common Shares at a price of $2.00 per
share.
"Softkat Common Shares" means the issued and outstanding shares of
Common Stock, without par value, of Softkat determined as of the
Closing Date.
"Softkat Shares" means (a) Softkat Common Shares that are issued and
outstanding, plus (b) Softkat Common Shares that are subject to
issuance upon exercise or conversion of outstanding convertible
notes, preferred stock, stock warrants, stock options, conversion
rights and other similar rights, whether or not such warrants,
options and rights are currently exercisable or convertible or are
subject to any contingency, specifically including Softkat Warrants,
in each case determined as of the Closing Date.
"Surviving Corporation" shall have the meaning given in Section 2(a)
of this Agreement.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including
taxes under Code Sec. 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including
any interest, penalty, or addition thereto, whether disputed or not.
"Trading Price" shall mean (A) the closing sale price of the ESYNCH
New Common Shares as reported by the principal trading market of the
ESYNCH New Common Shares if they are traded on a national securities
exchange or quoted on a national quotation system of a national
association of securities dealers (such as the Nasdaq National
Market or Nasdaq SmallCap Market) on the day concerned, and if no
sales occur on such day, then the closing sale price on the first
prior trading day on which at least one sale occurs on such
principal market, or (B) if the ESYNCH New Common Shares are not
traded on a national securities exchange or quoted on such a
national quotation system, then the closing bid price of the ESYNCH
New Common Shares, if a closing bid price is reported on such day on
the over-the-counter bulletin board, and if not, then the reported
closing bid price on the first prior trading day on which such a
closing bid price is reported for the ESYNCH New Common Shares or
(C) if the prices for ESYNCH New Common Shares have not been
reported on any national securities exchange, automated quotation
systems of a national association of securities dealers or the
over-the-counter bulletin board for the immediately preceding ten
(10) trading days, then the opening bid price for the ESYNCH New
Common Shares on the next trading day on which so reported.
SECTION 2. The Merger; Other Exchanges of Securities.
(a) The Merger. Softkat and Acquisition Sub shall be the
constituent corporations in the Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Merger
shall be implemented by means of a merger (hereinafter sometimes
referred to as the "Merger") of Acquisition Sub with and into
Softkat in accordance with Section 1100 et seq. of the CGCL, to be
effected by the filing of the Merger Agreement, substantially in the
form attached hereto as Exhibit C, with the California Secretary of
State and the various certificates required by such law. In
accordance with such statutes, at the Effective Time, the
Acquisition Sub shall be merged with and into Softkat, the separate
corporate existence of Acquisition Sub shall cease, and Softkat
shall be the surviving corporation (the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State
of California. From and after the Effective Time and thereafter
until amended as provided by law, the Articles of Incorporation of
Softkat as in effect immediately prior to the effective time shall
become the Articles of Incorporation of the Surviving Corporation.
From and after the Effective Time and thereafter until amended as
provided by law, the Bylaws of Softkat as in effect immediately
prior to the effective time shall become the Bylaws of the Surviving
Corporation, except that the Bylaws of the Surviving Corporation
shall be amended such that the number of directors shall be one,
which number may be changed from time to time, by a resolution duly
adopted by the shareholders or a majority of the directors then in
office. The directors and officers of the Surviving Corporation
shall be as set forth in Exhibit C, and each such director or
officer shall serve until his or her successor has been duly elected
or appointed and qualified or until his or her earlier death,
resignation or removal in accordance with the terms of the Surviving
Corporation's Articles of Incorporation and Bylaws.
(b) Treatment of Softkat Shares and Acquisition Sub Stock.
(i) Conversion of Softkat Common Shares and
Acquisition Sub Stock. At the Effective Time, each of the Softkat
Common Shares issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares and Excluded Shares, if
any) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive a
number of ESYNCH New Common Shares equal to the product of
multiplying the number of Softkat Common Shares by the Exchange
Ratio (the "Merger Consideration"). All Softkat Common Shares
shall, as of the Effective Time, no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each
certificate previously representing any such shares shall thereafter
represent only the right to receive the Merger Consideration into
which the shares of Softkat Common Shares represented by such
certificate have been converted. As of the Effective Time, all
Excluded Shares, if any, shall cease to exist and the certificates
for such shares shall, as promptly as practicable thereafter, be
cancelled and no payments shall be made in consideration therefor.
Notwithstanding anything in this Agreement to the contrary,
Dissenting Shares shall not be converted into the right to receive,
or be exchangeable for, the Merger Consideration provided for in
Section 2(b)(i) hereof, but, instead, the holders thereof shall be
entitled to payment for such Dissenting Shares in accordance with
the provisions of Chapter 13 of the CGCL, a copy of which is
attached hereto as Exhibit D, unless and until a holder of
Dissenting Shares shall have failed to perfect or shall have
effectively withdrawn or lost such holder's rights to appraisal and
payment, as the case may be. Softkat shall (a) comply with the
provisions of Sections 1300 et seq. of the CGCL applicable to it in
a prompt and expeditious manner, (b) give ESYNCH prompt written
notice of (i) the identities of all Softkat shareholders who have
perfected rights to dissent pursuant to the CGCL and (ii) the
receipt of any notice from any Softkat shareholder demanding the
purchase of his, her or its Softkat Common Shares, (c) not settle or
offer to settle any such demands without the prior written consent
of ESYNCH, and (d) not, without the prior written consent of ESYNCH,
waive any vote in favor of the Merger or failure of any Softkat
shareholder timely to take any other action required under CGCL. At
the Effective Time, the shares of common stock of Acquisition Sub
then issued and outstanding shall be converted into a like number of
shares of common stock of the Surviving Corporation, which
thereafter shall constitute all of the issued and outstanding shares
of common stock of the Surviving Corporation.
(ii) Exchange of Certificates. After the
Effective Time, each holder of a certificate or certificates
theretofore representing issued and outstanding Softkat Common
Shares (other than the Dissenting Shares and Excluded Shares) shall,
upon the surrender of such certificates to ESYNCH, or an exchange
agent designated by ESYNCH, be entitled to receive, in exchange for
each of the shares represented by such certificate or certificates
so surrendered, an amount in ESYNCH New Common Shares equal to the
Merger Consideration, less any required withholding of Taxes (as
hereinafter defined). The holder of a certificate that prior to the
Merger represented issued and outstanding Softkat Common Shares
shall have no rights, after the Effective Time, with respect to such
shares except to surrender the certificate in exchange for the
Merger Consideration, without interest thereon or, if applicable, to
perfect such rights as a holder of Dissenting Shares as such holder
may have pursuant to the applicable provisions of Chapter 13 of the
CGCL. Within five (5) business days after the Effective Time, the
Surviving Corporation will send to each holder of Softkat Common
Shares at the Effective Time a letter of transmittal for use in such
exchange. In the event any certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
person of a bond in such amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it
with respect to such certificate, ESYNCH will deliver, or cause to
be delivered, in exchange for such lost, stolen or destroyed
certificate, certificates representing the Merger Consideration
payable in respect thereof.
(iii) ESYNCH Contingent Common Shares. Within
five (5) business days following the first anniversary of the
Closing Date ("Anniversary Date"), ESYNCH shall issue and cause to
be delivered to the holders of Softkat Common Shares (other than
Dissenting Shares or Excluded Shares) as of immediately prior to the
Effective Time ("Recipients") additional ESYNCH New Common Shares
("ESYNCH Contingent Common Shares") if and only if the Trading Price
of the ESYNCH New Common Shares shall not have equaled or exceeded
$3.00 on any one or more of the trading days during the 30-day
period ending on the Anniversary Date. Subject to the terms and
conditions in the foregoing sentence, ESYNCH shall issue ESYNCH New
Common Shares, represented by certificates registered in the name of
the Recipients, pro rata, in the aggregate amount equal to the
lesser of (A) 720,000 ESYNCH Contingent Common Shares, and (B) a
number equal to 720,000 multiplied by the difference between (a)
$3.00 (subject to proportionate adjustment in the event of any
split, reverse split, or stock dividend of the ESYNCH New Common
Shares), and (b) the average Trading Price of the ESYNCH New Common
Shares over the 10 trading days ending on the first trading day
prior to the Anniversary Date. The aggregate amount determined as
set forth above, if any, shall be allocated among the Recipients pro
rata according to the number of Softkat Common Shares registered in
the name of each of them as of immediately prior to the Effective
Time. In the event that Softkat has willfully and fraudulently
concealed any material adverse information regarding the historical
business operations or historical financial condition of Softkat
from ESYNCH, and such information has a direct material adverse
effect on the Trading Price, ESYNCH shall be entitled to reduce the
number of ESYNCH Contingent Common Shares by a number equal to the
actual out-of-pocket damages suffered by ESYNCH directly resulting
from such concealed information, divided by the average Trading
Price of the ESYNCH New Common Shares over the 10 trading days
ending on the first trading day prior to the Anniversary Date.
(iv) Certain Taxes. If any certificates
representing Merger Consideration are to be registered in a name
other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of such delivery of
Merger Consideration that the certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the
person requesting such exchange shall pay to ESYNCH, in advance, any
transfer or other Taxes required by reason of the payment to a
person other than the registered holder of the certificate
surrendered, or required for any other reason, or shall establish to
the satisfaction of ESYNCH that such Tax has been paid or is not
payable.
(v) Closing of Transfer Books. At the
Effective Time, the transfer books for Softkat Common Shares shall
be closed, and no transfer of Softkat Common Shares shall thereafter
be made on such books. If, after the Effective Time, certificates
representing any such shares are presented for transfer to ESYNCH,
they shall be cancelled and exchanged for the Merger Consideration
as provided in this Section 2.
(c) Treatment of Softkat Warrants. Softkat shall take all
actions necessary to provide that, as to those holders of Softkat
Warrants who so agree, at the Effective Time, each Softkat Warrant
shall be exercised and cancelled. The aggregate exercise price paid
in cash by holders of the Softkat Warrants, as amended, to Softkat
shall equal $193,000 or more. Further, such holders of Softkat
Warrants shall agree (A) not to trade in the ESYNCH Shares with the
purpose or effect of manipulating the Trading Price of the ESYNCH
New Common Shares through the Anniversary Date, (B) to confirm the
amounts of Softkat securities owned by it, and (C) to approve the
Merger and this Agreement as holder of all of the Softkat Common
Shares owned by it or its affiliates immediately prior to the
Effective Time. Prior to the Effective Time, Softkat shall use
reasonable efforts to (i) obtain any consents from holders of
Softkat Warrants and (ii) make any amendments to the terms of such
Softkat Warrants that are necessary to give effect to the
transactions contemplated by this Section. To the extent that
holders of Softkat Warrants do not exercise the Softkat Warrants,
Softkat shall grant new warrants on the terms anticipated in the
amended warrants, all of which shall also be included in the
calculation of Fully-Diluted Softkat Shares, and shall be otherwise
treated as Softkat Warrants and exercised as described above.
(d) Treatment of Softkat Subordinated Notes. Prior to the
Effective Time, Softkat shall deposit with a bank, trust, escrow
company or exchange agent (the "Paying Agent"), for the benefit of
the holders of Softkat Subordinated Notes, cash in the aggregate
amount equal to $204,374.50 or more. $185,000 thereof is to
comprise a principal payment to the holders of Softkat Subordinated
Notes, $8.00 is to cover cash in lieu of fractional ESYNCH Series I
Preferred Shares, and $19,366.50 thereof is to cover attorneys' fees
and costs incurred by Softkat in connection with the Merger and the
other transactions contemplated in this Agreement. Barack
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx shall release Softkat from
any additional amounts of fees and costs then remaining due or
accrued thereafter in excess of $8,000. Certain founders of Softkat
shall deposit with the Paying Agent promptly following the Closing
1,260,000 Softkat Common Shares, and Softkat will deposit with the
Paying Agent promptly following the Closing an additional number of
Softkat Common Shares based on $0.035 per Softkat Common Share to
equal the deficiency between (a) the aggregate of the $185,000 cash
payment described above plus the $600,000 payment made in the form
of 600,000 ESYNCH Series I Preferred Shares plus 1,060,000 Softkat
Common Shares deposited by the founders and (b) the amount due under
the Softkat Subordinated Notes. Other than the aggregate of
$600,000 principal amount thereof to be exchanged for ESYNCH Series
I Preferred Shares as described below, the amount due the holders of
Softkat Subordinated Notes is equal to $200,000, representing unpaid
principal, plus accrued and unpaid interest of $32,666.66 to October
31, 1998, plus $153.42 per day thereafter to the Closing Date.
Softkat will therefore deposit Softkat Common Shares in an aggregate
number equal to approximately 358,889 Softkat Common Shares as of
November 13, 1998. ESYNCH shall deposit with the Paying Agent
promptly following the Closing 600,000 ESYNCH Series I Preferred
Shares, evidenced by certificates in appropriate denominations and
registered in the names of the record holders of the Softkat
Subordinated Notes, all for payment and delivery to the holders of
Softkat Subordinated Notes on the Payment Date. The amounts in cash
and shares required to be deposited with the Paying Agent are
hereinafter called the "Funds." $19,000 of the cash Funds shall be
disbursed as of the Closing Date to Barack Xxxxxxxxxx Xxxxxxxxxx
Xxxxxxx & Xxxxxxxxx to pay Transaction Costs incurred by Softkat in
connection with this Agreement and the Merger. The remaining Funds
shall be disbursed to each respective former holder of a Softkat
Subordinated Note as of or after the Closing Date on the first
business day following the receipt by the Paying Agent, for the
account of Softkat, of the Softkat Subordinated Note surrendered for
cancellation (such date herein called the "Payment Date"). The
$185,000 in cash; 600,000 shares of ESYNCH Series I Preferred Stock;
and approximately 1,420,000 Softkat Common Shares shall be paid and
allocated pro rata among those holders of Softkat Subordinated
Notes, according to the respective original principal amounts
thereof, who shall have agreed, on or prior to the Effective Time,
to surrender such Softkat Subordinated Notes for cancellation in
exchange for this right to receive Funds. Prior to the Effective
Time, Softkat shall use reasonable efforts to (i) obtain any
consents from holders of Softkat Subordinated Notes and (ii) make
any amendments to the terms of such Softkat Subordinated Notes that
are necessary to give effect to the transactions contemplated by
this Section. Notwithstanding the foregoing, neither ESYNCH, the
Surviving Corporation, nor any other person shall be liable to any
holder of Softkat Subordinated Notes for the payment to a public
official of any unclaimed portion of the Fund pursuant to applicable
abandoned property laws. In the event any such Softkat Subordinated
Note shall have been lost, stolen or destroyed upon the making of an
affidavit of that fact by the person claiming such certificate to be
lost, stolen or destroyed and, if required by ESYNCH or Softkat, the
posting by such person of a bond in such amount as either of such
parties may direct, whichever is greater, as indemnity against any
claim that may be made against Softkat with respect to such
promissory note, the Paying Agent shall deliver the pro rata portion
thereof, payable the holder in respect to such lost, stolen or
destroyed Softkat Subordinated Note. Further, each of the holders
of Softkat Subordinated Notes shall agree (A) not to trade in the
ESYNCH Shares with the purpose or effect of manipulating the Trading
Price of the ESYNCH New Common Shares through the Anniversary Date,
(B) to confirm the amounts of Softkat securities owned by it, and
(C) to approve the Merger and this Agreement as holder of all of the
Softkat Common Shares owned by it or its affiliates immediately
prior to the Effective Time. The terms of the ESYNCH Series I
Preferred Shares anticipate the Reclassification, and the conversion
rights therein are expressed in terms of ESYNCH New Common Shares.
(e) Treatment of Softkat Options. All of the options,
warrants and other rights to acquire Softkat Shares (other than the
Softkat Warrants) shall be cancelled prior to the Merger without
payment therefor pursuant to agreements between Softkat and the
holders thereof in form and substance satisfactory to ESYNCH.
(f) Fractional Shares. No certificates or scrip
representing fractional share interests in ESYNCH New Common Shares
will be issued, and no such fractional share interest will entitle
the holder thereof to vote, or to any rights of a stockholder of the
Company. A holder of Softkat Common Shares shall receive, in lieu
of any fraction of a ESYNCH Common Share to which the holder would
otherwise be entitled, a cash payment therefor, rounded to the
nearest cent, on the basis of the average of the closing bid and
asked quotations price of the ESYNCH New Common Shares as reported
by the over-the-counter bulletin board on the Effective Date (or in
the event the Company's New Common Shares are not so quoted on the
Effective Date, such closing quotations on the next preceding day on
which such stock was quoted). If more than one certificate
representing Softkat Common Shares shall be surrendered at one time
for the account of the same stockholder, the number of full ESYNCH
New Common Shares which shall be issued shall be computed on the
basis of the aggregate number of shares represented by the Softkat
Common Share certificates so surrendered. In the event that the
Company's Exchange Agent determines that a holder of Softkat Common
Shares has not tendered all his certificates for exchange, the
Exchange Agent may carry forward any fractional share until all
certificates of that holder have been presented for exchange such
that payment for fractional shares to any one person shall not
exceed the value of one share.
SECTION 3. Other Agreements.
(a) Promptly following the execution and delivery of this
Agreement, the parties shall issue a joint press release in a form
mutually to be agreed upon. The parties shall not, and shall
instruct their representatives not to, issue or cause the
publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, this
Agreement or the Merger without the consent of the other party,
which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, in the event that any party determines, based upon
the advice of counsel, that a press release, disclosure in a public
filing, or other public disclosure of or reference to this
Agreement, the Merger or the other party is required by law, the
former party shall first use reasonable efforts to notify the latter
party of the potential disclosure, and use reasonable efforts to
afford the latter party a reasonable opportunity to review and
comment on the proposed disclosure, provided that the consent of the
latter party for such publication shall not be required in any such
instance. In addition, ESYNCH shall file on a timely basis a
Current Report on Form 8-K reporting this transaction as an
acquisition, and make any additional filings and reports as may be
required or advisable under applicable law.
(b) ESYNCH HAS EFFECTED THE RECLASSIFICATION, PURSUANT TO
WHICH ALL OF THE SERIES H PREFERRED STOCK HAS AUTOMATICALLY
CONVERTED INTO ESYNCH NEW COMMON SHARES. ESYNCH HAS FILED A
CERTIFICATE OF ELIMINATION OF THE SERIES H PREFERRED STOCK.
(c) Promptly following the date of execution of this
Agreement, ESYNCH shall file Form D with the SEC regarding the
Merger, and make all other necessary or advisable filings under
California, New York and other applicable state securities laws, as
necessary or advisable to obtain appropriate exemptions from
registration or qualification under federal and applicable state
securities laws. Except as expressly disclosed in writing by
Softkat, ESYNCH shall understand that the Softkat shareholders are
residents of California, Alabama, Connecticut, Delaware, Florida,
Georgia, Illinois, Iowa, Kansas, Massachusetts, Montana, New Jersey,
New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Virginia or
Washington. In order to perfect such exemptions as are available
under Regulation D and the California Corporate Securities Law, and
other applicable laws, Softkat shall require that prior to the
Effective Time the holders of Softkat Common Shares, Softkat
Warrants and Softkat Subordinated Notes consent and acknowledge in
writing that the ESYNCH Shares being acquired by the Softkat Holder
are being acquired for the person's personal account, for investment
purposes only, and not with a view to the distribution, resale or
other disposition thereof, that ESYNCH is issuing the ESYNCH Shares
without registering such shares under the Securities Act of 1933
(the "Act") on the basis of certain exemptions from such
registration requirement, and accordingly that the person
acknowledges that the certificates evidencing the ESYNCH Shares
shall bear a legend indicating such non-registration under the Act
and the resulting restrictions on transfer, and the person may be
required to hold the ESYNCH Shares indefinitely unless they are
subsequently registered for resale under the Act or an exemption
from such registration is available, and that the person has
received a copy of the Filings (as defined below) and understands
that all rights and obligations connected with this Agreement are
set forth in this Agreement, acknowledges having had an opportunity
to request and receive additional information from ESYNCH, its being
experienced and sophisticated in financial and business matters
sufficient to protect its interests in this transaction and to
evaluate the merits and risks of the Merger and its being in such
financial condition so as to be able to invest in illiquid
securities for an indefinite period of time.
(d) On the Closing Date, Softkat shall cause to be
delivered to ESYNCH and Acquisition Sub such resignations of
directors and officers of Softkat and cause to take effect such
amendments of its bylaws as may be necessary or appropriate to elect
Xxxxxx Xxxxxxxxx and other designates of Acquisition Sub to
constitute all of the members of Softkat's and Sonoma's Board of
Directors and officers.
(e) Following the Closing, ESYNCH shall continue to file
reports with the Securities and Exchange Commission as required in
Rule 144(c)(1), or any successor rule, for a period of at least
twenty-four (24) months immediately following the Closing, or such
longer period as any Recipient shall be deemed an affiliate of
ESYNCH on account of being an officer or director of ESYNCH or its
receipt and holding of Merger Consideration or ESYNCH Contingent
Common Shares, or such shorter time as any ESYNCH New Common Shares
or ESYNCH Series I Preferred Shares are outstanding, and ESYNCH
shall take all other actions as may reasonably be required of ESYNCH
in order that Rule 144, or any successor rule, may be available to
the shareholders of ESYNCH who satisfy the provisions of the rule
applicable to the holder or its offer or sale of securities.
(f) Until five years from the Effective Time, unless
otherwise required by applicable law, the articles of incorporation
and bylaws of the Surviving Corporation shall contain provisions no
less favorable with respect to the elimination of liability of
directors and the indemnification of (and advancement of expenses
to) directors, officers, employees and agents that are set forth in
the articles of incorporation and bylaws of Softkat, as in effect on
the date hereof. The articles and bylaws of Softkat are attached as
Exhibit E. The purpose of this provision is to assure that the
Surviving Corporation does not deny indemnity claims under its
articles of incorporation or bylaws that would be allowed as to
actions or inactions that occurred prior to the Effective Time but
for such subsequent amendment, and shall not be construed to cover
any actions or inactions occurring after the Effective Time.
SECTION 4. Representations and Warranties of Softkat. As of the
date hereof, and as of the Closing Date, Softkat hereby represents
and warrants to ESYNCH, except as set forth on Softkat's Disclosure
Schedule, as follows:
(a) Softkat is a corporation duly organized and existing
and in good standing under the laws of the State of California and
Softkat has all necessary corporate power and authority to own and
conduct its business as currently conducted. Softkat is not
required by the nature of its business or properties to be qualified
to do business as a foreign corporation in any jurisdiction outside
California. Softkat has no subsidiaries other than Sonoma
MultiMedia, Inc., a California corporation ("Sonoma"), and owns no
similar interest in any other entity. Softkat holds of record and
beneficially all right, title and interest in all of the outstanding
capital stock of Sonoma, free and clear of any lien, claim,
encumbrance or adverse interest of any kind, and such stock is
validly issued, fully-paid and non-assessable.
(b) Other than approval of the shareholders of Softkat
required by applicable law and other than the agreements
contemplated in Sections 2(c), 2(d) or 2(e), Softkat has obtained
all necessary corporate authorizations and material approvals
required for the execution, delivery and consummation of the
transactions provided for in this Agreement. This Agreement, and
when executed and delivered each of the other agreements
contemplated by this Agreement, to which Softkat is to be a party,
constitutes the valid and binding obligations of Softkat,
enforceable against Softkat in accordance with its terms except as
such enforcement may be limited by bankruptcy laws or other laws
affecting creditors' rights generally.
(c) Softkat has authorized capital of 5,000,000 shares of
Common Stock, without par value, of which a total of 3,403,468
shares of Common Stock are issued and outstanding, 1,031,625 shares
are reserved for issuance under outstanding Softkat Warrants (prior
to the amendments thereof contemplated in this Agreement which shall
result in the cancellation thereof prior to the Effective Time), and
no other shares are reserved for issuance under outstanding
convertible notes or other securities or arrangements except other
stock options listed in the Disclosure Schedule, all of which shall
be cancelled prior to the Effective Time. There are no preemptive
rights or similar rights as to Softkat's capital stock. All of the
Softkat Common Shares that are outstanding are, and all of the
Softkat Common Shares which shall have become outstanding prior to
the Effective Time shall be when issued, validly issued, fully-paid
and non-assessable and were or shall have been issued in compliance
with all applicable federal and state securities laws. Sonoma has
authorized capital of 1,000,000 shares of capital stock, without par
value, of which a total of 1,000,000 shares are issued and
outstanding, and all of which are registered in the name of Softkat,
and are held by Softkat free and clear of any encumbrance, pledge,
lien, claim or restriction (other than restrictions on resale under
federal and state securities laws) and no other shares are
outstanding or reserved for issuance under outstanding convertible
notes or other securities or arrangements.
(d) The execution and delivery of this Agreement by
Softkat, and the consummation of the transactions and obligations
contemplated hereby, do not conflict with or result in a material
breach of the terms, conditions or provisions of, or constitute a
material default (or an event that would upon notice or lapse of
time or both would become a default) under, or result in the
creation of a lien or encumbrance of any kind on any of its assets
pursuant to (i) its Articles of Incorporation, as amended, or
bylaws, as amended, (ii) any material agreement, document or
instrument to which Softkat or Sonoma is a party or by which Softkat
or Sonoma is bound, or (iii) any judgment, decree, order, statute,
rule or regulation applicable to Softkat or Sonoma.
(e) The audited and the unaudited financial statements of
Softkat, on a consolidated basis with Sonoma, attached hereto as
Exhibit F fairly present the consolidated financial condition of
Softkat for the periods and at the dates stated therein, subject in
the case of unaudited financial statements to normal audit
adjustments and the absence of footnotes. No fact or condition is
known to Softkat that materially adversely affects, or that is
reasonably expected to materially adversely affect Softkat's or
Sonoma's business or financial condition, taken as a whole.
(f) Neither Softkat nor Sonoma (i) is involved in any
pending or, to its knowledge, threatened investigation, litigation
or legal proceeding that may have a material adverse effect upon its
financial condition, business or prospects, or (ii) is subject to
any order, judgment or decree that would reasonably be likely to
have such effect. All known, current or potential, or threatened
claims that could reasonably be anticipated to result in a material
claim against Softkat for indemnity are set forth in the Softkat
Disclosure Schedule.
(g) At the Closing Date, all of the assets of Softkat and
Sonoma shall be free and clear of any and all liens, liabilities,
claims or encumbrances of any kind or nature whatsoever, except
those in favor of Comerica Bank and the holders of the Softkat
Subordinates Notes, or as otherwise expressly provided herein or as
arises in favor of ESYNCH.
(h) Except as set forth in the Softkat Disclosure Schedule,
to the best knowledge of Softkat, neither Softkat nor Sonoma has
infringed or is now infringing, any patent, trade name, trademark,
service xxxx, copyright, trade secret, technology, know-how or
process belonging to any other person, firm or corporation, which
infringement would have an material adverse effect on Softkat or
Sonoma. Neither Softkat nor Sonoma has received any written notice
or other written indication of any such claim of infringement.
(i) Softkat has not utilized the services of, and that it
does not and will not have any liability to, any broker or finder in
connection with this Agreement or the transactions contemplated
hereby. Neither Softkat nor any holder of Softkat securities has
any liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which ESYNCH, Acquisition Sub,
Softkat or any of the other person could become liable or obligated
or otherwise. The solicitations of holders of Softkat Common
Shares, Softkat Warrants, Softkat Subordinated Notes, or other
securities as contemplated by this Agreement do not and shall not
involve any advertisement, general solicitation, or payment of
commissions or other amounts, directly or indirectly, to persons
soliciting consents, approvals, exchanges or proxies or any
violations of registration or qualification requirements of
applicable federal or state securities laws. The holders of Softkat
securities include no unsophisticated investors and fewer than 35
non-accredited investors.
(j) The Softkat Disclosure Schedule lists all employee
pension plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all material
employee welfare plans (as defined in Section 3(1) of ERISA), and
all other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements, and any
material current or former employment, executive compensation,
consulting or severance agreements, written or otherwise, for the
benefit of, or relating to, any employee of or consultant (or former
employee of or consultant) to Softkat, any trade or business
(whether or not incorporated) which is a member of a controlled
group including Softkat or which is under common control with
Softkat (an "ERISA Affiliate") within the meaning of Section 414 of
the Code, (all such plans, practices and programs are referred to as
the "Softkat Benefit Plans"), excluding agreements with former
employees under which Softkat has no remaining monetary obligations.
Neither Softkat nor any ERISA Affiliate maintains, or has ever
maintained, an Softkat Benefit Plan intended to qualify under
Section 401(a) of the Code or subject to Title IV of ERISA. There
have been made available to ESYNCH copies of (i) each written
Softkat Benefit Plan and (ii) the most recent annual report on Form
5500 series, with accompanying schedules and attachments, filed with
respect to each Softkat Benefit Plan required to make such a filing.
No Softkat Benefit Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and no Softkat Benefit
Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA. There has been no "prohibited transaction," as such
term is defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") with respect
to any Softkat Benefit Plan, which could result in any material
liability to Softkat. All Softkat Benefit Plans are in material
compliance with the requirements prescribed by any and all statutes
(including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto (including all
applicable requirements for notification to participants or the
Department of Labor, IRS or Secretary of the Treasury), and, Softkat
has performed all obligations required to be performed by it under,
are not in any respect in default under or violation of, and Softkat
has no knowledge of any default or violation by any other party to,
any Softkat Benefit Plans; and (iv) all contributions required to be
made to any Softkat Benefit Plan pursuant to the terms of such
Softkat Benefit Plan have been made on or before their due dates.
The Softkat Disclosure Schedule also sets forth a true and complete
list of (i) all employment agreements with officers or key
management personnel of Softkat; (ii) all agreements with
consultants obligating Softkat to make annual cash payments in an
amount exceeding $10,000; (iii) all employees of, or consultants to,
Softkat who have executed a confidentiality or non-competition
agreement with Softkat; (iv) all severance agreements, programs and
policies of Softkat with or relating to its employees, excluding
programs and policies required to be maintained by law; and (v) all
plans, programs, agreements and other arrangements of Softkat with
or relating to its employees which contain change in control
provisions. Except as set forth in the Softkat Disclosure Schedule,
(i) there are no controversies, including any unfair labor practice
complaint, pending or, to the knowledge of Softkat, threatened,
between Softkat and any of its employees, nor to the knowledge of
Softkat, is there any factual basis for any such controversy; and
(ii) Softkat is in compliance with all applicable laws, regulations
and orders respecting employment and employment practices, terms and
conditions of employment and wages and hours and Softkat is not
engaged in any unfair labor practice.
(k) The Softkat Disclosure Schedule includes a list of all
agreements to which Softkat or Sonoma is a party or by which Softkat
or Sonoma is bound (i) under which the consequences of a default,
nonrenewal or termination could have a material adverse effect on
Softkat or Sonoma; or (ii) pursuant to which payments might be
required or acceleration of benefits may be required upon a "change
of ownership" of Softkat. Such list shall include any agreements or
notes or other instruments under which Softkat or Sonoma borrows
money or finances the purchase of any goods or services, that grants
any security interest or other lien or encumbrance on any assets of
Softkat or Sonoma, restricts the scope or nature of or places
geographic restrictions on the business of Softkat or Sonoma, that
governs the provision of services by Softkat or Sonoma its clients,
provides for the sale or issuance of any shares of Softkat or Sonoma
stock or any convertible securities or for the sale of any assets of
Softkat or Sonoma, other than sales of inventory in the ordinary
course of business consistent with past practice (collectively, the
"Material Contracts"). Except as set forth in the Softkat
Disclosure Schedule, all of the Material Contracts are valid and
binding obligations of Softkat and Sonoma, as the case may be, and,
to the knowledge of Softkat, of the other parties thereto, all such
Material Contracts are in full force and effect and there has not
occurred any material default under or breach of any of the Material
Contracts, whether by Softkat or Sonoma or, to the knowledge of
Softkat, by the other parties thereto and, to the knowledge of
Softkat, no events or circumstances have occurred that, with the
passage of time or the giving of notice, or both, would constitute a
material breach or default of any such Material Contract (whether by
Softkat or Sonoma or any of the other parties thereto) under any of
the Material Contracts, or would materially impair Softkat's or
Sonoma's rights or alter the rights or obligations of any third
party under, or give to any of the other parties any rights of
termination, amendment, acceleration or cancellation of any Material
Contract, or result in the creation of a lien or encumbrance on any
of the assets of Softkat or Sonoma.
SECTION 5. Representations and Warranties of ESYNCH. As of the
date hereof and as of the Closing Date, ESYNCH represents and
warrants, except as set forth on the ESYNCH Disclosure Schedule, to
Softkat as follows:
(a) ESYNCH is a corporation duly organized and existing in
good standing under the laws of the State of Delaware and has all
necessary corporate power and authority to own and conduct its
business as now conducted. Acquisition Sub is a corporation duly
organized and existing in good standing under the laws of the State
of Delaware and has all necessary corporate power and authority to
own and conduct its business as now conducted. ESYNCH and each
subsidiary of ESYNCH ("Subsidiary") is qualified to do business as a
foreign corporation in each jurisdiction where the nature of its
business or properties requires.
(b) ESYNCH has authorized capital of 20,000,000 Common
Shares, par value $.001 per share (in this Agreement called "ESYNCH
new Common Shares"), and 1,000,000 shares of Preferred Stock, par
value $.001 per share, of which a total of approximately 6,514,829
ESYNCH New Common Shares are issued and outstanding. Approximately
1,841,670 ESYNCH New Common Shares are reserved for issuance under
outstanding options or warrants. The foregoing exclude the ESYNCH
New Common Shares, ESYNCH Contingent Common Shares, and ESYNCH
Series I Preferred Shares issuable pursuant to this Agreement or
upon subsequent conversion thereof, and shares issuable in private
placements or other financings as contemplated by the terms of the
ESYNCH Series I Preferred Stock. At the Closing Date, ESYNCH shall
have full power and authority to issue the ESYNCH Shares, in the
manner provided herein, free and clear of any liens, claims,
charges, options and encumbrances, other than restrictions that
arise under federal or state securities laws, and all of the ESYNCH
Shares when issued in accordance with the terms of this Agreement
shall be validly issued, fully-paid and non-assessable, and in
reliance on the list of states and the representations and
warranties made by Softkat as to the holders of its securities, and
the further representations as shall be required to be made pursuant
to Section 3(c), will be issued in compliance with exemptions from
registration or qualification requirements of applicable federal and
state securities laws.
(c) ESYNCH has obtained all necessary corporate
authorizations and material approvals required for the execution,
delivery and consummation of the transactions provided for in this
Agreement except for any federal and state securities law filings or
permits as may be required hereafter. This Agreement constitutes a
valid and binding obligation of ESYNCH, enforceable against ESYNCH
in accordance with its terms except as such enforcement may be
limited by bankruptcy laws or other laws affecting creditors' rights
generally.
(d) The execution and delivery of this Agreement by ESYNCH,
and the consummation of the transactions and obligations
contemplated hereby does not conflict with or result in a material
breach of the terms, covenants or provisions of, or constitute a
material default (or an event that would upon notice or lapse of
time or both would become a default) under, or result in the
creation of a lien or encumbrance of any kind on any of the assets
of ESYNCH or any Subsidiary pursuant to (i) its Certificate of
Incorporation, as amended, or bylaws, as amended, (ii) any material
agreement, document or instrument to which ESYNCH is a party or by
which ESYNCH or any Subsidiary is bound, or (iii) any judgment,
decree, order, statute, rule or regulation applicable to ESYNCH or
any Subsidiary.
(e) No fact or condition is known to ESYNCH that materially
adversely affects, or that may materially adversely affect any of
the assets, business, financial condition or prospects of ESYNCH
which is not reflected in the filings (the "Filings") by ESYNCH with
the Securities and Exchange Commission ("SEC"), all of which have
been delivered by ESYNCH to Softkat or are available through the
Electronic Data Gathering and Retrieval System at the SEC's public
website. ESYNCH has not taken any action, or omitted to take any
action, or executed any agreement, instrument or other document,
that would create any liability for ESYNCH, which is not reflected
in the Filings. Since January 1, 1998, ESYNCH has made all Filings
required of it by the SEC or applicable federal or state securities
laws in a timely manner and in compliance with such requirements.
The unaudited financial statements of ESYNCH, consolidated with
Intermark, as set forth in the Form 8-K/A filed by ESYNCH on October
19, 1998 with the SEC fairly present the consolidated financial
position of ESYNCH for the period ended, and at, June 30, 1998,
subject to normal audit adjustments and the absence of footnotes.
No fact or condition is known to ESYNCH and not disclosed in the
Filings that materially adversely affects, or that reasonably is
expected to materially adversely affect, ESYNCH's or its
subsidiaries' business or financial condition taken as a whole.
(f) Neither ESYNCH nor any Subsidiary (i) is involved in
any pending or, to its knowledge, threatened investigation,
litigation or legal proceeding that may have a material adverse
effect upon the business or prospects of ESYNCH, or (ii) is subject
to any order, judgment, or decree that may have such effect.
(g) Except as set forth in the ESYNCH Disclosure Schedule,
to the best knowledge of ESYNCH, ESYNCH has not infringed, and is
not now infringing, any patent, trade name, trademark, service xxxx,
copyright, trade secret, technology, know-how or process belonging
to any other person, firm or corporation, which infringement would
have an material adverse effect on ESYNCH. ESYNCH has not received
any written notice or other written indication of any such claim of
infringement. Except as set forth in the ESYNCH DISCLOSURE
SCHEDULE, ESYNCH owns, or holds adequate licenses or other rights to
use, all Intellectual Property used in or necessary for the
operation of ESYNCH's business as now conducted.
(h) ESYNCH has not utilized the services of, and that it
does not and will not have any liability to, any broker or finder in
connection with this Agreement or the transactions contemplated hereby.
(i) ESYNCH and Acquisition Sub each is acquiring any
securities it may be deemed to receive in connection with the Merger
for investment, and not with a view toward resale or distribution
thereof, and ESYNCH acknowledges that such securities are neither
registered under the Act, nor qualified under any state securities
laws, and will bear restrictive legends required under such laws.
ESYNCH further acknowledges having had an opportunity to request and
receive additional information from Softkat regarding the merits and
risks to ESYNCH and Acquisition Sub of the Merger, and being
experienced and sophisticated in financial and business matters
sufficient to protect its interests in this transaction and to
evaluate the merits and risks of the Merger.
SECTION 6. Closing; Conditions.
(a) Closing. Unless the parties shall mutually fix another
date, time or place, the closing of the Merger ("Closing") shall
take place at 2:00 P.M. Pacific Time on or before November 17, 1998,
at the offices of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx in Newport Beach,
California. The date on which Closing occurs is referred to herein
as the "Closing Date." Except as otherwise provided herein, all
proceedings to be taken and all documents to be executed at the
Closing shall be deemed to have been taken, delivered and executed
simultaneously as of the Closing Date, and no proceeding shall be
deemed taken nor documents deemed executed or delivered until all
have been taken, delivered and executed.
(b) Conditions to Obligations of ESYNCH. The obligations
of ESYNCH to cause Acquisition Sub to consummate the Merger are
subject to the satisfaction of, or ESYNCH's written waiver of, each
of the following conditions by or before the Termination Date:
(i) Accuracy of Representations and
Warranties. Softkat's representations and warranties contained in
Section 4 of this Agreement shall have been true and correct as of
the dates when made and again as of the Closing Date, except to the
extent that the event or development rendering such representation
or warranty untrue, individually or in the aggregate with all other
events or developments rendering that or any other representation or
warranty of Softkat untrue, shall not have resulted in or
constitute, and could not reasonably be expected to result in or
constitute, a material adverse effect on Softkat or ESYNCH or on the
ability of Softkat, Acquisition Sub, or ESYNCH to consummate the
Merger.
(ii) Compliance with Covenants. Softkat shall
have performed, satisfied and complied with, in all material
respects, each of its agreements and covenants contained in this
Agreement, unless the failure to perform, satisfy or comply, taken
together with all other such failures, does not constitute a
material failure by Softkat to perform its obligations hereunder.
(iii) Receipt of Officers' Certificate. ESYNCH
shall have received from Softkat a certificate, executed by
respectively, the President and Secretary of Softkat and dated as of
the Closing Date, certifying to the fulfillment of the conditions
specified in Section 6(d) (with regard to Softkat only) and Section
6(b), including a certification that each representation or warranty
contained in Section 4 is true and correct as of the Closing Date
(or, if such certification cannot be made, specifying the exceptions
thereto), excepting only representations and warranties which speak
expressly as of an earlier specified date.
(iv) Documents and Instruments in Satisfactory
Form. All corporate and other proceedings in connection with this
Agreement and with the Merger and all documents and instruments
incidental to the Merger shall be reasonably satisfactory in
substance and form to ESYNCH and its counsel, and ESYNCH and its
counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably
request.
(v) Board and Shareholder Approvals. The
Board of Directors of Softkat shall have unanimously approved this
Agreement and the Merger, and determined that each of them are aware
of all personnel interests of the directors in this transaction, if
any, and that the Merger and the transactions contemplated in this
Agreement are fair from a financial point of view to Softkat and the
shareholders of Softkat and is in Softkat's and such shareholders'
best interests, and shall not have rescinded or qualified such
approval. At least seventy-five percent of the shareholders of
Softkat shall have approved the Merger and this Agreement.
(vi) Dissenting Softkat Shares. There shall be
fewer than nine and nine-tenths percent (9.9%) of the Softkat Common
Shares constituting dissenting shares as defined in Article 13 of
the CGCL. All of the Softkat Warrants shall have been exchanged for
Softkat Common Shares. All of the Softkat Subordinated Notes shall
have, concurrently with the Merger, been exchanged for ESYNCH Series
I Preferred Shares and the right to receive cash Funds as described
in Section 2(d).
(vii) Softkat's Auditors. The auditors of the
Softkat financial statements shall have consented to the use of
their accountants' report in connection with such financial
statements in ESYNCH's filings with the SEC under the Securities
Exchange Act of 1934.
(viii) Shareholder Information. The lists and
information provided by Softkat or Softkat's legal counsel to ESYNCH
or ESYNCH's legal counsel concerning the residencies,
accreditedness, status as institutional investor, and sophistication
of the holders of Softkat securities, as the case may be, shall have
been correct in all material respects as with respect to
availability of exemptions from registration or qualification under
federal and state securities laws, including exemptions under Rule
506 of Regulation D and corresponding state laws and regulations, or
with respect to any relevant exemption for offers and sales of
securities to institutional investors in connection with the Merger
and each of the related transactions contemplated in Section 2.
(c) Conditions to Obligations of Softkat. The obligations
of Softkat to consummate the Merger are subject to the satisfaction
of, or Softkat's written waiver of, each of the following conditions
by or before the Termination Date:
(i) Accuracy of Representations and
Warranties. ESYNCH's representations and warranties contained in
this Agreement shall have been true and correct as of the dates when
made and again as of the Closing Date, except to the extent that
the event or development rendering such representation or warranty
untrue, individually or in the aggregate with all other events or
developments rendering that or any other representation or warranty
of ESYNCH untrue, shall not have resulted in or constitute, and
could not reasonably be expected to result in or constitute, a
material adverse effect on ESYNCH or on the ability of ESYNCH,
Softkat or Acquisition Sub to consummate the Merger.
(ii) Compliance with Covenants. ESYNCH shall
have performed, satisfied and complied with, in all material
respects, each of its agreements and covenants contained in this
Agreement, unless the failure to perform, satisfy or comply, taken
together with all other such failures, does not constitute a
material failure by ESYNCH to perform its obligations hereunder.
(iii) Receipt of Officers' Certificate. Softkat
shall have received from ESYNCH a certificate, executed by
respectively, the President and Chief Financial Officer of ESYNCH
and dated as of the Closing Date, certifying to the fulfillment of
the conditions specified in Section 6(d) (with regard to ESYNCH and
Acquisition Sub only) and Section 6(c), including a certification
that each representation or warranty contained in Section 5 is true
and correct as of the Closing Date (or, if such certification cannot
be made, specifying the exceptions thereto), excepting only
representations and warranties which speak expressly as of an
earlier specified date.
(iv) Documents and Instruments in Satisfactory
Form. All corporate and other proceedings in connection with this
Agreement and with the Merger, and in connection with effecting the
Reclassification, and all documents and instruments incidental to
the Merger or the Reclassification shall be reasonably satisfactory
in substance and form to Softkat and its counsel, and Softkat and
its counsel shall have received all such counterpart originals or
certified or file-stamped or other copies and proofs of filing of
such documents as they may reasonably request.
(v) Transfer of Shares. Xxx Xxxxxxx, Xxxx
Xxxx and Xxxxx Xxxx shall have transferred in the aggregate
1,260,000 Softkat Common Shares to the holders of Softkat
Subordinated Notes, allocated pro rata according the original
principal amount thereof, in consideration of the waiver and release
executed by such holder as described in Section 9(e).
(vi) Board and Shareholder Approvals. The
Board of Directors of Acquisition Sub shall have unanimously
approved this Agreement and the Merger, and determined that the
Merger and the transactions contemplated in this Agreement is
entirely fair to ESYNCH, as the sole shareholder of Acquisition Sub
and provides the best available financial value to the shareholder
of Acquisition Sub and is in Acquisition Sub's and such
shareholder's best interests, and shall not have rescinded or
qualified such approval. The sole shareholder of Acquisition Sub
shall have approved the Merger and this Agreement. The stockholders
of ESYNCH shall have approved the Reclassification, and the
Reclassification shall have been effected in accordance with the
Delaware General Corporation Law and shall have resulted in the
conversion of all of the ESYNCH Series H Preferred Shares and
elimination thereof and all of their voting rights in respect of the
Merger and this Agreement and all of the transactions contemplated
hereby. The Board of Directors of ESYNCH shall have unanimously
approved this Agreement, the Merger and the issuances of all ESYNCH
securities contemplated by this Agreement.
(vii) ESYNCH shall continue its current private
placement of stock for a reasonable time on the terms contemplated
in the Private Placement Memorandum attached hereto as Exhibit G.
From a reasonable time following the date this Agreement is
executed, ESYNCH shall have used offering materials in connection
with its private placement that have referred to the uses of
proceeds contemplated by the redemption provisions of the ESYNCH
Series I Preferred Shares.
(d) Conditions to Obligations of Each Party.
(i) There shall be no claim, action, suit,
investigation or other proceeding pending or overtly threatened
before any court or other governmental or regulatory entity that
presents a substantial risk of restraint or prohibition of the
Merger; and no such restraint or prohibition shall be effective as
of the Closing or the Closing Date, whether or not the action in
which the same was entered shall remain pending.
(ii) Softkat shall have obtained, and provided
to ESYNCH copies of, all necessary consents and agreements from all
officers and directors of Softkat to the cancellation and
extinguishment of all options, warrants rights and similar
securities which are held by such officers and directors of Softkat.
SECTION 7. Termination. This Agreement may be terminated, and the
Merger abandoned, prior to the Closing solely by the following means
and with the following effects:
(a) By Mutual Agreement. ESYNCH and Softkat may terminate
this Agreement by mutual written consent at any time.
(b) By Softkat. Softkat may unilaterally terminate this
Agreement: (i) If ESYNCH has breached any of its representations or
warranties or covenants contained in this Agreement and such breach
is of a nature that would, in the reasonable determination of
Softkat, cause the failure of the condition to Softkat's obligations
set forth in Section 6(c), and ESYNCH has failed to cure such breach
within ten (10) business days following written notice to ESYNCH
from Softkat identifying and describing such breach in reasonable
detail; or (ii) Upon written notice to ESYNCH at any time after
November 6, 1998 (the "Termination Date"), if the Closing and the
Closing Date shall not have occurred on or prior to such date,
unless such failure results from Softkat breaching any of its
representations, warranties, covenants or agreements contained in
this Agreement in any material respect.
(c) By ESYNCH. ESYNCH may unilaterally terminate this
Agreement: (i) If Softkat has breached any of its representations
or warranties or covenants contained in this Agreement and such
breach is of a nature that would, in the reasonable determination of
ESYNCH, cause the failure of the condition to ESYNCH's obligations
set forth in Section 6(b), and Softkat has failed to cure such
breach within ten (10) business days following written notice to
Softkat from ESYNCH identifying and describing such breach in
reasonable detail; or (ii) Upon written notice to Softkat after the
Termination Date, if the Closing shall not have occurred on or prior
to such date, unless the failure results from ESYNCH breaching any
of its representations, warranties, covenants or agreements
contained in this Agreement in any material respect.
(d) Effect of Termination; Remedies. In the event of the
termination of this Agreement pursuant to this Section 7, this
Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto or any of its affiliates,
directors, officers or stockholders, and all documents, instruments
and consideration delivered hereunder shall be returned to the
delivering party within two days of such termination. Specifically,
and without limiting the generality of the foregoing, Softkat and
ESYNCH agree that termination of this Agreement shall be their sole
and exclusive remedy for any nonwillful breach by the other party of
its representations, warranties and covenants under this Agreement.
All costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
SECTION 8. Remedies for Breaches of this Agreement.
All of the representations and warranties of ESYNCH,
Acquisition Sub and Softkat contained in Sections 4 or 5 shall
survive and continue in full force and effect until and shall expire
at the Effective Time. It is contemplated by the parties, and
constitutes a material inducement for ESYNCH to enter into this
Agreement, that the ESYNCH Contingent Common Shares and the
adjustments to the ESYNCH Series I Preferred Shares' conversion
price shall be in lieu of any claim against ESYNCH or Acquisition Sub.
SECTION 9. Certain Covenants Prior to Closing.
(a) Access. Each party shall make available to the other
all information regarding the party that the other party reasonably
may request and shall authorize all reasonable visits to the party's
premises with such staff, consultants and experts as the other party
may reasonably request. Softkat shall promptly provide ESYNCH's
legal counsel with originals or full and complete copies of
Softkat's and Sonoma's minute books and of Softkat's and Sonoma's
stock ledgers, note ledgers, warrant ledgers, option ledgers and, in
each case, books and records related thereto. Softkat agrees to
coordinate closely all activities concerning it creditor and
security holder relations and renegotiations with ESYNCH's and
Acquisition Sub's CEO. Each party shall conduct any such inquiries
with appropriate discretion and sensitivity to the other party's
relationships with its employees, clients and suppliers. The
parties acknowledge that certain of the information made available
to one another pursuant to this Section 9 and otherwise in
connection with the Merger is confidential, proprietary or otherwise
nonpublic ("Confidential Information"), and each party agrees, for
itself and for each of representatives, that it shall maintain in
confidence and not disclose or use, except as contemplated in this
Agreement or to enforce or interpret this Agreement or as required
by law or judicial order, any Confidential Information, and in
addition agree to keep such material confidential to the same extent
as it maintains the confidentiality of its own sensitive and
confidential information. The confidentiality provisions in this
Section shall survive any termination of this Agreement and the
consummation of the Merger, except that if the Merger is
consummated, the obligations of and restrictions on ESYNCH and
Acquisition Sub hereunder shall thereupon terminate. Each party
shall be responsible on the same basis for any disclosure of
Confidential Information by any of its representatives. Softkat
shall use its best efforts to cause its auditors to provide all
audit work papers and attorney audit letters, and audit reports and
letters to management, to ESYNCH's accountants.
(b) Conduct in Ordinary Course. ESYNCH, Softkat and
Sonoma, respectively, shall (a) conduct its business in the usual,
regular and ordinary course of business consistent with past
practice (except as required by applicable law or by this
Agreement), (b) use all reasonable efforts to maintain and preserve
intact its business organization, employees and advantageous
contractual and business relationships and retain the services of
its officers and key employees (including by causing its current
insurance policies not to be cancelled or terminated or any of the
coverage thereunder to lapse prior to or upon the Closing, unless
simultaneously with such event replacement policies providing
substantially similar coverage for substantially similar (or lesser)
premiums are in full force and effect), (c) conduct relations with
its employees, excluding hiring and terminating practices, only in
the ordinary course of business and consistent with past practice,
and (d) take no action which could reasonably be expected to
materially adversely affect or delay the ability of any party to
this Agreement or any of their respective subsidiaries to obtain any
necessary approvals of any governmental or regulatory entity or
other third persons required for the Merger or for the transactions
contemplated in connection therewith, or to perform its covenants
and agreements under this Agreement.
(c) Operating Restrictions. Without the other party's
prior written consent (which consent shall not be unreasonably
withheld or delayed), and without limiting the generality of the
provisions of this Agreement, ESYNCH, Softkat and Sonoma,
respectively, shall not, except as contemplated by this Agreement:
(i) Amend or otherwise change its Articles of
Incorporation or bylaws;
(ii) Issue, sell, pledge, dispose of or
encumber, or authorize the issuance, sale, pledge, disposition or
encumbrance of, any shares of capital stock of any class (in the
case of ESYNCH, other than ESYNCH's private offering or the exercise
of ESYNCH's warrants or conversions of ESYNCH's convertible
securities in accordance with their terms), any convertible
securities or any other rights of any kind to acquire any shares of
capital stock or convertible securities, or any other ownership
interest (including, without limitation, any phantom interest) in
such party or any subsidiary;
(iii) Declare, set aside, make or pay any
dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of any of its capital stock,
or split, combine or reclassify (in the case of ESYNCH, other than
the Reclassification) any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or
amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire, any of its shares of stock
or propose to do any of the foregoing (in the case of Softkat,
except exchanges of Softkat Warrants and Softkat Subordinated Notes
on terms contemplated in this Agreement);
(iv) Take, or agree in writing or otherwise to
take, any of the actions described in this Section 9(c) expressly
made applicable to such party, or any action which would make any of
its representations or warranties contained in this Agreement untrue
or incorrect or prevent it from performing or cause it not to
perform its covenants in this Agreement.
Prior to the Closing, without the written consent of ESYNCH, neither
Softkat or Sonoma shall do, or agree to do, any of the following:
(v) (a) Acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof; (b) incur any
indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person or, except in the
ordinary course of business consistent with past practice or in
connection with purchases of equipment or capital improvements made
in the ordinary course of business and consistent with past
practices, make any loans or advances, (c) enter into any new or
amend or terminate any existing material contract; (d) authorize any
capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $25,000; or (e) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 9(c)(v);
(vi) Increase the compensation payable or to
become payable to its officers or employees, or grant any severance
or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the party
(except as expressly contemplated in this Agreement), or establish,
adopt, enter into or amend any collective bargaining, any employee
benefit plan or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors,
officers or employees, except, in each case, as may be required by
law, and promptly disclosed in writing to ESYNCH;
(vii) Take any action to change accounting
policies or procedures (including, without limitation, procedures
with respect to revenue recognition, payments of accounts payable
and collection of accounts receivable);
(viii) Make any material tax election
inconsistent with past practice or settle or compromise any material
federal, state, local or foreign tax liability or agree to an
extension of a statute of limitations, except to the extent the
amount of any such settlement has been reserved for in its financial
statements;
(ix) Pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practices of current liabilities that have
become mandatorily due and payable and are reflected or reserved
against in its financial statements; or
(x) Sell, pledge, dispose of, grant any
security interest in or encumber any assets of Softkat or Sonoma
(except for (i) sales of assets or inventory in the ordinary course
of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, (iii) sales of
immaterial assets not in excess of $10,000 individually or $25,000
in the aggregate, (iv) exchanges of Softkat Warrants and Softkat
Subordinated Notes on terms contemplated in this Agreement, and (v)
as otherwise expressly permitted in this Agreement);
(d) Prior to the Closing Date, proceeds of each sale of
securities, or exercise of warrants or options to purchase
securities, of Softkat shall be used only as described in Section
2(d). Softkat will use its reasonable efforts to negotiate
settlement agreements with all of its creditors whose claims are
disputed evidenced by agreements and documents satisfactory to
Acquisition Sub.
(e) On or prior to the Closing Date, Softkat shall present
to Acquisition Sub written evidence that Softkat has taken all
necessary action in order to effect the following, under agreements
with third parties on terms acceptable to Softkat and Acquisition
Sub: (a) the exercise and cancellation of the Softkat Warrants and
the exchange of the Softkat Subordinated Notes as described in this
Agreement, (b) the obtaining of agreements from the holders of
Softkat Subordinated Notes and the Softkat Warrants that they shall
unconditionally waive and release any and all claims, suits,
damages, against Softkat (and ESYNCH to the extent that it may be
deemed to assume such liability) or any of their respective
directors, officers, employees, agents, placement agents, investment
bankers, insurers, attorneys, accountants, or other representatives,
in connection with or directly or indirectly related to the
performance of Softkat, the value of any equity interest therein, or
the Merger and other transactions contemplated by this Agreement,
including the Exhibits hereto, and (c) the releasing by the holders
of Softkat Warrants and Softkat Subordinate Notes and the management
of Softkat of any claim for indemnification by Softkat or ESYNCH or
any affiliate thereof by reason of the fact that he or it or any
affiliate shall be at any time after the Effective Time a director,
officer, employee, or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint,
claim, or demand whatsoever except as may be specifically granted by
ESYNCH after the Effective Time.
(f) Each respective parties' Board of Directors will,
subject to their fiduciary duties, recommend that this Agreement and
the transactions contemplated hereby to its stockholders, and,
subject to the requirements of applicable law, Softkat will seek
consent from holders of Softkat Common Shares in writing or at a
special meeting, pursuant to materials to be delivered to Softkat's
shareholders that reasonably describes the material terms and
provisions of the Merger and this Agreement, including all Exhibits
hereto, and any other transactions contemplated by this Agreement or
such Exhibits (the "Softkat Proxy Statement"). ESYNCH will provide,
and be responsible for, all required information about ESYNCH and
its affiliates for inclusion in the Softkat Proxy Statement.
Softkat will be responsible for all other information therein. The
parties and their respective representatives or counsel will consult
each other concerning the form and content thereof. Softkat will
use its best efforts to obtain the necessary approvals by its
shareholders, warrant holders and note holders of this Agreement and
the transactions contemplated hereby and will otherwise comply with
all legal requirements applicable to the Merger. Softkat will
provide Acquisition Sub with a copy of the Softkat Proxy Statement
and all modifications thereto a reasonable time prior to delivery
and will consult with Acquisition Sub in connection therewith.
Softkat will notify Acquisition Sub promptly of the receipt of any
material comments or requests from the shareholders for amendments
or supplements to the Softkat Proxy Statement or for additional
information and will supply Acquisition Sub with copies of all
correspondence between Softkat or any of its representatives, on the
one hand, and the shareholders their representatives, on the other
hand, with respect to the Softkat Proxy Statement or the Merger. If
at any time prior to Softkat's shareholder meeting or the
effectiveness of a written consent of Softkat's shareholders there
shall occur any event that should be set forth in an amendment or
supplement to the Softkat Proxy Statement, Softkat will promptly
prepare and mail to its shareholders such an amendment or
supplement. Attached hereto as Exhibit H are true and correct
copies of all of the correspondence between Softkat, or its
affiliates or representatives, on the one hand, and the holders of
Softkat Shares, Softkat Subordinated Notes, Softkat Warrants, or
other options or securities, on the other hand, for the purposes
contemplated in this Agreement or indicating agreement or rejection
of the proposals made by or for Softkat.
(g) Until this Agreement is terminated, neither Softkat nor
Sonoma nor its respective agents or representatives shall, without
the prior consent of Acquisition Sub, sell, agree to sell, enter
into negotiations to sell , or discuss the sale of the assets of
Softkat or Sonoma or the stock of Softkat or Sonoma, to or with any
party except as disclosed to Acquisition Sub in advance and agreed
upon by both parties and except as contemplated in this Agreement or
as permitted under Section 9(c). Unless and until this Agreement is
terminated in accordance with its terms and except as contemplated
by this Agreement, neither Softkat nor Sonoma nor any of its
respective officers, directors, employees, agents or other
representatives shall (i) solicit, initiate, or encourage, or enter
into discussions or any letter of intent or agreement with respect
to, any inquiries, proposals or offers that contemplate, propose or
relate to any Acquisition Proposal (as hereinbelow defined), (ii)
undertake or consummate, any sale or other disposition of, or grant
of any rights or options with respect to, or any pledge,
hypothecation or encumbrance of, any of the outstanding shares of
capital stock of Softkat or any authorized but unissued shares of
capital stock or convertible securities of Softkat or Sonoma (other
than those contemplated by this Agreement); or (iii) provide
information regarding Softkat or Sonoma or its businesses or assets,
capitalization, financial condition or operating results to any
person (other than as provided in this Agreement, or to a government
agency having jurisdiction over Softkat or Sonoma, or to its
respective creditors in the course of such relationship, or as
otherwise contemplated in this Agreement, or to Softkat's
shareholders, note holders or warrant holders for purposes related
to this Agreement). Softkat shall immediately notify Acquisition
Sub after receipt of any Acquisition Proposal, or any modification
of or amendment to any Acquisition Proposal, or any request for
nonpublic information relating to Softkat or Sonoma in connection
with a possible Acquisition Proposal or for access to the
properties, books or records of Softkat or Sonoma by any person or
entity that informs the Board of Directors of Softkat or Sonoma that
it is considering making, or has made, an Acquisition Proposal.
"ACQUISITION PROPOSAL" shall mean any inquiry, proposal, term sheet,
discussion draft, letter of intent or other communication or
agreement that contemplates, proposes or relates to (i) any possible
sale or disposition by Softkat or Sonoma of, or any mortgage, lien
or encumbrance on, any of its assets (other than sales of assets
that are made in the ordinary course of business consistent with
past practices); (ii) any sales by Softkat or Sonoma or its
management or principal shareholders or issuance of shares of
capital stock or convertible securities of Softkat or Sonoma (except
as contemplated by this Agreement); (iii) any redemption or
repurchase, or any recapitalization, of any of the outstanding
Softkat Common Shares, Softkat Warrants or Softkat Subordinated
Notes, or of any other shares or other securities or debts of
Softkat or Sonoma (other than those contemplated by this Agreement),
(iv) any offer to purchase more than five percent (5%) of the
outstanding shares of capital stock of Softkat, (v) any financing or
refinancing, including any sale-leaseback of the assets of Softkat
or Sonoma that involves the granting of any security interest or
lien on, or the transfer of ownership of any of the assets of
Softkat or Sonoma (other than in the ordinary course of business),
or (vi) any merger or reorganization of Softkat or Sonoma with or
any other business combination between Softkat or Sonoma and any
other entity.
(h) If any "fair price," "control share acquisition" or
"moratorium" statute or other anti-takeover or similar statute or
regulation or any state "blue sky" statute shall become applicable
to the transactions contemplated hereby, each constituent
corporation and the members of the Board of Directors of the
constituent corporation shall grant such approvals and take such
actions as are necessary so that the transactions contemplated
hereby and thereby may be consummated as promptly as practicable on
the terms contemplated hereby and thereby and otherwise act to
minimize the effects of such statute or regulation on the
transactions contemplated hereby or thereby.
(i) Each of the parties shall give prompt notice to the
other party, of: (i) any notice or other communication from any
person alleging that the consent of such person is or may be
required in connection with the transactions contemplated by this
Agreement; (ii) any notice or other communication from any
governmental or regulatory entity in connection with the
transactions contemplated by this Agreement; and (iii) any actions,
suits, claims, investigations or proceedings commenced or, to its
knowledge threatened against, relating to or involving or otherwise
affecting it or any of its subsidiaries which, if pending on the
date of this Agreement would have been required to have been
disclosed in a Disclosure Schedule or which relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 10. Miscellaneous Provisions.
(a) Expenses. If the Closing fails to occur, each of the
parties shall be solely responsible for all of their respective
costs and expenses incurred in connection with the transactions
contemplated herein, including, without limitation, legal fees,
costs and expenses. If the Closing occurs, Acquisition Sub shall
bear the costs and expenses (including reasonable legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby by itself.
(b) Binding Effect. This Agreement shall be binding upon
the successors and assigns of the respective parties hereto.
(c) Specific Performance. Each of the parties executing
this Agreement ("Parties") acknowledges and agrees that the other
Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each
of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which
they may be entitled, at law or in equity.
(d) Counterparts. This Agreement may be executed in
facsimile and in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed
to be one and the same instrument. The execution of this Agreement
by fewer than all of the persons identified on the signature pages
hereto as securityholders of Softkat shall not detract from the
enforceability or binding effect of this Agreement as to all
signatories, and each Softkat Holder is individually intending to be
bound hereby. Signatures on faxed agreements, instruments and
documents shall be considered originals, and shall be followed by
originals by certified mail or messenger if requested.
(e) Headings. The subject headings of the sections and
subsections of this Agreement are included for purposes of
convenience only and shall not affect the construction or
interpretation of any of its provisions.
(f) Waivers. Any party to this Agreement may waive any
right, breach or default which it has the right to waive; provided,
that such waiver will not be effective against the waiving party
unless it is in writing and specifically refers to this Agreement.
No waiver will be deemed to be a waiver of any other matter,
whenever occurring and whether identical, similar or dissimilar to
the matter waived.
(g) Entire Agreement. This Agreement, including the
Exhibits, disclosure schedules and other documents referred to
herein which form a part hereof, embodies the entire agreement and
understanding of the parties hereto, and supersedes all prior or
contemporaneous agreements or understandings (whether written or
oral) among the parties, in respect to the subject matter contained
herein. Without limiting the generality of the foregoing, this
Agreement shall supersede the letter dated October 13, 1998 from
Acquisition Sub addressed to ESYNCH which comprised the letter of
intent between the parties.
(h) Arbitration. All disputes between the parties hereto
shall be determined solely and exclusively by binding arbitration
under, and in accordance with the rules then in effect of, the
Judicial Arbitration and Mediation Service, or any successors hereto
("JAMS"), in Orange County, California, unless the parties otherwise
agree in writing. The parties shall jointly select a single
arbitrator. In the event the parties fail to agree upon an
arbitrator within ten (10) days, then each party shall select an
arbitrator and such arbitrators shall then select a third arbitrator
to serve as the sole arbitrator, provided that if either party, in
such event, fails to select an arbitrator within seven (7) days,
such arbitrator shall be selected by the JAMS upon application of
either party. Judgment upon the award of the agreed upon arbitrator
or the so chosen third arbitrator, as the case may be, shall be
binding and shall be entered into by a court of competent jurisdiction.
(i) Attorneys' Fees. In the event a dispute arises with
respect to this Agreement, the party prevailing in such dispute
shall be entitled to recover all expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred in
determining such party's rights, in preparing to enforce, or in
enforcing such party's rights under this Agreement, whether or not
it was necessary for such party to institute suit and, if
instituted, whether with regard to trial or appeals and shall
separately entitle the prevailing party to the costs for collection
of judgments.
(j) Severability. Any provision of this Agreement which is
illegal, invalid or unenforceable shall be ineffective to the extent
of such illegality, invalidity or unenforceability, without
affecting in any way the remaining provisions hereof.
(k) Notices. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or otherwise
delivered by hand or by messenger, addressed to the following
address, or any address designated in writing by such party by way
of notice to the other parties:
If to ESYNCH or Acquisition Sub:
ESYNCH Corporation
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
And a copy to:
Xxxxxxxx X. Xxxxx
Stradling, Yocca, Xxxxxxx & Xxxxx P.C.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
If to Softkat: Softkat, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxx, President
And a copy to:
Xxxxxxxx Xxxx Xxxxx, Esq.
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx &
Xxxxxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
(l) Governing Law. This Agreement shall be governed by,
and construed in accordance with, the CGCL, as applicable, and
otherwise the laws of the State of California without regard to any
conflict of law principles thereof.
(m) Further Assurances. Each party agrees to cooperate
with the other party to effect the transactions contemplated
hereunder. Without limiting the generality of the foregoing, each
of the parties shall execute, deliver and perform such agreements,
documents and instruments as the other party may request in order to
fully perform and carry out the terms and provisions of this
Agreement. Each of the parties agrees to use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other party in doing,
all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable the Merger and
the other transactions contemplated by this Agreement, including (i)
the obtaining of all other necessary actions or nonactions, waivers,
consents and approvals from governmental or regulatory entities and
the making of all other necessary registrations and filings, (ii)
the obtaining of all necessary consents, approvals or waivers from
third parties, (iii) the preparation of the Softkat Proxy Statement,
and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
(n) No Third Party Beneficiaries. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any person other than the parties executing this
Agreement and their respective successors and permitted assigns any
rights or remedies under or by reason of this Agreement. Provided,
however, Section 2(b)(iii) is for the intended benefit of the
Recipients, as defined in that Section.
WHEREAS, the parties hereto have entered into the
foregoing Agreement and Plan of Merger as of the date first above
written.
ESYNCH CORPORATION IN-US SOFTKAT ACQUISITION
a Delaware corporation CORPORATION, a Delaware corporation
By:/S/XXXXXX XXXXXXXXX By:/S/ XXXXXX XXXXXXXXX
------------------- -----------------------
Xxxxxx Xxxxxxxxx, Chief Executive Xxxxxx Xxxxxxxxx, Chief Executive
Officer and President Officer
By:/S/ T. XXXXXXX XXXX By:/S/ T. XXXXXXX XXXX
-------------------- -----------------------
T. Xxxxxxx Xxxx, Secretary T. Xxxxxxx Xxxx, Secretary
By:/S/ XXXXX XXXX By:/S/ XXXXX XXXX
--------------------- --------------------
Xxxxx Xxxx, Vice President Xxxxx Xxxx, Vice President
SOFTKAT, INC.
By:/S/ XXXX XXXX
---------------------
Xxxx Xxxx, President
By:/S/ XXX XXXXXXX
---------------------
Xxx Xxxxxxx, Secretary
SOFTKAT HOLDERS:
/S/ XXXX XXXX
----------------------------
Xxxx Xxxx
/S/ XXXXX XXXX
-----------------------------
Xxxxx Xxxx
/S/ XXX XXXXXXX
------------------------------
Xxx Xxxxxxx
