Exhibit 10.1
Execution Copy
AGREEMENT AND PLAN OF SHARE EXCHANGE
BY AND AMONG
IKON VENTURES, INC.
XXXXXX ONLINE, INC.
AND
THE STOCKHOLDERS OF XXXXXX ONLINE, INC.
JUNE 19, 2001
AGREEMENT AND PLAN OF SHARE EXCHANGE
AGREEMENT (the "Agreement"), dated as of June 19, 2001, by and
among Ikon Ventures, Inc., a Nevada corporation ("Ikon"), Xxxxxx Online, Inc., a
Delaware corporation (the "Company"), the stockholders of the Company on the
date hereof, each of whom has executed this Agreement on the date hereof or
shall execute a counterpart signature page hereto prior to the consummation of
the transactions contemplated hereunder (collectively, the "Existing
Stockholders"), and each of the entities that becomes a stockholder of the
Company after the date hereof upon the conversion of certain convertible
promissory notes of the Company, each of which shall execute a counterpart
signature page hereto prior to the consummation of the transactions contemplated
hereunder (collectively, the "New Stockholders;" the Existing Stockholders and
the New Stockholders are hereinafter collectively referred to as the
"Stockholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Existing Stockholders own of record and
beneficially all of the issued and outstanding capital stock of the Company as
of the date hereof, consisting of an aggregate of 6,000,000 shares (the
"Outstanding Company Shares") of the Company's common stock, par value $.025 per
share (the "Company Common Stock"); and
WHEREAS, the New Stockholders, and one of the Existing
Stockholders, Tiburon Asset Management, LLC ("TAM"), upon the conversion of
convertible promissory notes of the Company held by such parties prior to the
consummation of the transactions contemplated under this Agreement, will own of
record and beneficially an aggregate of 550,000 additional shares of Company
Common Stock (the "Conversion Company Shares"; and
WHEREAS, TAM and two Existing Stockholders, Tiburon Management
Ltd. and Tiburon Investment Management, Ltd., upon conversion of certain
promissory notes of the Company dated May 14, 2001 (the "May Notes"), prior to
the consummation of the transactions contemplated under this Agreement, will own
of record and beneficially an aggregate of 650,000 additional shares of Company
Common Stock (the "May Conversion Shares;" the Outstanding Company Shares, the
Conversion Company Shares and the May Conversion Shares" are hereinafter
collectively referred to as the "Company Shares"); and
WHEREAS, the Company is engaged in the business of operating
an online trading platform for use in the trading of securities (the
"Business"); and
WHEREAS, Ikon, a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), with shares publicly
quoted on the OTC Electronic Bulletin Board, has conducted no business
activities since April 1999 (other than those associated with the acquisition
described herein and with seeking other potential business opportunities ); and
WHEREAS, the parties to this Agreement intend to reorganize
both Ikon and the Company as provided under Section 368(a) (1) (B) of the
Internal Revenue Code of 1986, as amended (the "Code"), by an exchange of shares
of voting common stock pursuant to the following plan (hereinafter, the "Plan"):
PLAN OF REORGANIZATION. It is intended that the terms and
conditions of this Agreement comply in all respects with Section 368(a) (1) (B)
of the Code and the regulations corresponding thereto, so that the
reorganization contemplated hereby shall qualify as a tax free reorganization
under the Code. Accordingly, it is the intention of the parties hereto that, as
a result of this Agreement, the transactions contemplated hereby shall be
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accomplished solely in exchange for the voting common stock of each of Ikon and
the Company and that no gain or loss shall be recognized by the Stockholders or
by Ikon who are each transferring or issuing their shares of common stock solely
in exchange for receiving the common stock of the other; and further in
pursuance of the Plan, it is the intention of the parties hereto that any
outstanding warrants to purchase shares of Company Common Stock will be amended
to provide for the purchase of shares of Ikon Common Stock upon the exercise
thereof or exchanged for warrants to purchase shares of Ikon Common Stock
(referred to herein collectively as the "New Warrants"); and
WHEREAS, pursuant to the Plan, the Stockholders are desirous
of exchanging the Company Shares for shares of Ikon's voting common stock, par
value $.001 per share (the "Ikon Common Stock"), on the basis of 2.2222222
shares of Ikon Common Stock for each share of Company Common Stock (the ratio of
2.2222222 shares of Ikon Common Stock for each share of Company Common Stock is
hereinafter referred to as the "Exchange Ratio"). If the application of the
Exchange Ratio results in a fractional number, no fractional shares of Ikon
Common Stock shall be issued but instead the fractional number shall be rounded
up to the next whole number. The aggregate shares of Ikon Common Stock to be
issued to the Stockholders is hereinafter collectively referred to as the "Ikon
Shares".
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereby agree as follows:
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ARTICLE 1.
EXCHANGE OF COMPANY SHARES
SECTION 1.1 Exchange of Company Shares. At the Closing (as
hereinafter defined), the Stockholders shall convey to Ikon good and marketable
title to the Company Shares, free and clear of all liens, claims, debts,
obligations or other encumbrances except such restrictions as are imposed by
Federal or state securities laws; and Ikon shall convey to the Stockholders good
and marketable title to their proportionate share of the Ikon Shares based on
Schedule 1.3 annexed hereto, free and clear of all liens, claims, debts,
obligations or other encumbrances, except such restrictions as are imposed by
Federal or state securities laws. The exchange of voting shares as herein
provided shall be the sole consideration for the acquisition of the Company
Shares.
SECTION 1.2 Restriction on Transfer. Neither the Ikon Shares
nor the Company Shares to be exchanged as provided under Section 1.1 are being
registered under the Securities Act of 1933, as amended (the "Act"), and are to
be exchanged hereunder pursuant to an exemption that requires that the further
transfer of such shares be restricted under the Act. Each of Ikon and the
Stockholders agree to deliver to the other at or before the Closing an
investment letter acknowledging the foregoing and agreeing to comply with the
requirements of such exemption. In order to further evidence such restriction on
transferability, each recipient of shares pursuant to this Agreement hereby
agrees to the imposition of a customary restrictive legend on the face or back
of each certificate representing the shares to be exchanged.
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SECTION 1.3 Delivery of Shares. Subject to the terms and
conditions hereof, at the Closing (a) the Stockholders shall transfer to Ikon
the Company Shares by delivering the stock certificates evidencing the Company
Shares, accompanied by duly endorsed stock powers, with signatures medallion
guaranteed, in form and substance satisfactory to Ikon, permitting the transfer
of the Company Shares to Ikon; and (b) Ikon shall deliver to each Stockholder a
stock certificate(s) registered in the name of such Stockholder representing
his, her or its proportionate share of the Ikon Shares based on Schedule 1.3
annexed hereto (which schedule shall be updated from time to time to reflect the
New Shareholders).
SECTION 1.4 Supplemental Action. If at any time after the
Closing, Ikon or the Stockholders shall determine that any further conveyances,
agreements, documents, instruments, and assurances or any further action is
necessary or desirable to carry out the provisions of this Article 1, Ikon or
the Stockholders, as the case may be, shall execute and deliver any and all
proper conveyances, agreements, documents, instruments, and assurances and
perform all necessary or proper acts to carry out the provisions of this Article
1.
ARTICLE 2.
CLOSING; CLOSING DATE
SECTION 2.1. The exchange of the Company Shares for the Ikon
Shares as contemplated hereby (the "Closing") shall take place at 10:00 a.m. on
such date as the parties mutually agree, but in no event later than August 17,
2001, at the offices of Xxxxx Xxxx LLP, 245 Park Avenue, New York, New York
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10167 (or such other time, date or place as the parties hereto may mutually
agree in writing). The date upon which the Closing occurs is herein called the
"Closing Date."
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each of the Stockholders severally, but not jointly,
represents and warrants to Ikon as follows:
SECTION 3.1 Authority to Execute and Perform Agreements. Such
Stockholder has full power and capacity to execute and deliver this Agreement
and any other agreement or instrument contemplated by this Agreement (such other
agreements and instruments are hereinafter collectively referred to as the
"Transaction Documents") and to consummate the Transactions. This Agreement has
been duly executed and delivered and is the valid and binding obligation of such
Stockholder enforceable in accordance with its terms. Other than any filings
that may be required pursuant to Section 13 and/or Section 16 of the Exchange
Act, the execution and delivery of this Agreement and the Transaction Documents,
the consummation of the transactions contemplated hereunder (the "Transactions")
and the performance by such Stockholder of this Agreement and each of the
Transaction Documents in accordance with its respective terms and conditions
will not require the approval, consent of, waiver, order or authorization of,
notification to, or registration, declaration or filing with, any Federal,
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state, county, local or other governmental or regulatory body or the approval or
consent of any other person.
SECTION 3.2 Ownership of Company Shares. (a) Such Stockholder
owns, beneficially and of record, his, her or its respective portion of the
Company Shares to be sold hereunder to Ikon as shown on Schedule 1.3 annexed
hereto, free and clear of any and all liens, charges or encumbrances of any kind
or nature whatsoever; (b) such Stockholder is not bound by or subject to any
voting trust arrangement, proxy, voting agreement, stockholder agreement,
purchase agreement or other agreement or understanding (i) granting any option,
warrant or other right to purchase all or any of his, her or its portion of the
Company Shares to any person, (ii) restricting his, her or its right to sell or
convey his, her or its portion of the Company Shares, or (iii) otherwise
restricting any rights with respect to his, her or its portion of the Company
Shares (including restrictions as to the voting or disposition of such Company
Shares); (c) such Stockholder has the absolute and unrestricted right, power and
capacity to assign and transfer his, her or its portion of the Company Shares;
and (d) upon transfer by such Stockholder to Ikon of his, her or its portion of
the Company Shares hereunder, Ikon will acquire good and valid title to such
Company Shares, free and clear of any liens, charges or encumbrances.
SECTION 3.3 Finders and Investment Bankers. Such Stockholder
has not employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the
Transactions.
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SECTION 3.4 Litigation and Claims. Except as otherwise set
forth in Schedule 3.4 annexed hereto, there is no suit, action, proceeding,
claim or investigation pending or to the best knowledge of such Stockholder,
threatened against or affecting such Stockholder that would have a material
adverse effect on the assets, business or financial condition of such
Stockholder or the Company or the ability of such Stockholder to perform his,
her or its obligations under this Agreement.
SECTION 3.5 Certain Payments. Such Stockholder, directly or
indirectly, has not given or agreed to give or solicited or received any gift,
rebate or similar benefit to any customer, supplier, governmental employee or
other person or entity that might subject the Company or Ikon to any damage or
penalty in any civil, criminal or governmental litigation or proceeding or if
not given in the past might have had an adverse effect on the assets, Business,
operations or prospects of the Company.
SECTION 3.6 Company Representations. To the best knowledge of
such Stockholder, provided such Stockholder is an officer, director and/or
holder of 10% or more of the total issued and outstanding shares of Company
Common Stock, the representations and warranties of the Company contained in
Article 4 hereof are true and correct in all respects.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Ikon as follows:
SECTION 4.1 Due Incorporation and Qualification. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of Delaware, has all requisite power and authority to own, lease and
operate its assets, properties and Business and to conduct the Business as now
being and as heretofore conducted. The Company is qualified to do business as a
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foreign corporation in the jurisdictions listed on Schedule 4.1 annexed hereto,
and is not doing business in any other jurisdiction where qualification is
required or the failure to qualify would have a material adverse effect on the
Business or operations of the Company.
SECTION 4.2 Subsidiaries and Affiliates. The Company does not,
directly or indirectly, own any shares of stock or other equity interest
(including any form of profit participation) in, has not made any investment in,
and does not control or have any proprietary interest in, any corporation,
partnership, joint venture or other business association or entity other than as
set forth in Schedule 4.2 annexed hereto (all such entities are hereinafter
referred to collectively as the "Company Subsidiaries") which also sets forth
the percentage ownership of the Company, directly or indirectly, in each of the
Company Subsidiaries. All of the capital stock and other interests so held by
the Company (directly or indirectly) as indicated on Schedule 4.2 are owned by
the Company (directly or indirectly) free and clear of any claim, lien,
encumbrance, security interest or agreement with respect thereto. All of the
outstanding shares of capital stock in each of the Company Subsidiaries are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive rights and in compliance with applicable corporate and securities
laws. Except as indicated on Schedule 4.2, there are no irrevocable proxies,
voting agreements or similar obligations with respect to such capital stock of
the Company Subsidiaries, and no equity securities or similar obligations with
respect to such capital stock of the Company Subsidiaries are or may become
required to be issued or purchased by reason of any options, warrants, rights to
subscribe to, puts calls, reservation of shares or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
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for, shares of any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares. Each of
the Company Subsidiaries is in good standing and qualified to do business in
every jurisdiction in which the failure to qualify could have a material adverse
effect upon the Subsidiary or the Company. Schedule 4.2 also sets forth the name
of each of the Company's affiliates (other than the Company Subsidiaries),
including joint venture affiliates (incorporated and unincorporated), and the
nature of the affiliation.
SECTION 4.3 Articles of Incorporation and By-Laws. The Company
has delivered to Ikon true and complete copies of its Certificate of
Incorporation and By-Laws and each of the Company Subsidiaries as in effect on
the date hereof, which instruments shall not be or have been amended between the
dates thereof and the Closing Date.
SECTION 4.4 Capitalization. The total authorized capital stock
of the Company consists solely of 8,000,000 shares of the Company Common Stock,
of which only the Outstanding Company Shares are issued and outstanding as of
the date hereof. The Outstanding Company Shares are, and the Conversion Company
Shares and the May Conversion shares will be, validly issued, fully paid and
non-assessable. Except for the Transactions and as set forth in Schedule 4.4
annexed hereto, there are no authorized or outstanding options, warrants,
subscription calls, rights (including preemptive rights and rights to demand
registration under the Act, commitments, conversion rights, plans or other
agreements of any character obligating the Company to authorize, issue, deliver,
sell or redeem any shares of its capital stock or any securities convertible
into or evidencing the right to purchase any shares of such stock.
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SECTION 4.5 Officers and Directors. Annexed hereto as Schedule
4.5 is a true and correct list of the officers and directors of the Company as
of the date of this Agreement.
SECTION 4.6 Financial Statements; Financial Matters.
(a) Annexed hereto as Schedule 4.6 (a) is the unaudited
balance sheet of the Company as at March 31, 2001, and the related unaudited
statements of operations and retained earnings and changes in financial position
(cash flow) as at and for each of the two years then ended or for such shorter
period for which the Company has been in existence (collectively the "Company
Unaudited Financials"; the unaudited balance sheet as at March 31, 2001 included
therein is sometimes referred to as the "Company Balance Sheet").
(b) At or prior to the Closing Date, the Company will
have furnished Ikon with (i) the audited balance sheet of the Company as at
March 31, 2001, and the related audited statements of operations, retained
earnings (or stockholder deficit) and changes in financial position (cash flow)
as at and for each of the two years then ended or for such shorter period for
which the Company has been in existence, together with the unqualified opinion
thereon of a firm of independent certified public accountants authorized to
practice before the Securities and Exchange Commission (collectively, the
"Company Audited Financials").
(c) The Company Unaudited Financials are, and the
Company Audited Financials will be, (i) in accordance with the books and records
of the Company, (ii) correct and complete, (iii) fairly present the financial
position and results of operations of the Company as of the dates indicated, and
(iv) prepared in accordance with generally accepted accounting principles
applied on a consistent basis ("GAAP") (except that (x) unaudited financial
statements may not be in accordance with GAAP because of the absence of
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footnotes normally contained therein and (y) interim (unaudited financials) are
subject to normal year-end audit adjustments that in the aggregate will not have
a material adverse effect on the Business, properties, assets, operations,
liabilities, financial condition or prospects of the Company).
SECTION 4.7 Liabilities. Except as set forth on Schedule 4.7
annexed hereto, as of the date hereof, the Company has no direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known, or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, including,
without limitation, liabilities on account of taxes, other governmental charges
or lawsuits brought ("Liabilities"), other than (i) Liabilities fully and
adequately reflected or reserved against on the Company Balance Sheet, and (ii)
Liabilities incurred since March 31, 2001 in the ordinary course of business.
The Company has no knowledge of any past or existing circumstance, condition,
event or arrangement that may hereafter give rise to any Liabilities of the
Company, or any successor to its business except in the ordinary course of
business or as otherwise set forth on Schedule 4.7. Between the date hereof and
the Closing Date, the Company will not, without the prior written consent of
Ikon, incur or become subject to, or agree to incur or become subject to, any
Liabilities except current liabilities and obligations incurred in the ordinary
course of business or as contemplated by this Agreement or any exhibit or
schedule hereto.
SECTION 4.8 Absence of Certain Changes. Since March 31, 2001,
there has been no material adverse change in the condition, financial or
otherwise, of the Company, other than changes occurring in the ordinary course
of business which changes have not, individually or in the aggregate, had a
material adverse effect on the Business, properties, assets, operations,
liabilities, financial condition or prospects of the Company.
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SECTION 4.9 Tax Matters. The Company has filed all Federal,
state, county and local income tax, franchise tax, real and personal property
tax, payroll tax, occupation tax, sales tax, excise tax, and other tax returns
which it is required to file, the failure to file which would materially
adversely affect the assets, properties, Business, operations or financial
condition or prospects of the Company, taken as a whole, and has paid, reserved
or provided for all taxes shown on such returns, and all deficiencies or other
assessments of tax, interest or penalties which have been served on or delivered
to the Company. There are no claims with respect to Federal, state, county,
local, foreign or other taxes. The Federal income tax returns of the Company
have never been audited by the Internal Revenue Service. To the best knowledge
of the Company, there is no unassessed tax deficiency proposed or threatened
against the Company. No audit of any tax return of the Company is in progress.
There are not in force any extensions of time with respect to the date on which
any tax return was or is due to be filed by the Company or any waivers or
agreements by the Company for an extension of time for the assessment or payment
of any tax.
SECTION 4.10 Real and Personal Property - Leased to the
Company. Set forth on Schedule 4.10(a) annexed hereto is a description of each
lease under which the Company is the lessee of any real property, and on
Schedule 4.10 (b) annexed hereto is a description of each lease under which the
Company is the lessee of any personal property. The premises or property
described in said leases are presently occupied or used by the Company as lessee
under the terms of such leases. All rentals due under such leases have been paid
and there exist no defaults under the terms of such leases and no event has
occurred which, upon passage of time or the giving of notice, or both, would
result in any events of default or prevent the Company from exercising and
obtaining the benefits of any rights or options contained therein. The Company
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has the full right, title and interest of the lessee under the terms of said
leases, free of all liens, claims or encumbrances and all such leases are valid
and in full force and effect.
SECTION 4.11 Title. The Company Balance Sheet reflects all of
the material assets and properties of the Company, except to the extent the
Company has acquired or disposed of any assets and properties, in the ordinary
course of its business since March 31, 2001. The Company owns outright and has
good and marketable title to all of its assets and properties, in each case free
and clear of any lien or other encumbrance except for (i) immaterial assets and
properties; (ii) liens or other encumbrances securing taxes, assessments,
governmental charges or levies, or the claims of materialmen, carriers,
landlords and like persons, all of which are not yet due and payable and
purchase money interests and similar security interests for goods purchased by
the Company since March 31, 2001 in the ordinary course of business; (iii)
defects of title, liens or other encumbrances of a character that do not
materially impair the assets or properties of the Company or detract materially
from the Business, or (iv) liens, claims, encumbrances or security interests
reflected in the Company Balance Sheet. The assets and properties owned by the
Company, as reflected on the Company Balance Sheet, are adequate to permit the
Company to conduct the Business as presently conducted and to continue to
conduct the Business after the Closing.
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SECTION 4.12 Intellectual Property.
(a) For purposes of this Agreement, the following terms have
the following definitions:
"Intellectual Property" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all
United States and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof, (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets
(whether currently existing or in development), proprietary
information, know how, technology, technical data and customer lists,
and all documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor, and all
other rights corresponding thereto throughout the world; (iv) all
maskworks, mask work registrations and applications therefor, and all
other rights corresponding thereto throughout the world; (v) all
industrial designs and any registrations and applications therefor
throughout the world; (vi) all trade names, trade dress, logos, common
law trademarks and service marks; trademark and service xxxx
registrations and applications therefor throughout the world; (vii) all
databases and data collections and all rights therein throughout the
world; and (viii) all computer software including all source code,
object code, firmware, development tools, files, records and data, all
media on which any of the foregoing is recorded and all documentation
related to any of the foregoing throughout the world.
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"Company Intellectual Property" shall mean any Intellectual
Property that: (i) is owned by or exclusively licensed to the Company
or any Company Subsidiary, or (ii) is necessary to the operation of the
Company or the Company Subsidiaries, including the design, manufacture,
sale and use of the products or performance of the services of the
Company and the Company Subsidiaries, as it currently is operated or is
reasonably anticipated to be operated in the future.
(b) Schedule 4.12 (a) annexed hereto sets forth all of the
Company's and the Company Subsidiaries' United States and foreign (i)
patents, patent applications (including provisional applications); (ii)
registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations related to
trademarks; (iii) registered copyrights and applications for copyright
registration; (iv) maskwork registrations and applications to register
mask works; and (v) other Company Intellectual Property that is the
subject of an application, certificate or registration issued by or
recorded by any state, government or other public legal authority, all
of the foregoing, the "Registered Intellectual Property."
(c) Schedule 4.12 (c) annexed hereto sets forth any proceeding
or actions before any court, tribunal (including the United States
Patent Office ("PTO") or equivalent authority anywhere in the world)
related to any of the Registered Intellectual Property.
(d) The Company or the Company Subsidiaries have complied with
all applicable disclosure requirements and, to the best knowledge of
the Company, have not committed any fraudulent act in the application
for and maintenance of any patent, trademark or copyright of the
Company or the Company Subsidiaries.
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(e) Each item of Registered Intellectual Property is valid and
subsisting, all necessary registration, maintenance and renewal fees in
connection with such Registered Intellectual Property have been made
and all necessary documents and certificates in connection with such
Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purposes of
maintaining, renewing or extending the registration of such Registered
Intellectual Property. Schedule 4.12 (e) annexed hereto sets forth all
actions and payments that must be made in the twelve month period
following the Closing Date in connection with the preservation or
maintenance of the Registered Intellectual Property.
(f) The Company and the Company Subsidiaries are not barred
from seeking patents on any patentable inventions of the Company or the
Company Subsidiaries that in the reasonable judgment of the Company
would have been necessary to the operation of the Company or the
Company Subsidiaries by "on-sale" or similar bars to, patentability or
by failure to apply for a patent on such inventions within the time
required.
(g) The contracts, licenses and agreements set forth on
Schedule 4.12 (g) annexed hereto include all contracts, licenses and
agreements to which the Company and the Company Subsidiaries are a
party with respect to any Company Intellectual Property.
(h) The contracts, licenses and agreements set forth on
Schedule 4.12 (g) are in full force and effect. The consummation of the
Transactions will neither violate nor result in the breach,
modification, cancellation, termination or suspension of the contracts,
licenses and agreements set forth on Schedule 4.12 (g). Other than
those matters that would not have a material adverse effect on the
Company, and the Company Subsidiaries, the Company and the Company
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Subsidiaries are in compliance with, and have not breached any term of
the contracts, licenses and agreements set forth on Schedule 4.12 (g),
and, to the best knowledge of the Company, all other parties to the
contracts, licenses and agreements set forth on Schedule 4.12 (g) are
in compliance with, and have not breached any material term of, such
contracts, licenses and agreements. Following the Closing Date, the
Company and the Company Subsidiaries will be permitted to exercise all
of their respective rights under the contracts, licenses and agreements
set forth on Schedule 4.12 (g) without the payment of any additional
amounts or consideration other than ongoing fees, royalties or payments
which the Company or the Company Subsidiaries would otherwise be
required to pay.
(i) Except as set forth on Schedule 4.12 (i) annexed hereto,
(i) no person or entity has any rights to use any of the Company
Intellectual Property; and (ii) the Company and the Company
Subsidiaries have not granted to any person or entity, nor authorized
any person or entity to retain, any rights in the Company Intellectual
Property.
(j) Except as set forth on Schedule 4.12 (j) annexed hereto,
(A) the Company or the Company Subsidiaries own and have good, valid
and exclusive title to, and have the unrestricted right to license and
use, each item of the Intellectual Property of the Company or the
Company Subsidiaries, including all Registered Intellectual Property
set forth on Schedule 4.12 (b), free and clear of any Lien; (ii) the
Company or the Company Subsidiaries own, or have the right, pursuant to
a valid contract, to use or operate all other Intellectual Property of
the Company or the Company Subsidiaries, and (iii) the Company or one
of its Company Subsidiaries is the exclusive owner of all trademarks
and trade names used in connection with the operation or conduct of the
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business of the Company and the Company Subsidiaries, including the
sale of any products or the provision of any services by the Company
and the Company Subsidiaries.
(k) To the Company's best knowledge, the operation of the
Business of the Company and the Company Subsidiaries , taken as a
whole, as such Business currently is conducted, or as reasonably
contemplated to be conducted, including the Company and the Company
Subsidiaries design, development, manufacture, marketing and sale of
the products or services of the Company and the Company Subsidiaries
has not, does not and will not infringe or misappropriate the
Intellectual Property of any other person or entity.
(l) Except as set forth on Schedule 4.12 (l), attached hereto,
the Company has not received any written notice from any person or
entity that the design, development, manufacture and sale of the
Company or the Company Subsidiaries' products and provision of their
respective services, infringes or misappropriates the Intellectual
Property of any person or entity.
(m) The Company and the Company Subsidiaries own or have the
right to use all Intellectual Property necessary to the conduct their
respective business as currently is conducted or is reasonably
contemplated to be conducted, including , without limitation. the
design, development, manufacture and sale of all products currently
manufactured or sold by the Company and the Company Subsidiaries and
the performance of all services provided by the Company or the Company
Subsidiaries.
(n) Except as set forth on Schedule 4.12 (n), annexed hereto,
to the Company's best knowledge, no person or entity has or is
infringing or misappropriating any Company Intellectual Property.
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(o) Except as set forth on Schedule 4.12 (o) attached hereto,
no Company Intellectual Property, or product or service of the Company
Subsidiaries is subject to any proceeding or outstanding decree, order
judgment, or stipulation restricting in any manner the use or licensing
thereof by the Company or the Company Subsidiaries, or which may affect
the validity, use licensing or enforceability of such Company
Intellectual Property.
(p) The Company and the Company Subsidiaries own exclusively
and have good title to all copyrighted works that are the Company's and
the Company Subsidiaries' products or which the Company or the Company
Subsidiaries otherwise purport to own, except for those copyrighted
works licensed to the Company and the Company Subsidiaries set forth on
Schedule 4.12 (p) annexed hereto.
(q) Except as set forth on Schedule 4.12 (q) annexed hereto,
and except for work, inventions or material created by advertising or
other marketing firms on behalf of the Company and the Company
Subsidiaries to which any such firm has retained all rights, to the
20
extent that any work, invention, or material has been developed or
created by a third party for the Company or the Company Subsidiaries,
the Company or the Company Subsidiaries have a written agreement with
such third party with respect thereto and the Company or the Company
Subsidiaries thereby have obtained ownership of, and are the exclusive
owners of, all Intellectual Property in such work, material or
invention by operation of law or valid assignment.
SECTION 4.13 Contracts and Other Agreements. Schedule 4.13
annexed hereto sets forth, as of the date of this Agreement, all contracts,
commitments, understandings, arrangements and other agreements to which the
Company is a party or by or to which any of the Company's properties are bound
or subject (collectively, the "Contracts"), except (i) Contracts made in the
ordinary course of business of the Company and involving the payment to or by
the Company of less than $25,000 with respect to any one contract or $25,000
with respect to any related Contracts and (ii) any Contract that is terminable
by the Company upon not more than 30 days notice and with the payment of a
termination penalty, if any, not exceeding $5,000. There have been delivered or
made available to Ikon true and complete copies of all the Contracts and other
agreements set forth on Schedule 4.13 or on any other Schedule. All of the
Contracts are valid, subsisting, in full force and effect and binding upon the
parties thereto in accordance with their terms, and the Company has paid in full
or accrued all amounts due thereunder and has satisfied in full or provided for
all of its liabilities and obligations thereunder, and is not in default in any
material respect under any of them, nor, to the Company's best knowledge, is any
other party to any Contract in default thereunder, nor, to the Company's best
knowledge, does any condition exist that with notice or lapse of time or both
would constitute a default thereunder that would give the other party thereto
21
the right to terminate such Contract. Except as separately identified on
Schedule 4.13, no approval or consent of any person is needed in order that the
Contracts set forth on Schedule 4.13 or on any other Schedule continue in full
force and effect following the consummation of the Transactions. Between the
date hereof and the Closing Date, the Company will not, without Ikon's prior
written consent, become a party to any Contract of the types listed in this
Section 4.13 (other than contracts with bona fide third parties entered into in
the ordinary course of the Company's business on terms commercially reasonable
within the industry or on terms similar to those contained in Contracts
currently in effect to which the Company is a party), or make or permit the
amendment or termination (other than in the ordinary course and excluding the
termination of Contracts by their terms) of any Contract listed on Schedule
4.13.
SECTION 4.14 Insurance. Annexed hereto as Schedule 4.14 is a
list of all policies of insurance covering the Company (specifying the insurer,
amount of coverage, type of insurance, policy number and any pending claims
thereunder). True copies of all such policies have been made available by the
Company to Ikon. The Company will cause such policies to be maintained in effect
until and at the Closing Date. To the best knowledge of the Company, the Company
has not failed to give any notice or present any material claim under any
insurance policy in due and timely fashion.
SECTION 4.15 Litigation; Actions and Proceedings. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental, administrative or regulatory body or arbitration or mediation
tribunal against or involving the Company. Except as set forth in Schedule 4.15
annexed hereto, there are no actions, suits or claims or legal, administrative,
regulatory, governmental or arbitral proceedings or investigations (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) pending or, to the Company's best knowledge, threatened against or
22
involving the Company or any of its properties or assets, nor, to the best
knowledge of the Company, are there any grounds therefor, that individually or
in the aggregate, could have a material adverse effect upon the transactions
contemplated hereby or upon the assets, properties, Business, operations, or
condition (financial or otherwise) of the Company. There are no actions, suits
or claims or legal, administrative, regulatory, governmental or arbitral
proceedings pending or, to the Company's best knowledge, threatened that would
give rise to any right of indemnification on the part of any director or officer
of the Company, or the heirs, executors or administrators of such director or
officer, against the Company or any successor to the Business.
SECTION 4.16 Operations of the Company. (a) Except as set
forth on Schedule 4.16 annexed hereto, since March 31, 2001, the Company has
not:
(i) amended its Certificate of Incorporation or By-Laws or
merged with or into or consolidated with any other person, subdivided or in any
way reclassified any shares of its capital stock or changed or agreed to change
in any manner the rights of its outstanding capital stock or the character of
its business;
(ii) issued or sold or purchased, or issued options or rights
to subscribe to, or entered into any contracts or commitments to issue or sell
or purchase, any shares of its capital stock;
(iii) entered into or amended any employment agreement (other
than employment agreements or at will employment arrangements entered into or
amended in the ordinary course of the Company's business), entered into or
amended any agreement with any labor union or association representing any
employee, adopted, entered into, or amended any employee benefit plan;
23
(iv) except in the ordinary course of business and not in
excess of $25,000 (individually or in the aggregate), incurred any indebtedness
for borrowed money;
(v) declared or paid any dividends or declared or made any
other distributions of any kind to the Stockholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares of
its capital stock;
(vi) materially reduced its cash or short term investments or
their equivalent;
(vii) waived any right of material value to its business;
(viii) made any change in its accounting methods or practices
or made any change in depreciation or amortization policies or rates adopted by
it;
(ix) materially changed any of its business policies;
(x) granted or paid any wage or salary increase in excess of
$25,000 per annum, or any bonus in excess of $5,000, or any increase in any
other direct or indirect compensation, for or to any of its officers, directors,
employees, consultants, agents, brokers, independent contractors or other
representatives, or any accrual for or commitment or agreement to make or pay
the same;
(xi) made any loan or advance to any of the Stockholders, its,
officers, directors, employees, consultants, agents, brokers, independent
contractors or other representatives (other than travel, entertainment or
business expense advances made in the ordinary course of business), or made any
other loan or advance otherwise than consistently with past practice in the
ordinary course of business;
(xii) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, consultants, agents, brokers,
independent contractors or other representatives, other than payments or
commitments to pay persons other than its officers, directors or the
Stockholders made in the ordinary course of business;
24
(xiii) entered into any lease (as lessor or lessee); sold,
abandoned or made any other disposition of any of its assets or properties
(except in the ordinary course of business); granted or suffered any lien or
other encumbrance on any of its assets or properties; entered into (except in
the ordinary course of business) or amended any contract or other agreement to
which it is a party, or by or to which it or its assets or properties are bound
or subject, or pursuant to which it agrees to indemnify any party or to refrain
from competing with any party;
(xiv) except in the ordinary course of business and in amounts
less than $10,000 in each case, incurred or assumed any Liability;
(xv) made any acquisition of or entered into any agreement to
acquire all or any part of the assets, properties, capital stock or business of
any other person;
(xvi) failed to pay timely any of its material liabilities in
accordance with their terms; and
(xvii) except in the ordinary course of business, entered into
any other material contract or other agreement or other material transaction.
(b) Between the date hereof and the Closing, the
Company will not, without the prior written consent of Ikon, do any of the
things listed in clauses (i) through (xvii) of Section 4.16 (a).
SECTION 4.17 Compliance with Laws. The Company is not in
default under or in violation of any applicable order, judgment, injunction,
award or decree, any material applicable federal, state, or local statute, law,
ordinance, rule or regulation, including without limitation, the Employee
25
Retirement Income Security Act of 1974, as amended ("ERISA",) or the provisions
of any franchise or license, or of any other material requirement of any
governmental, regulatory, administrative or industry body, court or arbitrator
applicable to the Company or the Business. The Company is not in default under
or in violation of any provisions of its Certificate of Incorporation or its
By-Laws, or any material instrument, contract, mortgage, indebtedness, indenture
or other agreement to which the Company is a party or by or to which the Company
or any of its assets or properties may be bound or subject.
SECTION 4.18 Licenses, Permits and Certificates. The Company
and the Company Subsidiaries have all material licenses, permits, certificates,
authorizations, approvals and consents required by any governmental authority to
legally operate the Business as now operated and as contemplated and such
licenses, permits, certificates, authorizations, approvals and consents are
listed on Schedule 4.18 annexed hereto. No governmental, regulatory or industry
permits, consents, waivers, approvals or authorizations are necessary in
connection with the consummation of the Transactions or to permit the Company to
conduct the Business after the Closing in the manner and to the extent presently
conducted and contemplated to be conducted.
SECTION 4.19 No Conflicts. The execution, delivery and
performance of the Transaction Documents by the Company and the consummation of
the Transactions will not (a) result in a violation of the Company's Certificate
of Incorporation or By-Laws, (b) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company is a party, or (c) result in a violation of any law, rule, regulation,
by-law, directive, order, judgment or decree (including federal, state,
26
provincial and municipal securities laws and regulations) applicable to the
Company or by which any of its property or assets is bound or affected, except
to the extent that matters within clauses (b) and (c) immediately above would
not have a material adverse effect on the Business, properties, assets,
operations, liabilities, financial condition or prospects of the Company, or the
ability of the Company to perform this Agreement and the other Transaction
Documents.
SECTION 4.20 Labor Agreements, Employee Benefit Plans, and
Employment Agreements. Except as set forth on Schedule 4.20 annexed hereto,
neither the Company nor any of the Company Subsidiaries is a party to (a) any
union collective bargaining, works council, or similar agreement or arrangement,
(b) any qualified or non-qualified pension, retirement, severance,
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
retainer, consulting, health, welfare or incentive plan or agreement, (c) any
plan or policy providing for employee benefits, including but not limited to
vacation, disability, sick leave, medical, hospitalization, life and other
insurance plans, and related benefits, or (d) any employment agreement. Neither
the Company nor any of the Company Subsidiaries is presently a party to any
"employee leasing" agreement or arrangement and neither the Company nor any of
the Company Subsidiaries have any liability in respect of any such agreement or
arrangement to which it was, at any time, a party, but which is no longer in
effect.
SECTION 4.21 Books and Records. The books of account and other
corporate records of the Company and the Company Subsidiaries made or to be made
available to Ikon in connection with the Transactions and the due diligence
inquiries made by Ikon in connection herewith, are in all respects complete and
correct, have been maintained in accordance with good business practices and the
matters contained therein are accurately reflected on the financial statements
27
of the Company furnished or to be furnished hereunder by the Company to Ikon.
SECTION 4.22 Accounts Receivable. All accounts receivable of
the Company that will be reflected on the Company Balance Sheet or on the
accounting records of the Company as of the Closing Date (collectively, the
"Accounts Receivable"), will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business.
The reserves shown on the Company Balance Sheet or on the accounting records of
the Company as of the Closing Date with respect to the Accounts Receivable will
be adequate consistent with past practice. There will be no contest, claim, or
right of set-off in any agreement with any maker of an Account Receivable
relating to the amount or validity of such Account Receivable.
SECTION 4.23 Certain Payments. Neither the Company nor, to the
Company's best knowledge, any officer, employee, agent or affiliate of the
Company, has, directly or indirectly, given or agreed to give or solicited or
received any gift, rebate or similar benefit to any customer, supplier,
governmental employee or other person or entity which (i) might subject the
Company or Ikon to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past might have had an
adverse effect on the assets, business or operations of the Company or (iii) if
not continued in the future might adversely affect the assets, business,
operations or prospects of the Company.
SECTION 4.24 Full Disclosure All documents and other papers
delivered by or on behalf of the Company in connection with this Agreement and
the Transactions are, to the best of the Company's knowledge, authentic and true
and complete in all material respects. No representation or warranty of the
28
Company, and no document or other paper furnished by or on behalf of the Company
pursuant to this Agreement or in connection with the Transactions, contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements made in the context in
which made, not false or misleading. To the Company's best knowledge, there is
no fact that the Company has not disclosed to Ikon that materially adversely
affects, or so far as the Company can now foresee, will materially adversely
affect, the Business or the assets, properties, operations or condition
(financial or otherwise) of the Company or the ability of the Stockholders to
perform this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF IKON
Ikon represents and warrants to the Stockholders as follows:
SECTION 5.1 Due Incorporation and Qualification. Ikon is a
corporation duly incorporated, validly existing and in good standing under the
laws of Nevada, and has all requisite power and authority to own, lease and
operate its assets, properties and business and to conduct its business as now
being and as heretofore conducted. Ikon is not qualified to do business as a
foreign corporation in any jurisdiction, and is not doing business in any
29
jurisdiction, where qualification is required or the failure to qualify would
have a material adverse effect on the business or operations of Ikon.
SECTION 5.2 Authority to Execute and Perform Agreements. Ikon
has full authority to execute and deliver this Agreement and the other
Transaction Documents, and the consummation of the Transactions have been duly
authorized by all necessary corporate action of Ikon. This Agreement has been
duly executed and delivered and is the valid and binding obligation of Ikon.
Other than the filing of a current report on Form 8-K with the Commission
following the consummation of the Transactions, the execution and delivery of
this Agreement, the consummation of the Transactions and the performance by Ikon
of this Agreement in accordance with its terms and conditions will not require
the approval, consent of, waiver, order or authorization of, notification to, or
registration, declaration or filing with, any Federal, state, county, local or
other governmental or regulatory body or the approval or consent of any other
person.
SECTION 5.3 Subsidiaries and Affiliates. Ikon does not,
directly or indirectly, own any shares of stock or other equity interest
(including any form of profit participation) in, has not made any investment in,
and does not control or have any proprietary interest in any corporation,
partnership, joint venture or other business association or entity. Schedule 5.3
annexed hereto sets forth the name of each of Ikon's affiliates (other than
subsidiaries), including joint venture affiliates (incorporated and
unincorporated), and the nature of the affiliation.
SECTION 5.4 Officers and Directors. Annexed hereto as Schedule
5.4 is a true and correct list of the officers and directors of Ikon.
30
SECTION 5.5 Articles of Incorporation and By-Laws. Ikon has
delivered to the Stockholders true and complete copies of its Certificate of
Incorporation and By-Laws as in effect on the date hereof, which instruments
shall not be or have been amended between the dates thereof and the Closing
Date.
SECTION 5.6 Capitalization. (a) The total authorized capital
stock of Ikon consists of (i) 100,000,000 shares of Ikon Common Stock, of which
310,913 shares are validly issued and outstanding, fully paid and
non-assessable. Except as set forth in Schedule 5.6 annexed hereto and Section
5.23 hereof and except for 5,000,000 shares of Ikon Common Stock reserved for
issuance under the Ikon 2001 Employee Stock Compensation Plan and 22,250 shares
of Ikon Common Stock reserved for issuance under the 1999 Ikon Compensation Plan
(a true and correct copy of each of which has been furnished to the
Stockholders), there are no authorized or outstanding options, warrants,
subscription calls, rights (including preemptive rights and rights to demand
registration under the Act), commitments, conversion rights, plans or other
agreements of any character obligating Ikon to authorize, issue, deliver, sell
or redeem any shares of its capital stock or any securities convertible into or
evidencing the right to purchase any shares of such stock.
(b) The Ikon Shares to be issued to the Stockholders pursuant
to this Agreement, will, when issued in accordance with the terms of this
Agreement, be validly issued, fully paid and nonassessable.
SECTION 5.7 SEC Reports. Ikon has delivered to the
Stockholders a true and correct copy of each of the following documents (the
"SEC Reports"): (a) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000, (b) Registration Statement on Form S-8 filed with the
Securities and Exchange Commission (the "Commission") on March 16, 2001, (c)
31
Quarterly Report on Form 10-QSB for the three months ended Xxxxx 00, 0000, (x)
Definitive Proxy Statement filed with the Commission on February 1, 2001, (e)
Current Report on Form 8-K filed with the Commission on December 18, 2000, (f)
Registration Statement on Form 10SB filed with the Commission on February 3,
2000 and (g) all other reports and registration statements filed with the
Commission since February 3, 2000. The SEC Reports constitute all of the
documents and reports that Ikon was required to file with the Commission
pursuant to the Exchange Act and the rules and regulations promulgated
thereunder by the Commission since February 3, 2000. As of their respective
dates, the SEC Reports comply in all material respects with the requirements of
the Exchange Act and the rules and regulations promulgated thereunder and none
of the SEC Reports contained an untrue statement of a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 5.8 Financial Statements.
(a) Included in the SEC Reports are the audited balance sheets
of the Ikon as at December 31, 2000 and 1999, and the related statements of
income, stockholders' equity and cash flows for the two years then ended,
together with the unqualified report thereon (except with respect to
continuation as a going concern) of HLB Kidsons ("HLBK), registered auditors and
chartered accountants (collectively, "Ikon's Audited Financials").
(b) Included in the SEC Reports is the unaudited balance sheet
of Ikon as at March 31, 2001, and the related statements of operations and cash
flows for the three months ended March 31, 2001 and 2000, as reviewed by HLBK
("Ikon's Interim Financials"). The unaudited balance sheet included in Ikon's
Interim Financials is hereinafter referred to as Ikon's Interim Balance Sheet.
32
Since April 1999, Ikon has been inactive except for maintaining its corporate
existence, seeking business opportunities and negotiating this Agreement.
(c) Ikon's Audited Financials and Ikon's Interim Financials
are (i) in accordance with the books and records of Ikon, (ii) correct and
complete, (iii) fairly present the financial position and results of operations
of Ikon as of the dates indicated, and (iv) prepared in accordance with GAAP
(except that (x) unaudited financial statements may not be in accordance with
GAAP because of the absence of footnotes normally contained therein, and (y)
interim (unaudited) financials are subject to normal year-end audit adjustments
that in the aggregate will not have a material adverse effect on the business,
properties, assets, operations, liabilities, financial condition or prospects of
Ikon).
SECTION 5.9 Liabilities. Except as set forth on Schedule 5.9
annexed hereto, as of the date hereof, Ikon has no direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known, or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, including,
without limitation, liabilities on account of taxes, other governmental charges
or lawsuits brought ("Liabilities"), other than (i) Liabilities fully and
adequately reflected or reserved against on the Ikon's Interim Balance Sheet,
(ii) Liabilities incurred since March 31, 2001 in the ordinary course of
business and (iii) Liabilities incurred in connection with the preparation and
execution of this Agreement and the consummation of the Transactions. Ikon has
no knowledge of any past or existing circumstance, condition, event or
arrangement that may hereafter give rise to any Liabilities of Ikon, or any
successor to its business except in the ordinary course of business or as
otherwise set forth on Schedule 5.9. Ikon will not between the date hereof and
the Closing Date, without the prior written consent of the Stockholders, incur
or become subject to, or agree to incur or become subject to, any Liabilities
33
except current liabilities and obligations incurred in the ordinary course of
business or as contemplated by this Agreement or any exhibit or schedule hereto.
SECTION 5.10 Tax Matters. Ikon has filed all Federal, state,
county and local income tax, franchise tax, real and personal property tax,
payroll tax, occupation tax, sales tax, excise tax, and other tax returns which
it is required to file, the failure to file which would materially adversely
affect the assets, properties, business, operations or financial condition or
prospects of Ikon, and has paid, reserved or provided for all taxes shown on
such returns, and all deficiencies or other assessments of tax, interest or
penalties which have been served on or delivered to Ikon. There are no claims
against Ikon with respect to Federal, state, county, local, foreign or other
taxes. The Federal income tax returns of Ikon have never been audited by the
Internal Revenue Service. To the best knowledge of Ikon, there is no unassessed
tax deficiency proposed or threatened against Ikon. No audit of any tax return
of Ikon is in progress. There are not in force any extensions of time with
respect to the date on which any tax return was or is due to be filed by Ikon or
any waivers or agreements by Ikon for an extension of time for the assessment or
payment of any tax.
SECTION 5.11 Real and Personal Property - Leased to Ikon. Ikon
is not a party to or otherwise bound by any lease of real or personal property.
SECTION 5.12 Title. Ikon does not own any assets other than
cash or cash equivalents.
34
SECTION 5.13 Intangible Property.
(a) Ikon does not own any patents, patent applications,
trademark and service xxxx registrations or registration applications, U.S.
copyright registrations or registration applications. Ikon is not a party to or
otherwise bound by any confidentiality, nondisclosure or license agreements
granting rights under one or more patents, patent applications, trademark or
service registrations and registration applications, U.S. copyright
registrations or registration applications by or to Ikon.
(b) (i) Ikon does not infringe a patent, U.S.
trademark registration, U.S. service xxxx registration or copyright of a third
party and (ii) no party has asserted a claim against Ikon that Ikon infringes a
patent, trademark, copyright, trade name or trade secret of a third party.
SECTION 5.14 Contracts and Other Agreements. Schedule 5.14
annexed hereto sets forth, as of the date of this Agreement, all contracts,
commitments, understandings, arrangements and other agreements to which Ikon is
a party or by or to which any of Ikon's properties are bound or subject
(collectively also referred to herein as the "Contracts"). There have been
delivered or made available to the Stockholders true and complete copies of all
the Contracts and other agreements set forth on Schedule 5.14 or on any other
Schedule. All of the Contracts are valid, subsisting, in full force and effect
and binding upon the parties thereto in accordance with their terms, and Ikon
has paid in full or accrued all amounts due thereunder and has satisfied in full
or provided for all of its liabilities and obligations thereunder, and is not in
default in any material respect under any of them, nor, to Ikon's best
knowledge, is any other party to any Contract in default thereunder, nor, to
Ikon's best knowledge, does any condition exist that with notice or lapse of
35
time or both would constitute a default thereunder that would give the other
party thereto the right to terminate such Contract. Except as separately
identified on Schedule 5.14, no approval or consent of any person is needed in
order that the Contracts set forth on Schedule 5.14 or on any other Schedule
continue in full force and effect following the consummation of the
Transactions. Ikon will not, between the date hereof and the Closing Date,
without the Stockholders' prior written consent, become a party to any Contract
or make or permit the amendment or termination (other than in the ordinary
course and excluding the termination of Contracts by their terms) of any
Contract listed on Schedule 5.14.
SECTION 5.15 Litigation; Actions and Proceedings. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental, administrative or regulatory body or arbitration or mediation
tribunal against or involving Ikon. There are no actions, suits or claims or
legal, administrative, regulatory, governmental or arbitral proceedings or
investigations (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) pending or, to Ikon's best knowledge,
threatened against or involving Ikon or any of its properties or assets, nor, to
the best knowledge of Ikon, are there any grounds therefor, that individually or
in the aggregate, could have a material adverse effect upon the transactions
contemplated hereby or upon the assets, properties, business, operations, or
condition (financial or otherwise) of Ikon. There are no actions, suits or
claims or legal, administrative, regulatory, governmental or arbitral
proceedings pending or, to Ikon's best knowledge, threatened that would give
36
rise to any right of indemnification on the part of any director or officer of
Ikon, or the heirs, executors or administrators of such director or officer,
against Ikon or any successor to its business.
SECTION 5.16 Operations of Ikon. (a) Except as set forth on
Schedule 5.16 hereto, since March 31, 2001, Ikon has not:
(i) amended its Certificate of Incorporation or By-Laws or
merged with or into or consolidated with any other person, subdivided or in any
way reclassified any shares of its capital stock or changed or agreed to change
in any manner the rights of its outstanding capital stock or the character of
its business;
(ii) issued or sold or purchased, or issued options or rights
to subscribe to, or entered into any contracts or commitments to issue or sell
or purchase, any shares of its capital stock;
(iii) entered into or amended any employment agreement (other
than employment agreements or at will employment arrangements entered into or
amended in the ordinary course of Ikon's business), entered into or amended any
agreement with any labor union or association representing any employee,
adopted, entered into, or amended any employee benefit plan;
(iv) incurred any indebtedness for borrowed money;
(v) declared or paid any dividends or declared or made any
other distributions of any kind to its stockholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares of
its capital stock;
(vi) materially reduced its cash or short term investments or
their equivalent;
(vii) waived any right of material value to its business;
(viii) made any change in its accounting methods or practices
or made any change in depreciation or amortization policies or rates adopted by
it;
(ix) materially changed any of its business policies;
37
(x) approved, granted or paid any wage or salary increase in
excess of $25,000 per annum, or any bonus in excess of $5,000, or any increase
in any other direct or indirect compensation, for or to any of its officers,
directors, employees, consultants, agents, brokers, independent contractors or
other representatives, or any accrual for or commitment or agreement to make or
pay the same;
(xi) made any loan or advance to any of its stockholders,
officers, directors, employees, consultants, agents, brokers, independent
contractors or other representatives (other than travel, entertainment or
business expense advances made in the ordinary course of business), or made any
other loan or advance otherwise than consistently with past practice in the
ordinary course of business;
(xii) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, consultants, agents, brokers,
independent contractors or other representatives, other than payments or
commitments to pay persons other than its officers, directors or stockholders
made in the ordinary course of business;
(xiii) entered into any lease (as lessor or lessee); sold,
abandoned or made any other disposition of any of its assets or properties
(except in the ordinary course of business); granted or suffered any lien or
other encumbrance on any of its assets or properties; entered into (except in
the ordinary course of business) or amended any contract or other agreement to
which it is a party, or by or to which it or its assets or properties are bound
or subject, or pursuant to which it agrees to indemnify any party or to refrain
from competing with any party;
(xiv) except in the ordinary course of business and in amounts
less than $10,000 in each case, incurred or assumed any Liability;
(xv) made any acquisition of or entered into any agreement to
acquire all or any part of the assets, properties, capital stock or business of
any other person;
38
(xvi) failed to pay timely any of its material liabilities in
accordance with their terms or otherwise in the ordinary course of business; and
(xvii) except in the ordinary course of business, entered into
any other material contract or other agreement or other material transaction.
(b) Ikon will not, between the date hereof and the
Closing, without the prior written consent of the Stockholders, do any of the
things listed in clauses (i) through (xvii) of Section 5.16(i), except that Ikon
may offer for sale and sell to accredited investors a maximum of 100,000 shares
of Ikon Common Stock and except as contemplated under this Agreement.
SECTION 5.17 Compliance with Laws. Ikon is not in default
under or in violation of any applicable order, judgment, injunction, award or
decree, of any material applicable Federal, state, or local statute, law,
ordinance, rule or regulation including, without limitation, ERISA or the
provisions of any franchise or license, or of any other material requirement of
any governmental, regulatory, administrative or industry body, court or
arbitrator applicable to Ikon. Ikon is not in default under or in violation of
any provisions of its Certificate of Incorporation or its By-Laws, or any
material instrument, contract, mortgage, indebtedness, indenture or other
agreement to which Ikon is a party or by or to which Ikon or any of its assets
or properties may be bound or subject.
SECTION 5.18 Licenses, Permits and Certificates. Ikon does not
have any material licenses, permits, certificates, authorizations, approvals and
consents from any governmental authority and none are required to legally
operate its business. No governmental, regulatory or industry permits, consents,
waivers, approvals or authorizations are necessary in connection with the
consummation of the Transactions.
39
SECTION 5.19 No Conflicts. The execution, delivery and
performance of the Transaction Documents by Ikon and the consummation by Ikon of
the Transactions will not (a) result in a violation of Ikon's Certificate of
Incorporation or By-Laws, (b) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which Ikon
is a party, or (c) result in a violation of any law, rule, regulation, by-law,
directive, order, judgment or decree (including Federal, state, provincial and
municipal securities laws and regulations) applicable to Ikon or by which any of
its property or assets is bound or affected, except to the extent that matters
within clauses (b) and (c) immediately above would not have a material adverse
effect on the business, properties, assets, operations, liabilities, financial
condition or prospects of Ikon, or the ability of Ikon to perform this Agreement
and the other Transaction Documents.
SECTION 5.20 Labor Agreements, Employee Benefit Plans and
Employment Agreements. Except as set forth in Schedule 5.20 annexed hereto, Ikon
is not a party to (a) any union collective bargaining, works council, or similar
agreement or arrangement, (b) any qualified or non-qualified pension,
retirement, severance, profit-sharing, deferred compensation, bonus, stock
option, stock purchase, retainer, consulting, health, welfare or incentive plan
or agreement, oral or written, whether legally binding or not, (c) any plan or
policy providing for employee benefits, including but not limited to vacation,
disability, sick leave, medical, hospitalization, life and other insurance
plans, and related benefits, or (d) any employment agreement. Ikon is not
presently a party to any "employee leasing" agreement or arrangement, nor does
Ikon have any liability in respect of any such agreement or arrangement to which
it was, at any time, a party, but which is no longer in effect.
40
SECTION 5.21 Books and Records. The books of account and other
corporate records of Ikon made or to be made available to the Stockholders in
connection with the Transactions and the due diligence inquiries made by the
Stockholders in connection herewith, are in all respects complete and correct
and have been maintained in accordance with good business practices and the
matters contained therein are accurately reflected in all material respects on
the financial statements of Ikon furnished or to be furnished hereunder by Ikon
to the Stockholders.
SECTION 5.22 Ownership of the Ikon Shares. (a) Ikon is not
bound by or subject to any voting trust arrangement, proxy, voting agreement,
stockholder agreement, purchase agreement or other agreement or understanding,
except as contemplated hereunder, (i) granting any option, warrant or other
right to purchase all or any of the Ikon Shares or the shares of Ikon Common
Stock issuable upon exercise of the New Warrants (the "Ikon Warrant Shares") to
any person, (ii) restricting the right of Ikon to issue the Ikon Shares, or
(iii) otherwise restricting any rights of Ikon with respect to the Ikon Shares
and the Ikon Warrant Shares (including restrictions as to the voting or
disposition of the Ikon Shares or the shares of Ikon Warrant Shares); (b) Ikon
has the absolute and unrestricted right, power and capacity to issue the Ikon
Shares and the Ikon Warrant Shares, and (c) upon issuance to the Stockholders of
the Ikon Shares hereunder and the Ikon Warrant Shares to the holders of the New
Warrants in accordance with the terms of the New Warrants, the Stockholders and
such holders will acquire good and valid title to the Ikon Shares or the Ikon
Warrant shares, as the case may be, free and clear of any liens, charges or
encumbrances except as contemplated hereunder .
41
SECTION 5.23 Finders and Investment Bankers. Ikon has not
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Transactions.
SECTION 5.24 Absence of Certain Changes. Since March 31, 2001,
there has been no material adverse change in the condition, financial or
otherwise, of Ikon, other than changes occurring in the ordinary course of
business which changes have not, individually or in the aggregate, had a
material adverse effect on the business, properties, assets, operations,
liabilities, financial condition or prospects of Ikon and other than as set
forth in Schedule 5.24 annexed hereto.
SECTION 5.25 Insurance. Ikon does not maintain any insurance.
SECTION 5.26 Full Disclosure. All documents and other papers
delivered by or on behalf of Ikon in connection with this Agreement and the
Transactions are, to the best of Ikon's knowledge, authentic and true and
complete in all material respects. No representation or warranty of Ikon
contained in this Agreement, and no document or other paper furnished by or on
behalf of Ikon pursuant to this Agreement or in connection with the
Transactions, contains an untrue statement of a material fact or omits to state
42
a material fact required to be stated therein or necessary to make the
statements made in the context in which made, not false or misleading. To Ikon's
best knowledge, there is no fact that Ikon has not disclosed to the Stockholders
that materially adversely affects, or so far as Ikon can now foresee, will
materially adversely affect, the assets, properties, business, operations or
condition (financial or otherwise) of Ikon or the ability of Ikon to perform
this Agreement.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE PARTIES
SECTION 6.1 Conduct of Business.
(a) Between the date hereof and the Closing Date,
except as otherwise contemplated in this Agreement, the Company shall conduct
its business in the ordinary and usual course, and the Company, without the
prior consent of Ikon, will not change in any material respect any business
policy or practice or take any action which would violate Section 4.16 hereof.
(b) Between the date hereof and the Closing Date,
except as otherwise contemplated in this Agreement, Ikon shall conduct its
business in the ordinary and usual course, and shall not, without the prior
consent of the Stockholders, change in any material respect any business policy
or practice or take any action which would violate Section 5.16 hereof.
SECTION 6.2 Access and Investigation.
(a) Between the date hereof and the Closing Date, the
Company agrees to afford Ikon and its directors, officers, employees, agents,
consultants, advisors, or other representatives, including legal counsel,
accountants, and financial advisors (collectively, "Representatives") full and
43
free access, during normal business hours and at such other reasonable times as
otherwise may be required under the circumstances, to the Company's personnel,
properties, contracts, books, records and other existing documents and data as
Ikon may reasonably request.
(b) Between the date hereof and the Closing Date,
Ikon will afford the Stockholders and their Representatives full and free
access, during normal business hours and at such other reasonable times as
otherwise may be required under the circumstances, to Ikon's personnel,
properties, contracts, books, records and other existing documents and data as
the Stockholders may reasonably request.
SECTION 6.3 Litigation. Between the date hereof and the
Closing Date, Ikon and the Stockholders will promptly notify each other of any
lawsuits, claims, proceedings or investigations which are threatened or
commenced against either Ikon or the Company, or against any officer, employee,
agent, consultant or director thereof, which may relate to, or affect the
stockholders, the Business of the Company or Ikon or their respective assets,
this Agreement or the Transactions.
SECTION 6.4 Actions with Respect to Closing. Each of the
parties hereto agrees to use his, her or its best efforts to bring about the
satisfaction of the conditions precedent to the obligation of the other parties
hereto to effect the Closing (to the extent that such satisfaction is dependent
on the actions on the part of the initial party of commission or omission) and
to cause its covenants and agreements contained in this Agreement to be
satisfied and performed hereunder.
SECTION 6.5 Public Statement. No party hereto shall, without
the prior consent of the other parties hereto, make any public statement,
announcement or release to trade publications or to the press, or make any
44
statements to any competitor, customer or any third party, with respect to this
Agreement except to the extent that any party is advised by his, her or its
counsel that a public statement is required by law and then only upon prior
notice to the other parties hereto.
SECTION 6.6 Consent to Jurisdiction and Service of Process.
Any legal action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby shall be instituted in any
state or Federal court of competent jurisdiction located in Xxx Xxxx Xxxxxx,
Xxxxx xx Xxx Xxxx, Xxxxxx Xxxxxx, and each party agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of such court, that
its property is exempt or immune from attachment or execution, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. Each party further
irrevocably submits to the exclusive jurisdiction of any such court in any such
action, suit or proceeding. Ikon hereby appoints Xxxxxx X. Xxxxx, Esq., at his
offices at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, and the Stockholders hereby
appoint Xxxxxxx, Savage & Kaplowitz, LLP, at its offices at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX 00000 (or at each such person's or entity's office at such
other address as such person or entity hereafter furnishes to the other
parties), as such party's authorized agent to accept and acknowledge on such
party's behalf service of any and all process that may be served in any such
action, suit or proceeding. Any and all service of process and any other notice
45
in any such action, suit or proceeding shall be effective against any party if
given personally or by registered or certified mail, return receipt requested,
or by any other means of mail that requires a signed receipt, postage prepaid,
mailed to such party as herein provided
SECTION 6.7 Expenses. Each of the parties to this Agreement
shall, except as otherwise specifically provided herein, bear his, her and its
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the Transactions, including without
limitation, all fees and expenses of agents, representatives, counsel and
accountants.
SECTION 6.8 Bridge Loan. Simultaneous with the execution of
this Agreement by all of the parties hereto, Ikon agrees to loan the Company
$100,000. Such loan shall be evidenced by and be repayable in accordance with
the terms and conditions of a promissory note substantially in the form of
Exhibit A annexed hereto to be executed and delivered by the Company.
SECTION 6.9 Confidential Information.
(a) Each of Ikon and the Company has disclosed and delivered
and will through the Closing disclose and deliver to the other party certain
information about its respective business and operations prepared by such party
or its advisors (such party when disclosing such information being the
"Disclosing Party" and such party when receiving such information being the
"Receiving Party"). All such information furnished by the Disclosing Party or
its Authorized Persons (as defined below), whether furnished before or after the
date hereof, whether oral or written, and regardless of the manner in which it
is furnished, is referred to herein as "Proprietary Information." Proprietary
Information does not include, however, information which (a) is or becomes
46
generally available to the public other than as a result of a disclosure by the
Receiving Party or its Authorized Persons, (b) was available to the Receiving
Party on a nonconfidential basis prior to its disclosure by the Disclosing Party
or its Authorized Persons, provided that the source of such information is not
known to the Receiving Party to be obligated to maintain such information as
confidential, (c) becomes available to the Receiving Party on a nonconfidential
basis from a Person other than the Disclosing Party or its Authorized Persons
that is not otherwise bound by a confidentiality agreement with the Disclosing
Party or any of its Authorized Persons, or is otherwise not under an obligation
to the Disclosing Party or any of its Authorized Persons not to transmit the
information to the Receiving Party or any other third party or (d) required to
be disclosed in connection with this Agreement or any other documents
contemplated hereby. As used in this Agreement, the term "Authorized Person"
means, as to any Person, those Persons that are actively and directly
participating in the evaluation and negotiation of the transactions contemplated
by this Agreement.
(b) Subject to Section 6.9 (a), unless otherwise agreed to in
writing by the Disclosing Party, the Receiving Party agrees (i) except as
required by law, to keep all Proprietary Information confidential and not to
disclose or reveal any Proprietary Information to any Person other than its
Authorized Persons, and to cause those persons to observe the terms of this
Agreement and (ii) not to use Proprietary information for any purpose other than
in connection with its evaluation of the transactions contemplated hereby or the
completion of the transactions contemplated hereby in a manner approved by the
Disclosing Party.
SECTION 6.10 Notice of Developments. Each party hereto will
give prompt written notice to the other parties hereto of any material adverse
development causing a breach of any of his, her or its own representations and
warranties contained herein. No disclosure by any party pursuant to this Section
47
6.10, however, shall be deemed to prevent or cure any misrepresentation, breach
of warranty, or breach of covenant contained herein.
SECTION 6.11 Exclusivity. None of Ikon, the Company (or any of
its Subsidiaries) or the Stockholders will solicit, initiate, or encourage the
submission of any proposal or offer from any person or entity relating to the
acquisition of all or substantially all of the capital stock or assets of Ikon
or the Company (including any acquisition structured as a merger, consolidation,
or share exchange); provided, however, that Ikon, as a public company, will
remain free to participate in any discussions or negotiations regarding, furnish
any information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person or entity to do or seek any of
the foregoing to the extent the fiduciary duties of Ikon's directors may require
under applicable law. Each party hereto shall notify the other immediately if
any person or entity makes any proposal, offer, inquiry, or contact with respect
to any of the foregoing.
ARTICLE 7
CONDITIONS TO IKON OBLIGATIONS
The obligations of Ikon to consummate the Transactions shall
be subject to the satisfaction of each of the following conditions on or before
the Closing Date, subject to the right of Ikon to waive any one or more of such
conditions:
SECTION 7.1 Representations and Warranties of the Company and
the Stockholders. The representations and warranties of the Company and the
Stockholders contained in this Agreement, including the Schedules hereto, and in
the certificates to be delivered to Ikon pursuant hereto and in connection
herewith shall be true and correct in all material respects (except to the
48
extent any such representations and warranties is already qualified as to
materiality in Article 3 or Article 4, in which case, such representations and
warranties shall be true and correct without further qualifications as to
materiality under this Section 7.1) on the date hereof and on the Closing Date
as though such representations and warranties were made on the Closing Date,
except for representations and warranties made as of a specific date which shall
be true and correct on the Closing Date as of such specific date.
SECTION 7.2 Performance of this Agreement. The Company and the
Stockholders shall have duly performed or complied in all material respects with
all of the obligations to be performed or complied with by them under the terms
of this Agreement on or prior to the Closing Date.
SECTION 7.3 Certificates of Stockholders and Company. Ikon
shall have received a certificate signed by each of the Stockholders, dated as
of the Closing Date and subject to no qualification, certifying that the
conditions set forth in Sections 7.1 and 7.2 hereof with respect to each such
Stockholder has been fully satisfied. Such certificate shall be deemed
representations and warranties of such Stockholder under this Agreement. Ikon
shall also have received a certificate duly signed on behalf of the Company by
its chief executive officer, dated as of the Closing Date and subject to no
qualification, certifying that the conditions set forth in Sections 7.1 and 7.2
hereof with respect to the Company have been fully satisfied. Such certificate
shall be deemed representations and warranties of the Company under this
Agreement.
SECTION 7.4 No Material Adverse Change. Ikon shall have
received a certificate duly signed on behalf of the Company by its chief
executive officer to the effect that as of the Closing Date there has been no
material adverse change in the financial condition, results of operations,
Business or prospects of the Company since March 31, 2001, or any material
49
adverse change in the nature of the Business, the manner of conducting the
Business or the prospects of the Business since such date, except as for the
execution, delivery and performance of this Agreement and the other Transaction
Documents.
SECTION 7.5 Satisfactory Business Review. Ikon shall have
satisfied itself, after receipt and consideration of the Schedules and after
Ikon and its representatives have completed the review of the Business and the
Company contemplated by this Agreement, that none of the information revealed
thereby or in the Company Audited Financials has resulted in, or in the opinion
of Ikon, may result in, a material adverse change in the assets, properties,
business or condition (financial or otherwise) of the Company.
SECTION 7.6 Governmental Permits and Approvals. All permits,
including any environmental or regulatory consents or permits required for the
lawful consummation of the Closing, shall have been obtained.
SECTION 7.7 Third Party Consents. All consents, permits and
approvals from parties to contracts or other agreements with the Company or with
the Stockholders that may be required in connection with the performance by the
Stockholders of their obligations under this Agreement or the continuance of
such contracts or other agreements after the Closing shall have been obtained.
SECTION 7.8 Charter Documents. The Company shall have
delivered to Ikon copies of the Company's Certificate of Incorporation,
certified as true and complete as of a recent date by the Secretary of State of
Delaware, and certified as true and complete as of the Closing Date by an
authorized officer of the Company.
50
SECTION 7.9 By-Laws. The Company shall have delivered to Ikon
a copy of the Company's By-Laws as in effect on the date of the Closing
certified by an authorized officer of the Company.
SECTION 7.10 Good Standing. The Company shall have delivered
to Ikon certificates of good standing, existence or its equivalent with respect
to the Company, certified as of a recent date by the appropriate governmental
authority of Delaware, and each other jurisdiction in which the failure to so
qualify and be in good standing would have a material adverse effect on the
Company and its Business.
SECTION 7.11 Litigation. At the Closing Date no suit, action
or other proceeding shall be pending or threatened before any court or
governmental agency in which it is sought (i) to restrain, prohibit, invalidate
or set aside (in whole or in part) the Transactions, (ii) to affect the right of
the Stockholders or the Company to operate or control, after the Closing Date,
its respective assets, properties and businesses (in whole or in part) or (iii)
to obtain damages or a discovery order in connection with this Agreement or the
consummation of the Transactions.
SECTION 7.12 Consulting Agreements. Ikon shall have entered
into a consulting agreement with each of Sigma Limited S.A. and Corporate
Communications Network Inc. substantially in the form of Exhibits B and C,
respectively, attached hereto.
SECTION 7.13 New Warrants. Each holder of a warrant to
purchase shares of Company Common Stock shall have executed a written agreement,
in form and substance satisfactory to Ikon, pursuant to which such holder shall
have agreed that upon exercise of such warrant after the Closing of the
Transactions the holder shall be entitled to receive Ikon Common Stock in lieu
of Company Common Stock on the basis of the Exchange Ratio. Any such
warrantholder who shall become a stockholder of the Company after the date
51
hereof but prior to the Closing shall have executed a counterpart signature page
to this Agreement.
SECTION 7.14 Convertible Notes. All of the notes convertible
into shares of Company Common Stock shall have been converted and the holders of
the shares of Company Common Stock issued upon such conversion shall have
executed a counterpart signature page to this Agreement.
SECTION 7.15 May Notes. The holders of the May Notes shall
have converted such notes into 650,000 shares of Company Common Stock.
SECTION 7.16 Counterpart Signature Pages. All of the Existing
Stockholders and any party that shall acquire any of the Company Shares prior to
the Closing that shall not have executed this Agreement on the date hereof shall
have executed counterpart signature pages hereto.
SECTION 7.17 Agreement and General Release. The Company and
Global Capital Partners, Inc., a Delaware corporation and an Existing
Stockholder ("GCAP"), shall have entered into an Agreement and General Release
substantially in the form of Exhibit D attached hereto.
ARTICLE 8
CONDITIONS TO THE STOCKHOLDERS' OBLIGATIONS
The obligations of the Stockholders to consummate the
Transactions shall be subject to the satisfaction of each of the following
conditions on or before the Closing Date, subject to the right of the
Stockholders to waive any one or more of such conditions:
52
SECTION 8.1 Representations and Warranties of Ikon. The
representations and warranties of Ikon contained in this Agreement, including
the Schedules hereto, and in the certificates to be delivered to the
Stockholders pursuant hereto and in connection herewith shall be true and
correct in all material respects (except to the extent any such representations
and warranties is already qualified as to materiality in Article 5, in which
case, such representations and warranties shall be true and correct without
further qualifications as to materiality under this Section 8.1) on the date
hereof and on the Closing Date as though such representations and warranties
were made on the Closing Date except for representation and warranties made as
of a specific date which shall be true and correct on the Closing Date as of
such specific date.
SECTION 8.2 Performance of this Agreement. Ikon shall have
duly performed or complied in all material respects with all of the obligations
to be performed or complied with by it under the terms of this Agreement on or
prior to the Closing Date.
SECTION 8.3 Certificate of Ikon. The Stockholders shall have
received a certificate duly signed on behalf of Ikon, dated as of the Closing
Date and subject to no qualification certifying that the conditions set forth in
Sections 8.1 and 8.2 hereof have been fully satisfied. Such certificate shall be
deemed representations and warranties of Ikon under this Agreement.
SECTION 8.4 No Material Adverse Change. The Stockholders shall
have received a certificate, signed by a duly authorized officer of Ikon, to the
effect that as of the Closing Date there has been no material adverse change in
the financial condition, results of operations, business or prospects of Ikon
since March 31, 2001 or any material adverse change in the nature of Ikon's
business, the manner of conducting such business or the prospects of the
53
business since such date, except as associated with the execution, delivery and
performance of this Agreement and the other Transaction Documents.
SECTION 8.5 Satisfactory Business Review. The Stockholders
shall have satisfied themselves, after the Stockholders and their
Representatives have completed the review of Ikon's books and records that none
of the information revealed thereby has resulted in, or in the opinion of the
Stockholders, may result in, a material adverse change in the assets,
properties, business or condition (financial or otherwise) of Ikon.
SECTION 8.6 Governmental Permits and Approvals. All permits,
including any environmental or regulatory consents or permits required for the
lawful consummation of the Closing, shall have been obtained.
SECTION 8.7 Third Party Consents. All consents, permits and
approvals from parties to contracts or other agreements with Ikon that may be
required in connection with the performance by Ikon of its obligations under
this Agreement or the continuance of such contracts or other agreements after
the Closing shall have been obtained.
SECTION 8.8 Certified Resolutions. Ikon shall have delivered
to the Stockholders certified copies of board resolutions approving and adopting
this Agreement and the other Transaction Documents and authorizing the
Transactions, certified as true and correct by the Secretary of Ikon.
SECTION 8.9 Charter Documents. Ikon shall have delivered to
the Stockholders copies of its Certificate of Incorporation, certified as true
and complete as of a recent date by the appropriate governmental authority of
Nevada, and certified as true and complete as of the Closing Date by the
Secretary of Ikon.
54
SECTION 8.10 By-Laws. Ikon shall have delivered to the
Stockholders a copy of Ikon's By-Laws certified by the Secretary of Ikon as of
the Closing Date to be true and correct and in full force and effect as of the
Closing Date.
SECTION 8.11 Good Standing. Ikon shall have delivered to the
Stockholders certificates of good standing, existence or its equivalent with
respect to Ikon, certified as of a recent date by the appropriate governmental
authority of Nevada, and each other jurisdiction in which the failure to so
qualify and be in good standing would have a material adverse effect on Ikon and
its business.
SECTION 8.12 Resignation and Election of Directors and
Officers. Subject to compliance with applicable Federal securities laws, the
existing board of directors and officers of Ikon shall have resigned and the
individuals listed in Schedule 8.12 annexed hereto shall have been appointed in
lieu thereof.
SECTION 8.13 Litigation. At the Closing Date no suit, action
or other proceeding shall be pending or threatened before any court or
governmental agency in which it is sought (i) to restrain, prohibit, invalidate
or set aside (in whole or in part) the Transactions contemplated by this
Agreement, (ii) to affect the right of Ikon to operate or control, after the
Closing Date, its assets, properties and businesses (in whole or in part) or
(iii) to obtain damages or a discovery order in connection with this Agreement
or the consummation of the Transactions.
SECTION 8.14 Liquid Net Worth of Ikon. Ikon shall have
furnished to the Stockholders evidence that the liquid (cash or cash
equivalents) net worth of Ikon as at the Closing shall be not less than Four
Hundred Thousand Dollars ($400,000).
SECTION 8.15 Convertible Notes. All of the notes convertible
into shares of Company Common Stock shall have been converted, the pledge
agreement between GlobalNet Xxxxxxxxx.xxx, Inc., a New Stockholder, and the
55
Company, dated as of February 16, 2001(the "GlobalNet Pledge Agreement"), shall
have been terminated and the 250,000 shares of the common stock of GCAP, pledged
pursuant to the terms of the GlobalNet Pledge Agreement shall have been
delivered to the Company.
SECTION 8.16 May Notes. The holders of the May Notes shall
have converted such notes into 650,000 shares of Company Common Stock, the
pledge agreements between the holders of the May Notes and GCAP (the "May Notes
Pledge Agreements") shall have been terminated and the aggregate of 1,000,000
shares of Company Common Stock pledged pursuant to the terms of the May Notes
Pledge Agreement shall have been delivered to GCAP.
SECTION 8.17 Xxxx Note. The Company shall have delivered to
Xxxxxx X. Xxxx ("Xxxx") an aggregate of 310,000 shares of the common stock of
GCAP as payment in full of a $175,000 promissory note of the Company held by
Xxxx.
SECTION 8.18 Company Common Stock Sale. GCAP shall have sold
an aggregate of at least 2,684,000 shares of Company Common Stock and warrants
to purchase 500,000 shares of Company Common Stock to Xxxxxxxx X. Xxxxxx
("Xxxxxx"), the 401 (k) plan f/b/x Xxxxxx and/or Xxxxxxx X. Xxxxx ("Xxxxx")
and/or such other purchaser or purchasers acceptable to GCAP on such terms and
conditions as mutually agreed by GCAP and each of the purchaser or purchasers
and each of the purchaser or purchasers thereof shall have executed a
counterpart signature page to this Agreement.
SECTION 8.19 GCAP Common Stock Sale. Xxxxxx and/or the 401 (k)
plan f/b/x Xxxxxx and Xxxxx shall have sold an aggregate of 340,398 shares of
the common stock of GCAP to Xxxx on such terms and conditions as mutually agreed
by each of Xxxxxx and Xxxxx and Xxxx.
56
SECTION 8.20 Employment Agreements. Each of Xxxxxx and Xxxxx
shall have entered into an amendment to his employment agreement with the
Company and GCAP, on such terms and conditions as mutually agreed by the
Company, GCAP and each of Xxxxxx and Xxxxx, pursuant to which GCAP shall be
removed as a party to each such agreement.
SECTION 8.21 Equipment Lease Agreements. GCAP shall have
entered into an agreement or agreements with such party or parties acceptable to
GCAP, on such terms and conditions as mutually agreed by GCAP and each of such
party or parties, pursuant to which GCAP shall receive reasonable collateral in
order to secure GCAP's guaranty of certain equipment leases entered into by the
Company.
ARTICLE 9
INDEMNIFICATION; SURVIVAL
SECTION 9.1 Obligation of the Shareholders to Indemnify. Each
of the Stockholders, severally and not jointly, agrees to indemnify, defend and
hold harmless Ikon and its stockholders as of the date of this Agreement and
their respective directors, officers, heirs, legal representatives, successors
and assigns, from and against all losses, liabilities, damages, deficiencies,
actions, suits, proceedings, claims, demands, orders, assessments, amounts paid
in settlement, fines, and reasonable costs and expenses (including interest,
penalties and reasonable attorneys' fees and disbursements and reasonable
investigative costs) (collectively, "Losses") based upon, arising out of or
otherwise in respect of (i) any breach in any of the representations and
warranties of such Stockholder in this Agreement and (ii) any breach or
non-fulfillment of any of the covenants or agreements of such Stockholder
contained in this Agreement.
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SECTION 9.2 Obligation of Ikon to Indemnify. Ikon agrees to
indemnify, defend and hold harmless the Stockholders, and their respective
directors, officers, heirs, legal representatives, successors and assigns, from
and against any Losses based upon, arising out of or otherwise in respect of (i)
any breach in any of the representations and warranties of Ikon set forth in
this Agreement and (ii) any breach or nonfulfillment of any covenant or
agreement of Ikon contained in this Agreement.
SECTION 9.3 Claims Notice. Each party hereto (an "Indemnified
Party") shall, promptly upon becoming aware of any event or circumstance (an
"Indemnifiable Event") which, in his, her or its reasonable judgment, may result
in a Loss for which the Indemnified Party could assert a right of
indemnification against any other party (or parties) hereto (the "Indemnifying
Party") under this Article 9, give notice thereof (the "Claims Notice") to the
Indemnifying Party (but the obligations of the Indemnifying Party under this
Article 9 shall not be impaired by the Indemnified Party's failure to give such
notice, except to the extent that said failure actually prejudices the rights of
the Indemnifying Party). The Claims Notice shall describe the Indemnifiable
Event in reasonable detail, shall indicate whether the Indemnifiable Event
involves a "Third Party Claim" (defined below), and shall indicate the amount
(estimated, if necessary) of the Loss that has been or may be suffered by the
Indemnified Party. In such event, the Indemnifying Party shall, within fifteen
(15) business days after receipt of the Claims Notice, give notice to the
Indemnified Party of whether he or it intends to dispute the claim described in
the Claims Notice (the "Response Notice"). If the Indemnifying Party timely
disputes the Claims Notice as provided above, the Indemnified Party shall, for a
period of not more than fifteen (15) business days after receipt of the Response
Notice (or less, if the nature of the Indemnifiable Event so requires), seek out
a negotiated settlement of the dispute with the Indemnifying Party and shall
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refrain during that period from commencing any judicial proceeding or other
action to enforce this Article 9. If, despite their good faith negotiations, the
parties are unable to resolve the dispute within the aforesaid period (or if the
Indemnifying Party fails to timely give the Response Notice), the Indemnified
Party shall be free to exercise all rights and remedies available to him or it
hereunder, at law in equity or otherwise to enforce his or its rights under this
Article 9. As used herein, "Third Party Claim" means any demand, claim or
circumstance which, with the lapse of time or otherwise, would give rise to a
claim or the commencement (or threatened commencement) of any action, proceeding
or investigation against the Indemnified Party by any other person.
SECTION 9.4 Opportunity to Defend Against Third Party Claims.
If the Claims Notice relates to a Third Party Claim, the Indemnifying Party may
elect to compromise or defend, at its own expense and by its own counsel, such
Third Party Claim. If the Indemnifying Party elects to compromise or defend such
Third Party Claim, it shall within 30 business days (or sooner, if the nature of
the Third Party Claim so requires) after his or its receipt of the Claims
Notice, notify the Indemnified Party of its intent to do so, and the Indemnified
Party shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Third Party Claim. If the Indemnifying
Party elects not to compromise or defend such Third Party claim, fails to notify
the Indemnified Party of its election as herein provided or contests its
obligation to indemnify under this Agreement, the Indemnified Party may pay,
compromise or defend such Third Party Claim. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnified Party may settle or
compromise any claim over the objection of the other, provided, however, that
consent to settlement or compromise shall not be unreasonably withheld. In any
event, the Indemnified Party and the Indemnifying Party may participate, at
their own expense, in the defense of such Third Party Claim. If the Indemnifying
Party chooses to defend any claim, the Indemnified Party shall make available to
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the Indemnifying Party any books, records or other documents within its control
that are necessary or appropriate for such defense. The Indemnifying Party shall
be subrogated to all rights and remedies of the Indemnified Party to the extent
of any indemnification provided by the Indemnifying Party to the Indemnified
Party.
SECTION 9.5 Limitation on Indemnification. Notwithstanding
anything to the contrary in this Agreement, no Indemnified Party shall have any
liability for indemnification under this Article 9 until the total of all Losses
of the Indemnified Party exceeds $25,000 and the total liability of an
Indemnifying Party under this Article 9 shall (i) in no event exceed the fair
market value of the consideration received as of the date of the applicable
Indemnifiable Event and (ii) be reduced to the extent of payment to the
Indemnified Party of any applicable insurance proceeds; provided, however, that
the foregoing limitations on indemnification shall be inapplicable in the case
of any Losses resulting from any breach of the representations and warranties
contained in Sections 3.1, 3.2, 5.2 and 5.22 hereof.
SECTION 9.6 Survival. Notwithstanding the investigations by
the parties hereto of each other's affairs, and notwithstanding any knowledge of
facts determined or determinable by such parties pursuant to such investigation,
each of Ikon and the Stockholders shall have the right to rely fully upon the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement. The representations and warranties of the parties
contained herein shall survive the Closing (i) to the extent contained in
Section 3.1, 3.2, 5.2 and 5.22 hereof, for the duration of the applicable
statute of limitations, (ii) to the extent relating to any other matter, for
twelve (12) months following the Closing. A claim for indemnification hereunder
must be asserted by a party seeking indemnification within the respective period
of survival.
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SECTION 9.7 Indemnification Exclusive Remedy. The parties
hereto acknowledge and confirm that, except in the event of fraud, the
indemnification procedures described in this Article 9 shall be the sole and
exclusive remedies available to them for any breach or non-fulfillment of the
representations, warranties, covenants, agreements and other provisions of this
Agreement.
ARTICLE 10
TERMINATION
SECTION 10.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) By mutual consent of the Stockholders and Ikon; or
(b) By the Stockholders if any of the conditions set forth in
Section 8 hereof shall have become incapable of fulfillment, and shall not have
been waived by the Stockholders; or
(c) By Ikon if any of the conditions set forth in Section 7
hereof shall have become incapable of fulfillment, and shall not have been
waived by Ikon; or
(d) By Ikon or the Stockholders if the Closing has not
occurred on or before August 17, 2001.
SECTION 10.2 Effects of Termination. If this Agreement is
terminated and the transactions contemplated hereby are not consummated as
described above, this Agreement shall become void and of no further force and
effect, except for the provisions of Section 6.7 relating to expenses and
Section 6.9 relating to confidentiality.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission or, if mailed, three (3) days after the date of deposit
in the mails, as follows:
(i) if to the Stockholders, to:
at the address provided by each Stockholder under
his, her or its signature hereto
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx, Xxxxxx & Kaplowitz, LLP
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
(ii) if to Ikon, to:
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with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
Any party may by notice given in accordance with this Section
to the other parties designate another address or person for receipt of notices
hereunder.
SECTION 11.2 Entire Agreement. This Agreement (including the
schedules and exhibits) and the agreements referred to herein and/or executed in
connection with the consummation of the Transactions contemplated herein contain
the entire agreement among the parties with respect to the exchange of the
Company Shares for the Ikon Shares and the related transactions, and supersede
all prior agreements, written or oral, with respect thereto.
SECTION 11.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the parties
waiving compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
63
inaccuracy or breach is based may also be the subject of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
SECTION 11.4 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York, applicable
to agreements made and to be performed entirely within such State (without
giving effect to conflicts of law principles thereof).
SECTION 11.5 Binding Effect; No Assignment; No Third Party
Beneficiaries. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and legal representatives. Nothing
contained herein is intended or shall be construed as creating third party
beneficiaries to this Agreement. This Agreement is not assignable except by
operation of law.
SECTION 11.6 Variations in Pronouns. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
SECTION 11.7 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto. Fascimile signatures shall be deemed originals for all purposes.
SECTION 11.8 Exhibits and Schedules. The Exhibits and
Schedules are a part of this Agreement as if fully set forth herein. All
references herein to Sections, subsections, clauses, Exhibits and Schedules
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shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require.
SECTION 11.9 Headings. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the date first above written.
IKON VENTURES, INC. XXXXXX ONLINE, INC.
By: /s/ XXX XXXX By: /s/ XXXXXXXX XXXXXX
-------------------------------- ------------------------------
Name: Xxx Xxxx Name: Xxxxxxxx Xxxxxx
Title: Chairman Title: Chief Executive Officer
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THE STOCKHOLDERS:
GLOBAL CAPITAL PARTNERS, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Chief Executive Officer
/s/ Xxxxxxxx X. Xxxxxx /s/ Tiburon Asset Management, LLC
---------------------------------- ----------------------------------
Xxxxxxxx X. Xxxxxx Tiburon Asset Management, LLC
/s/Xxxxxxx Xxxxx /s/ Tiburon Asset Management
---------------------------------- ----------------------------------
Xxxxxxx Xxxxx Tiburon Asset Management
/s/ The Xxxxxxxx Family Trust dtd 7/1/99 /s/ Tiburon Management Limited
---------------------------------------- ----------------------------------
The Xxxxxxxx Family Trust dtd 7/1/99 Tiburon Management Limited
/s/ Corona Corporation /s/ Xxx Xxxxxx
---------------------------------- ----------------------------------
Corona Corporation Xxx Xxxxxx
/s/ Xxxxx Xxxxx /s/ Xxxxxx Xxxxxx
---------------------------------- ----------------------------------
Xxxxx Xxxxx Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------- ----------------------------------
Xxxxxx Xxxxxxxx Xxxxxxx X. Xxxxxxxxx
/s/ Xxx Xxxxxxxxx /s/ Xxxxx Xxxxx
---------------------------------- ----------------------------------
Xxx Xxxxxxxxx Xxxxx Xxxxx
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/s/ Xxxxxxx Grundig /s/ Xxxxx Xxxxxxx
---------------------------------- ----------------------------------
Xxxxxxx Grundig Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxx /s/ Xxxxx Xxxxx
---------------------------------- ----------------------------------
Xxxxx Xxxxx Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxx /s/ Xxxxx Xxxxx
---------------------------------- ----------------------------------
Xxxxxxx Xxxxx Xxxxx Xxxxx
GlobalNet Xxxxxxxxx.xxx, Inc. Sigma Limited SA
By: /s/ W. XXXXXX XXXXXXX By: /s/ XXXXXX XXXX
------------------------------ ------------------------------
W. Xxxxxx Xxxxxxx Xxxxxx Xxxx
X.X. Xxxxxx Group, Inc. 401(K)
Profit Sharing Plan Dated 10/1/95
F/B/O Xxxxxxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxxx X. Xxxxxx
67
