AGREEMENT AND PLAN OF MERGER
among
XXXXXXXX.XXX, INC.,
ELINEAR CORPORATION
and
IMAGENUITY, INC.
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 11,
1999, among Xxxxxxxx.xxx, Inc., a Delaware corporation whose
address is 0000 X. Xxxxx Xxxx., Xxxxx 000, Xxxxxxxx Xxxxxxx, XX
00000 ("Kinetiks"), Elinear Corporation, a Colorado corporation and
wholly-owned subsidiary of Kinetiks, whose address is 00000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxx 00000 ("Elinear")
such corporation in its capacity as the surviving corporation being
sometimes called the "Surviving Corporation," and Imagenuity, Inc.,
a Florida corporation whose address is 00000 Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxxxx, Xxxxxxxx 00000 ("Imagenuity").
ARTICLE I
THE SURVIVING CORPORATION
Section 1.01 Name of Surviving Corporation
The corporation which shall survive the merger
(the "Merger") is Elinear Corporation, a Colorado corporation.
Immediately following the Effective Time (as defined in Section
3.04), the name of the Surviving Corporation shall continue to be
Elinear Corporation.
Section 1.02 Certificate of Incorporation and By-laws
The certificate of incorporation (as defined in the
Colorado Business Corporation Act) and the by-laws of Elinear as in
effect at the Effective Time shall from and after the Effective Time
be the certificate of incorporation and the by-laws of the Surviving
Corporation until they are amended.
Section 1.03 Board of Directors and Officers
The directors of Kinetiks at the Effective Time shall
continue as directors of the Surviving Corporation. In addition, three
designees of Imagenuity shall be nominated by Kinetiks' Board of
Directors as directors of Kinetiks as soon as practicable after
the Effective Time and Kinetiks shall use its best efforts (subject
to compliance with applicable law) to cause those designees promptly
to be so elected, each to serve until his respective successor shall
have been elected and qualified. Upon the election of the persons
designated by Imagenuity, Xxxxxxx-Xxxxxx Xxxxx and Xxxxxxx X. Xxxx
shall resign as directors of Kinetiks. The Board of Directors of
Kinetiks shall elect themselves as directors of the Surviving Corporation.
The officers of Imagenuity at the Effective Time shall be the officers
of the Surviving Corporation, each to serve, in each case (subject
to the Surviving Corporation's by-laws), until his respective successor
shall have been elected and qualified.
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
Section 2.01 Imagenuity Common Stock
The common stock of Imagenuity (par value $1.00) owned
Xxx X. Xxxxxx, who is the only registered holder and beneficial owner
of all the issued and outstanding Imagenuity Common Stock, shall be
exchanged as follows:
--------------- Exchanged Shares --------------------
Shares of Imagenuity Kinetiks Kinetiks Series A
Holder Common Stock Common Stock Preferred Convertible Stock
Xxx X. Xxxxxx 500 10,000,000 250,000
All shares of Imagenuity Common Stock held in Imagenuity's
treasury shall be cancelled as of the Effective Date.
Section 2.02 Surrender and Exchange of Imagenuity Common Stock.
After the Effective Time, Xxx X. Xxxxxx shall be
entitled to receive from American Transfer Agent, Inc. (the
"Exchange Agent") in exchange for his certificate evidencing is
shares of Imagenuity Common Stock (the "Old Certificate") certificates
(the "New Certificates") that the Surviving Corporation shall make
available to the Exchange Agent as soon as practicable after the
Effective Time, representing the number of shares of Kinetiks Common
Stock and Kinetiks Series A Preferred Convertible Stock into and
for which the shares of Imagenuity Common Stock have been converted.
Until surrendered and exchanged, the Old Certificate shall be deemed
for all corporate purposes to represent the number of whole shares
of Kinetiks Capital Stock into and for which the shares of the Old
Certificate shall have been converted.
Section 2.03 Capital Stock of Kinetiks
Subject to the agreement of Kinetiks to cause the number
of authorized shares to be increased to 50,000,000, all issued shares of
Kinetiks Common Stock and all issued shares of Kinetiks Series A Preferred
Convertible Stock, whether outstanding or held in the treasury of Kinetiks,
shall continue unchanged as shares of capital stock of Kinetiks. All
outstanding warrants and stock options of Kinetiks shall continue unchanged
as securities of Kinetiks.
Section 2.04 Capital Stock of Elinear
All issued shares of capital stock of Elinear, whether
outstanding or held in the treasury of Elinear, shall continue unchanged
as shares of capital stock of Elinear.
ARTICLE III
ACTIONS TO EFFECT MERGER
Section 3.01 Approval of Elinear Merger by Kinetiks' Board
Prior to the Effective Time, Kinetiks, as the sole
stockholder of Elinear, shall, by unanimous consent of its board of
directors in lieu of a meeting, adopt and approve this Agreement,
the Merger, and the other transactions described in this Agreement.
Section 3.02 Approval by Imagenuity
Prior to the Effective Time, the sole director and
shareholder of Imagenuity shall by consent in lieu of a meeting adopt
and approve this Agreement, the Merger, and the other transactions
described in or required as a condition to the effectiveness of this
Agreement.
Section 3.03 Approval by Kinetiks' Board
Prior to the Effective Time, the Board of Directors of
Kinetiks shall by unanimous consent of its board of directors in lieu
of a meeting approve this Agreement, the Merger and the other transactions
described in this Agreement.
Section 3.04 Filing; Effective Time
As soon as practicable after the adoption and approval
of this Agreement by Kinetiks, Elinear and Imagenuity (unless one or
more of the conditions contained in Article VII have not then been
fulfilled or waived, then as soon as practicable after the fulfillment
or waiver of all such conditions), the president of the Surviving
Corporation shall cause a certificate of merger in the form required
by the Colorado Business Corporation Act to be executed and filed in
the office of the Secretary of State of the State of Colorado, at
which time the Merger shall become effective (the "Effective Time").
The boards of directors of Kinetiks and Imagenuity shall take such
actions as are required by the States of Delaware and Florida to cause
the Merger to be effective.
Section 3.05 Consent to Service
Upon the effectiveness of the Merger, Elinear as the
Surviving Corporation (i) agrees that it may be served with process
in the State of Colorado in accordance with the requirements of law
in any proceeding for the enforcement of any obligation of Imagenuity;
(ii) irrevocably appoints the Secretary of State of the State of
Colorado as its agent to accept service of process in any such
proceeding; and (iii) agrees that the courts of the State of
Colorado shall retain jurisdiction over that part of Imagenuity's
corporate property within the limits of the State of Colorado in
all matters which may arise as if the Merger had not taken place.
ARTICLE IV
CERTAIN EFFECTS OF MERGER
When the Merger becomes effective, the separate existence of
Imagenuity shall cease, Imagenuity shall be merged into Elinear,
and the Surviving Corporation shall possess all the rights,
privileges, powers, and franchises, and shall be subject to all the
restrictions, disabilities, and duties of each of Elinear and
Imagenuity (the "Constituent Corporations"); and all and singular,
the rights, privileges, powers, and franchises of each of the
Constituent Corporations, and all property, real, personal, and
mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well as for stock subscriptions and as all
other things in action or belonging to each of the Constituent
Corporations shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers, and franchises, and all and
every other interest shall be as effectually the property of the
Surviving Corporation as they were of the several and respective
Constituent Corporations; and the title to any real estate vested
by deed or otherwise, under the laws of the State of Colorado or
any other jurisdiction, in either of the Constituent Corporations,
shall not revert or be in any way impaired by reason of the Merger;
but all rights of creditors and all liens upon any property of
either of the Constituent Corporations shall be preserved unimpaired,
and all debts, liabilities, and duties of the respective Constituent
Corporations shall attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts, liabilities,
and duties had been incurred or contracted by it.
ARTICLE V
COVENANTS
Section 5.01 Covenants of Imagenuity
(a) Negative Covenants. Imagenuity agrees that, unless
Kinetiks otherwise agrees in writing, it will not do or permit any of
the following to occur:
(i) Certificate of Incorporation and By-laws. Until the
earlier of the Effective Time or the termination of the Merger pursuant to
Article VII (the "Release Time"), amend its certificate of incorporation or
by-laws.
(ii) Shares and Options. Until the Release Time, offer for
sale, sell, issue or otherwise distribute shares of Imagenuity Common Stock,
options or warrants for such shares, rights to subscribe to or purchase such
shares, or securities convertible into or exchangeable for such shares.
(iii) Dividends and Purchases of Stock. Except for
Imagenuity's redemption of 125 shares of Imagenuity Common Stock from
Xxxxx Xxxxxxx for a redemption price of $5,000 and distribution of cash
and receivables of $312,849 to present and former shareholders, until the
Release Time, authorize, declare, or pay any dividend or liquidating or
other distribution or stock split, or effect any direct or indirect
redemption, purchase, or other acquisition of Imagenuity Common Stock.
(iv) Debt. Until the Release Time, borrow money,
guarantee the borrowing of money, engage in any transaction or enter
into any material agreement creating any indebtedness, except in the
ordinary course of business.
(v) Other Proposals. Until the Release Time, subject
to the fiduciary duties of Imagenuity's officers and directors, authorize
or permit any officer, director, employee, counsel, agent, investment
banker, accountant, or other representative of Imagenuity directly or
indirectly, to (A) initiate contact with any person or entity in an effort
to solicit any Imagenuity Takeover Proposal (as such term is defined in
this Subsection,); (B) cooperate with, or furnish or cause to be furnished
any nonpublic information concerning its business, properties, or assets
to any person or entity in connection with any Imagenuity Takeover Proposal;
(C) negotiate with any person or entity with respect to any Imagenuity
Takeover Proposal; or (D) enter into any agreement or understanding with
the intent to effect an Imagenuity Takeover Proposal. Imagenuity will
immediately give written notice to Kinetiks of the details of any Imagenuity
Takeover Proposal of which Imagenuity becomes aware. As used in this
Subsection, "Imagenuity Takeover Proposal" shall mean any proposal, other
than as described in this Agreement, for a merger, consolidation,
reorganization, or other business combination involving Imagenuity,for
the acquisition of a five percent or greater interest in the equity or
in any class or series of capital stock of Imagenuity, for the
acquisition of the right to cast five percent or more of the votes on
any matter with respect to Imagenuity, or for the acquisition of a
substantial portion of any of its assets other than in the ordinary
course of its business or the effect of which may be to prohibit, restrict,
or delay the consummation of the Merger or any of the other transactions
described in this Agreement or impair the benefits to Kinetiks of the Merger.
(vi) Consents Without Any Condition. Make any agreement or
reach any understanding not approved in writing by Kinetiks as a condition for
obtaining any consent, authorization, approval, order, license, certificate,
or permit required for the consummation of the transactions described in this
Agreement.
(b) Affirmative Covenants.
(i) Access to Business Information. Until the Release Time,
Imagenuity will (A) afford the officers, directors, employees, counsel, agents,
investment bankers, accountants, and other representatives of Kinetiks free
and full access to its books and records and will from time to time furnish
Kinetiks with such additional information as to the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of Imagenuity as Kinetiks from time to time may request and (B)
cause its independent certified public accountants to make available to
Kinetiks and its independent certified public accountants the work papers
relating to the audits of Imagenuity referred to in Subsection 6.01(c).
(ii) Conduct of Business. Imagenuity will (A) conduct its
business and affairs so that at the Effective Time no representation or
warranty of Imagenuity will be inaccurate, no covenant or agreement of
Imagenuity will be breached, and no condition in this Agreement will remain
unfulfilled by reason of Imagenuity's own actions or omissions, (B) use
its best efforts to preserve its business operations intact, keep available
the services of its present personnel, preserve in full force and effect
the contracts, agreements, instruments, leases, licenses, arrangements,
and understandings to which it is a party, and preserve the good will of
its suppliers, customers, and others having business relations with it,
and (C) conduct its business and operations in all respects only in the
ordinary course.
(iii) Advice of Changes. Until the Release Time,
Imagenuity will immediately notify Kinetiks of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which
(if existing and known at the date of the execution of this Agreement)
would have been required to be set forth or disclosed in or pursuant to
this Agreement, which (if existing and known at any time prior to or at
the Effective Time) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially
more difficult than in the absence of such fact or occurrence, or which
(if existing and known at the time of the Effective Time) would cause a
condition to any party's obligations under this Agreement not to be fully
satisfied.
(iv) Confidentiality. Imagenuity shall insure that all
confidential information which it or any of its respective officers,
directors, employees, counsel, agents, investment bankers, or accountants
may now possess, create or obtain relating to its financial condition,
results of operations, business, properties, assets, liabilities, or
future prospects, Kinetiks, Elinear, or any affiliate of either of them,
or any customer or supplier of either of them shall not be published,
disclosed, or made accessible to any other person or entity at any time
or used without the prior written consent of Kinetiks. However, the
restrictions of the prior sentence shall not apply (A) after the Merger
is terminated pursuant to Article VII, but only to the extent such
confidential information relates to the financial condition, results
of operations, business, properties, assets, liabilities, or future
prospects of Imagenuity, of any of its affiliates, or (insofar as
such confidential information was obtained directly by Imagenuity or
any such affiliate from any customer or supplier of any of them) of
any such customer or supplier, (B) as may otherwise be required by law,
(C) as may be necessary or appropriate in connection with the enforcement
of this Agreement, (D) to the extent the information shall have otherwise
become publicly available or (E) to disclosure by or on behalf of Imagenuity
to persons whose consent may be required or desirable in connection with
obtaining the financing or consents required or desirable to consummate
the transactions described in this Agreement. Imagenuity shall, and shall
cause all other such persons and entities to, deliver to Kinetiks all
tangible evidence of the confidential information to which the restrictions
of this Subsection apply immediately after the termination of the Merger
pursuant to Article VII.
(v) Public Statements. Before it releases or takes or
permits any action that may result in the release of any information
concerning this Agreement, the Merger, or any of the other transactions
that are described in or are a condition to the effectiveness of the Merger
or this Agreement, Imagenuity shall cooperate with Kinetiks, shall furnish
to Kinetiks drafts of all news releases, publications, documents or proposed
oral statements for comments, and shall not release any such information
without the prior written consent of Kinetiks. Nothing contained in this
Subsection shall prohibit Imagenuity from releasing any information
required by law.
Section 5.02 Covenants of Kinetiks and Elinear
(a) Negative Covenants. Kinetiks and Elinear agree that,
unless Imagenuity otherwise agrees in writing, it will not do or permit any
of the following to occur:
(i) Certificate of Incorporation and By-laws. Until
the Release Time, amend their respective certificates of incorporation or
bylaws.
(ii) Shares and Options. Except as permitted under
the Inducement Agreement described in Subsection 7.01(j) or issued to satisfy
existing option and warrant obligations or to satisfy existing obligations as
of the date of this Agreement, until the Release Time, offer for sale, sell,
issue or otherwise distribute shares of their respective capital stock,
options or warrants for such shares, rights to subscribe to or purchase
such shares, or securities convertible into or exchangeable for such shares.
(iii) Dividends and Purchases of Stock. Until the
Release Time, authorize, declare, or pay any distribution or stock split or
effect any direct or indirect redemption, purchase, or other acquisition
of shares of their capital stock.
(iv) Debt. Until the Release Time, borrow money,
guarantee the borrowing of money, engage in any transaction or enter into any
agreement creating any indebtedness.
(v) Other Proposals. Until the Release Time, subject
to the fiduciary duties of Kinetiks and Elinear's officers and directors,
authorize or permit any officer, director, employee, counsel, agent,
investment banker, accountant, or other representative of Kinetiks or
Elinear, directly or indirectly, to (A) initiate contact with any person
or entity in an effort to solicit any Kinetiks Takeover Proposal
(as such term is defined in this Subsection, (B) cooperate with, or
furnish or cause to be furnished any nonpublic information concerning
its business, properties, or assets, to any person or entity in connection
with any Kinetiks Takeover Proposal, (C) negotiate with any person or
entity with respect to any Kinetiks Takeover Proposal, or (D) enter into any
agreement or understanding with the intent to effect any Kinetiks Takeover
Proposal. Kinetiks will immediately give written notice to Imagenuity of
the details of any Kinetiks Takeover Proposal of which Kinetiks becomes
aware. As used in this Subsection, "Kinetiks Takeover Proposal" shall
mean any proposal, other than as contemplated by this Agreement, for a
merger, consolidation, reorganization, or other business combination
involving Kinetiks, for the acquisition of a five percent or greater
interest in the equity or in any class or series of capital stock of
Kinetiks, for the acquisition of the right to cast five percent or more
of the votes on any matter with respect to Kinetiks, or for the acquisition
of a substantial portion of any of the assets other than in the ordinary
course of its businesses or the effect of which may be to prohibit, restrict,
or delay the consummation of the Merger or any of the other transactions
described in this Agreement or impair the benefits to Imagenuity of the
Merger.
(vi) Consents Without Any Condition. Make any
agreement or reach any understanding not approved in writing by Imagenuity
as a condition for obtaining any consent, authorization, approval, order,
license, certificate, or permit required for the consummation of the
transactions described in this Agreement.
(b) Affirmative Covenants.
(i) Access to Business Information. Until the Release
Time, Kinetiks and Elinear will (A) afford the officers, directors,
employees, counsel, agents, investment bankers, accountants, and other
representatives of Imagenuity free and full access to its books and records,
and will from time to time furnish Imagenuity with such additional
information as to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Kinetiks and Elinear
as Imagenuity from time to time may request and (B) cause the independent
certified public accountants of Kinetiks and Elinear to make available to
Imagenuity and its independent certified public accountants the work papers
relating to the audits of Kinetiks and Elinear referred to in Subsection
6.02(c).
(ii) Conduct of Business. Until the Release Time,
Kinetiks will conduct its affairs, so that at the Effective Time no
representation or warranty of Kinetiks will be inaccurate, no covenant or
agreement of Kinetiks will be breached, and no condition in this Agreement
will remain unfulfilled by reason of the actions or omissions of Kinetiks.
Until the Release Time, Kinetiks will exercise its best efforts to maintain
its corporate existence, keep available the services of its present personnel
and preserve in full force and effect its contracts, agreements, instruments,
leases, licenses, arrangements, and understandings. Until the Release Time,
Elinear will conduct no business or operations except to carry out the
purposes of this Agreement.
(iii) Advice of Changes. Until the Release Time,
Kinetiks will immediately notify Imagenuity of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which
(if existing and known at the date of the execution of this Agreement) would
have been required to be set forth or disclosed in or pursuant to this
Agreement, which (if existing and known at any time prior to or at the
Effective Time) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially
more difficult than in the absence of such fact or occurrence, or which
(if existing and known at the time of the Effective Time) would cause a
condition to any party's obligations under this Agreement not to be fully
satisfied.
(iv) Confidentiality. Kinetiks and Elinear shall
insure that all confidential information which Kinetiks, Elinear, or any of
their respective officers, directors, employees, counsel, agents, investment
bankers, or accountants may now possess, create or obtain relating to their
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects, Imagenuity, any affiliate of any of them,
or any customer or supplier of any of them or any such affiliate shall not
be published, disclosed, or made accessible to any other person or entity
at any time or used by any of them except pending the Effective Time in the
business and for the benefit of Kinetiks, in each case without the prior
written consent of Imagenuity. However, the restrictions of the prior
sentence shall not apply (A) after the Effective Time, (B) after the Merger
is terminated pursuant to Article VII, but only to the extent such
confidential information relates to the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects
of Kinetiks, of any affiliate, or (insofar as such confidential information
was obtained directly by Kinetiks, or any such affiliate from any customer
or supplier) of any such customer or supplier, (C) as may otherwise be
required by law, (D) as may be necessary or appropriate in connection
with the enforcement of this Agreement, (E) to the extent the information
shall have otherwise become publicly available, or (F) to disclosure by or
on behalf of Kinetiks to others whose consent may be required or desirable
in connection with obtaining the financing or consents required or
desirable to consummate the transactions described in this Agreement.
Kinetiks shall, and shall cause all other such persons and entities to
deliver to Imagenuity all tangible evidence of the confidential information
to which the restrictions of this Subsection apply immediately after the
termination of the Merger pursuant to Article VII.
(v) Public Statements. Before it releases or takes or
permits any action that may result in the release of any information to the
public concerning this Agreement, the Merger, or any of the other transactions
that are described in or are a condition to the effectiveness of the Merger
or this Agreement, Kinetiks shall cooperate with Imagenuity, shall furnish to
Imagenuity drafts of all documents or proposed oral statements for comments,
and shall not release any such information without the prior written consent
of Imagenuity. Nothing contained in this Subsection shall prohibit Kinetiks
from releasing any information required by law.
(vi) Capital Stock Changes. If, prior to the
Effective Time, Kinetiks Capital Stock shall be recapitalized or reclassified
or Kinetiks shall effect any stock dividend, stock split, or reverse stock
split of Kinetiks Common Stock or issue any shares of stock to creditors or
others, then the shares of Kinetiks Capital Stock to be delivered under this
Agreement shall be appropriately and equitably adjusted to the kind and
amount of shares of stock and other securities and property to which the
holders of such shares of Kinetiks Capital Stock would have been entitled
to receive had such stock been issued and outstanding as of the record date
for determining stockholders entitled to participate in such corporate
event.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Representations and Warranties of Imagenuity
Imagenuity represents and warrants to Kinetiks as follows:
(a) Organization and Qualification. Imagenuity is a
corporation duly organized, validly existing, and in good standing under
the laws of Florida, with all requisite power and authority, and all
necessary consents, authorizations, approvals, orders, licenses,
certificates, and permits of and from, and declarations and filings with,
all federal, state, local, and other governmental authorities and all
courts and other tribunals, to own, lease, license, and use its properties
and assets and to carry on the business in which it is now engaged.
Imagenuity is duly qualified to transact the business in which it is
engaged and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of
property or assets or the conduct of its business makes such qualification
necessary.
(b) Capitalization. The authorized capital stock of
Imagenuity consists of 7,500 shares of Imagenuity Common Stock ($1.00
par value), of which 500 shares are outstanding. Each of the outstanding
shares of Imagenuity Common Stock is authorized, validly issued, fully paid,
and nonassessable, has not been issued and is not owned or held in violation
of any preemptive right of stockholders, and is owned of record and
beneficially by Xxx X. Xxxxxx, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, and
voting trusts. There is no commitment, plan, or arrangement to issue, and
no outstanding option, warrant, or other right calling for the issuance of,
any share of capital stock of Imagenuity or any security or other instrument
convertible into, exercisable for, or exchangeable for capital stock of
Imagenuity. There is outstanding no security or other instrument convertible
into or exchangeable for capital stock of Imagenuity.
(c) Financial Condition. Imagenuity has delivered to
Kinetiks true and correct copies of the following financial statements
("Imagenuity's Financial Statements"), initialed by the chief executive
officer of Imagenuity: an unaudited balance sheet, dated as of September 30,
1999 (the "Last Imagenuity Balance Sheet"); and an unaudited statement of
income, statement of retained earnings, and statement of changes in financial
position for the nine months ended September 30, 1999. Imagenuity's
Financial Statements present fairly its financial condition, assets,
liabilities, and stockholders' equity, retained earnings, the results of
operations, and changes in financial position. Imagenuity's Financial
Statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
and are in accordance with its books and records.
(d) Subsequent Activities of Business. Since September 30, 1999:
(i) There has at no time been a material adverse
change in the financial condition, results of operations, business, ties,
assets, liabilities, or future prospects of Imagenuity.
(ii) Except for a distribution of cash and receivables
to its present and former shareholders of $312,849 prior to the Effective
Time and for the redemption of 125 shares of Imagenuity Common Stock from
Xxxxx Xxxxxxx for a redemption price of $5,000, Imagenuity has not authorized,
declared, paid, or effected any dividend or liquidating or other distribution
in respect of, or any direct or indirect redemption, purchase, or other
acquisition of any, Imagenuity Common Stock.
(iii) The operations and business of Imagenuity have
been conducted only in the ordinary course.
(iv) There has been no accepted purchase order or
quotation, arrangement, or understanding for future sale of its products or
services that Imagenuity expects will not be profitable.
(v) Imagenuity has not suffered an extraordinary
loss (whether or not covered by insurance) or waived any right of substantial
value.
(e) No Potential Adverse Event. There is no fact known
to Imagenuity which materially adversely affects or in the future (as far as
Imagenuity can foresee) may materially adversely affect its financial
condition, results of operations, business, properties, assets, liabilities,
or future prospects.
(f) Taxes and Other Liabilities. Imagenuity is a
corporation that for federal income tax purposes has elected to be
treated, and immediately prior to the Effective Time, it is qualified as
an "S" corporation under the Internal Revenue Code of 1986, as amended.
Imagenuity does not have any liability of any nature, accrued or contingent,
including without limitation liabilities for federal, state, local, or
foreign taxes (including without limitation penalties, interest, and
additions to tax) ("Taxes"), and liabilities to customers or suppliers,
except for liabilities for which full provision has been made on the Last
Imagenuity Balance Sheet, taxes for which Imagenuity's sole shareholder
is obligated to pay, and other liabilities arising since September 30, 1999,
in the ordinary course of business.
(g) Litigation and Claims. Except for the threat of a
claim by Xxxxx Xxxxxxx, a former employee and shareholder whose employment
contract was terminated and whose shares of Imagenuity Common Stock were
redeemed effective October 6, 1999, there is no litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or
investigation pending or, to the knowledge of Imagenuity, threatened with
respect to Imagenuity or its business, properties, or assets. Imagenuity is
not affected by any present or threatened strike or other labor disturbance
nor to the knowledge of Imagenuity is any union attempting to represent any
employee of Imagenuity as a collective bargaining agent. Imagenuity is not
in violation or default of any law, rule, regulation, order, judgment, or
decree; nor is Imagenuity required to take any action to avoid such violation
or default.
(h) Properties. Except as disclosed in Schedule 6.01(h),
Imagenuity has good title to all properties and assets used in its business
or owned by it (except as are held pursuant to leases or licenses), free and
clear of all liens, mortgages, security interests, pledges, charges, and
encumbrances.
(i) Contracts and Other Instruments. Imagenuity has
furnished to Kinetiks (A) its certificate of incorporation and by-laws
together with all amendments to those instruments, minute books and stock
ledgers ("Imagenuity's Corporate Documents") as presently in effect,
certified by the Secretary of Imagenuity and (B) has furnished representatives
of Kinetiks for examination the following: all contracts, agreements,
instruments, leases, licenses, promissory notes, mortgages, deed of trusts,
security agreements and all documents and instruments evidencing financing
or other arrangements or understandings to which Imagenuity is a party or
under which it is a beneficiary ("Imagenuity's Agreements"). Imagenuity is
not in violation or breach of, or in default with respect to, any term of
Imagenuity's Corporate Documents. Except for the termination of Xxxxx
Xxxxxxx as an employee and the redemption of his Imagenuity Common Stock,
neither Imagenuity nor to its knowledge any other party to Imagenuity's
Agreements is now, or expected in the future to be, in violation or breach of,
or in default of any material provision of, and each of Imagenuity's
Agreements is in full force and is the legal, valid, and binding
obligation of the parties to Imagenuity's Agreements, and (subject to
applicable bankruptcy, insolvency, and other laws affecting the
enforceability of creditors' rights generally) each of Imagenuity's
Agreements is enforceable in accordance with its terms. Neither Imagenuity
nor any other party to Imagenuity's Agreements has given notice of
termination or taken any action inconsistent with the continuance of,
and the execution, delivery, and performance of this Agreement will not
cause a breach by Imagenuity under, Imagenuity's Agreements. Imagenuity
enjoys peaceful and undisturbed possession under all leases and licenses
under which it is operating. None of Imagenuity's Corporate Documents or
Imagenuity's Agreements has had or (to the knowledge of Imagenuity ) may in
the future have a material adverse effect on the financial condition,
results of operations, business, properties, assets, liabilities, or
future prospects of Imagenuity. Imagenuity has not engaged in, is not
engaging in, nor does it intend to engage in, any transaction, contract,
lease, license, arrangement or understanding with any stockholder, director,
officer or employee of Imagenuity (except for the Employment Agreement
described in Subsection 7.01(k)).
(j) Employees. Imagenuity does not have, nor does it
contribute to, any pension, profit-sharing, option, other incentive plan,
or any other type of Employee Benefit Plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA")), nor does
it have any obligation to or customary arrangement with employees for
bonuses, incentive compensation, vacations, severance pay, insurance, or
other benefits.
(k) Patents, Trademarks, Et Cetera. Except for its
interests in marketing materials for terms such as Return on
Internet Investment ("ROII), Imagenuity does not own, nor is there
pending, or is it licensed under, any patent, patent application,
trademark, trademark application, trade name, service xxxx,
copyright, franchise, or other intangible property or asset (all of
the foregoing being herein called "Intangibles"). Imagenuity has
neither infringed, is infringing, nor has received notice of
infringement with asserted Intangibles of others.
(l) Authority to Merge. Imagenuity has all requisite
power and authority to execute, deliver, and perform this Agreement.
All necessary corporate proceedings of Imagenuity have been taken to
authorize the execution, delivery, and performance of this Agreement
by Imagenuity.
(m) Enforceability of Agreement. This Agreement
has been authorized, executed, and delivered by Imagenuity, constitutes
the legal, valid, and binding obligation of Imagenuity, and is
enforceable as to it in accordance with its terms. Except as set forth
in this Agreement, no consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with,
any federal, state, local, or other governmental authority or any
court or other tribunal is required for the execution, delivery,
or performance of this Agreement by Imagenuity. No consent of any
party to any of Imagenuity's Agreements or to which Imagenuity's
properties or assets are subject, is required for the execution,
delivery, or performance of this Agreement; and the execution, delivery,
and performance of this Agreement will not violate, result in a
breach of, conflict with, or (with or without the giving of notice
or the passage of time or both) entitle any party to terminate or declare
a default under, entitle any party to rights or privileges that did not
exist immediately before this Agreement was executed under, or create any
obligation on the part of Imagenuity or the Surviving Corporation
that did not exist immediately before this Agreement was executed
under, any term of any of Imagenuity's Agreements (assuming, as to
the Surviving Corporation, that it was a party thereto immediately
before this Agreement was executed), or violate or result in a
breach of any term of Imagenuity's Corporate Documents or violate,
result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on Imagenuity or to which any of
its respective operations, businesses, properties, or assets are
subject. At the Effective Time, the Surviving Corporation will
acquire all right, title, and interest of Imagenuity in and to all
its properties and assets.
(n) Brokers. Neither Imagenuity nor any of its
officers, directors, employees, or agents has employed any broker
or finder or incurred any liability for any fee, commission, or other
compensation payable by any person on account of alleged employment
as a broker or finder, or alleged performance of services as a
broker or finder, in connection with or as a result of this
Agreement, the Merger, or the other transactions described in this
Agreement.
(o) Title Acquired by Elinear. At the Effective
Time, Elinear will acquire good title to all the properties and assets
used in the business of Imagenuity or owned by Imagenuity (except
properties and assets held pursuant to leases or licenses), free
and clear of all liens, mortgages, security interests, pledges,
charges, and encumbrances, except as set forth on Schedule 6.01(h).
(p) Completeness of Disclosure. No representation
or warranty by Imagenuity in this Agreement contains or (except for
changes beyond the control of Imagenuity) at the Effective Time
will contain an untrue statement of material fact or omits or
(except for changes beyond the control of Imagenuity) at the
Effective Time will omit to state a material fact required to be
stated or necessary to make the statements made not misleading.
Section 6.02 Certain Representations and Warranties of Kinetiks
and Elinear.
Kinetiks and Elinear represent and warrant to Imagenuity
as follows:
(a) Organization and Qualification. Each of Kinetiks
and Elinear is a corporation organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with
all requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and
permits of and from, and declarations and filings with, all
federal, state, local, and other governmental authorities and all
courts and other tribunals, to own, lease, license, and use their
properties and assets and to carry on the business in which Elinear
will engage as the surviving Corporation. Each of Kinetiks and
Elinear is qualified to transact the business in which it is
engaged and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of
property or assets or the conduct of its business makes such
qualification necessary.
(b) Capitalization. The authorized capital stock
of Kinetiks consists of 20,000,000 shares of Kinetiks Common Stock,
250,000 shares of Kinetiks Series A Preferred Convertible Shares,
and 250,000 shares of Preferred Stock ($0.001 par value) the rights
and privileges of which have not been designated. Each of the
outstanding shares of Kinetiks Common Stock is duly authorized,
validly issued, fully paid, and nonassessable, has not been issued
and is not owned or held in violation of any preemptive right of
stockholders, and is owned of record and beneficially, in each case
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. There is
no commitment, plan, or arrangement to issue, and, except as set
forth on Schedule 6.02(b), no outstanding option, warrant, or other
right calling for the issuance of, any share of capital stock of
Kinetiks or any security or other instrument convertible into,
exercisable for, or exchangeable for capital stock of Kinetiks.
There is outstanding no security or other instrument convertible
into or exchangeable for Kinetiks Common Stock.
(c) Financial Condition. Kinetiks has delivered
to Imagenuity true and correct copies of the following financial
statements ("Kinetiks Financial Statements"), initialed by the
corporate secretary of Kinetiks: the audited balance sheet of
Kinetiks as of December 31, 1998; the unaudited balance sheet of
Kinetiks as of June 30, 1999 (the "Last Kinetiks Balance Sheet");
an audited statement of income, statement of retained earnings, and
statements of changes in financial position of Kinetiks for the
year ended December 31, 1998; and an unaudited statement of
income, statement of retained earnings, and statement of changes
in financial position of Kinetiks for the month ended June 30,
1999. The Kinetiks Financial Statements present fairly the
financial condition, assets, liabilities, and stockholders' equity,
income and retained earnings, results of operations, changes in
financial position. The Kinetiks Financial Statements have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved and
are in accordance with its books and records.
(d) Taxes and Other Liabilities. Kinetiks has no
liability of any nature, accrued or contingent, including without
limitation liabilities for Taxes and liabilities to customers or
suppliers, other than liabilities described on the Last Kinetiks
Balance Sheet and other liabilities arising since the date of the
Last Kinetiks Balance Sheet and prior to the Effective Time in the
ordinary course of business, all of which liabilities, contingent
or otherwise, are disclosed on Schedule 6.02(d) ("Kinetiks
Liabilities"). The execution, delivery, and performance of this
Agreement by Kinetiks will not cause any Taxes to be payable or
cause any lien, charge, or encumbrance to secure any Taxes to be
created either immediately or upon the nonpayment of any Tax.
(e) Litigation and Claims. Except as described
in Schedule 6.02(e), (i) there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending or threatened with respect to Kinetiks,
Elinear or any of their respective activities, properties, or
assets; (ii) neither Kinetiks nor Elinear is in violation of, or in
default with respect to, any law, rule, regulation, order,
judgment, or decree; and (iii) neither Kinetiks nor Elinear is
required to take any action in order to avoid such violation or
default.
(f) Contracts and Other Instruments. Kinetiks
has furnished to Imagenuity (i) its certificate of incorporation
(or other charter document) and by-laws and all amendments to those
instrument, as presently in effect of Kinetiks and Elinear
(collectively, "Kinetiks' Corporate Documents"), certified by the
Secretary of the corporation and (ii) has furnished the following
to Imagenuity for examination: all contracts, agreements,
instruments, leases and licenses, promissory notes, mortgages,
deeds of trust, security agreements, and all other documents and
instruments evidencing financings, or other arrangements or
understandings to which Kinetiks or Elinear is or within the prior
five years has been a party or under which either corporation is a
beneficiary (collectively, "Kinetiks' Agreements"). The execution,
delivery, and performance of this Agreement will not violate any
Kinetiks' Agreements. Except as described in Schedule 6.02(f),
Kinetiks enjoys peaceful and undisturbed possession under all
leases and licenses under which it is operating. None of Kinetiks'
Corporate Documents or Kinetiks' Agreements has had or (to the
knowledge of Kinetiks or Elinear) may in the future have a material
adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of
Kinetiks or Elinear. Neither Kinetiks nor Elinear has engaged in,
neither is engaging in, and neither intends to engage in any
transaction, contract, agreement, lease, license, arrangement, or
understanding with, any stockholder, director, officer, or employee
of Kinetiks or Elinear, or any relative or affiliate of any
stockholder, director, officer, or employee of Kinetiks or Elinear,
except as set forth in the Inducement Agreement, described in
Subsection 7.01(j). Kinetiks is not in violation or breach of, or
in default with respect to, any term of Kinetiks' Corporate
Documents.
(g) Employees. Neither Kinetiks nor Elinear has
contributed or contributes to, any pension, profit-sharing, option,
other incentive plan, or any other type of Employee Benefit Plan,
or has any obligation to or customary arrangement with employees
for bonuses, incentive compensation, vacations, severance pay,
insurance, or other benefits.
(h) Patents, Trademarks, Et Cetera. Except as
set forth on Schedule 6.02(h), neither Kinetiks nor Elinear owns,
has pending, or is licensed under, any Intangible.
(i) Authority to Merge. Kinetiks and Elinear each
has all requisite power and authority to execute, deliver, and perform
this Agreement. All necessary corporate proceedings of Kinetiks have
been duly taken to authorize the execution, delivery, and performance
of this Agreement by Kinetiks and Elinear.
(j) Enforceability of Agreement. This Agreement
has been authorized, executed, and delivered by Kinetiks, constitutes
the legal, valid, and binding obligation of Kinetiks and Elinear, and
is enforceable as to them in accordance with its terms. Except as
set forth in this Agreement, no consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration
or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required for the
execution, delivery, or performance of this Agreement by Elinear.
No consent of any party to any of Kinetiks' Agreements or to which
any of their respective properties or assets are subject, is
required for the execution, delivery, or performance of this
Agreement. The execution, delivery, and performance of this
Agreement will not violate, result in a breach of, conflict with,
or (with or without the giving of notice or the passage of time or
both) entitle any party to terminate or call a default under,
entitle any party to rights or privileges that did not exist
immediately before this Agreement was executed, or create any
obligation on the part of Kinetiks that did not exist immediately
before this Agreement was executed under, any term of Kinetiks'
Agreements, or violate or result in a breach of any term of
Kinetiks' Corporate Documents or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree
binding on Kinetiks or to which any of its operations, businesses,
properties, or assets are subject.
(k) Brokers. Except for certain consideration
reserved by the Sponsors under the Inducement Agreement described
in Subsection 7.01(j), neither Kinetiks nor Elinear or any of their
respective officers, directors, employees, or agents has employed
any broker or finder or incurred any liability for any fee, commission,
or other compensation payable by any person on account of alleged
employment as a broker or finder, or alleged performance of
services as a broker or finder, in connection with or as a result
of this Agreement, the Merger, or the other transactions described
in this Agreement.
(l) Status of Kinetiks Common Stock To Be Issued.
Assuming without investigation that the shares of Imagenuity Common
Stock at the Effective Time will be validly authorized, validly
issued, fully paid, and nonassessable, the shares of Kinetiks
Capital Stock to be issued in the Merger will, at the Effective
Time, be validly authorized, and, when the Merger has become
effective and the shares of Kinetiks Capital Stock have been duly
delivered pursuant to the terms of this Agreement, such shares of
Kinetiks Capital Stock will be validly issued, fully paid, and
nonassessable. Any shares of Kinetiks Common Stock issuable upon
conversion of the Kinetiks Series A Preferred Convertible Stock
will, when such Kinetiks Series A Preferred Convertible Stock is
converted in accordance with the terms of the Kinetiks' Corporate
Documents, be validly authorized, validly issued, fully paid, and
nonassessable.
(m) Business After the Effective Time. For a
period of five years or such shorter period as Kinetiks on the advice
of counsel believes will not cause the Merger to fail to qualify as a
tax free reorganization under the federal tax laws as then applicable,
Elinear will continue the historic business of Imagenuity or use a
significant portion of Imagenuity's historic assets in a business.
(n) Completeness of Disclosure. No representation
or warranty by Kinetiks or Elinear in this Agreement contains or
(except for changes beyond the control of Kinetiks and Elinear) at
the Effective Time will contain an untrue statement of material
fact or omits or (except for changes beyond the control of Kinetiks
or Elinear) at the Effective Time will omit to state a material
fact required to be stated or necessary to make the statements made
not misleading.
ARTICLE VII
CONDITIONS, TERMINATION AND ABANDONMENT
Section 7.01 Right of Kinetiks to Terminate
Kinetiks and Elinear shall each have the right to
terminate the Merger if any of the following shall not be true or
shall not have occurred, as the case may be, as of the specified
date or dates:
(a) Accuracy of Representations and Compliance
With Conditions. All representations and warranties of Imagenuity
shall be accurate when made and, in addition, shall be accurate as
of the Effective Time as though such representations and warranties
were then made in exactly the same language by Imagenuity and regardless
of its knowledge or changes beyond its control; as of the Effective
Time Imagenuity shall have performed and complied with all
covenants and agreements and satisfied all conditions required to
be performed and complied with by it, at or before the Effective
Time; and Kinetiks and Elinear shall have received certificates
executed by the president and the chief financial officer of
Imagenuity dated the Effective Time to that effect.
(b) Legal Opinions. Kinetiks and Elinear shall have
received at the Effective Time opinions of Messrs. Xxxx and Xxxxxx,
attorneys-at-law, dated as of such date, to the effect that:
(i) Based on their review of Imagenuity's
Corporate Documents and a telephone confirmation with the Office
of the Secretary of State for the State of Florida, to the best of
their knowledge Imagenuity is a corporation validly existing and in
good standing under the laws of the State of Florida with all requisite
corporate power and authority to own, lease, license, and use its
properties and assets and to carry on the business in which it is
now engaged;
(ii) To the best of their knowledge, Imagenuity
is authorized to issue 7,500 shares of common stock; and, based on their
review of Imagenuity's Corporate Documents, all the outstanding shares of
Imagenuity Common Stock are authorized, validly issued and nonassessable;
(iii) All necessary corporate proceedings of
Imagenuity have been duly taken to authorize the execution, delivery,
and performance of this Agreement by Imagenuity;
(iv) Imagenuity has all requisite corporate
power and authority to execute, deliver, and perform this Agreement
and this Agreement has been duly authorized, executed, and delivered by
Imagenuity, constitutes the legal, valid, and binding obligation of
Imagenuity, and (subject to applicable bankruptcy, insolvency, and
other laws affecting the enforceability of creditors' rights
generally) is enforceable as to Imagenuity in accordance with its
terms;
(v) The execution, delivery, and performance
of this Agreement by Imagenuity will not violate or result in a breach of
any term of Imagenuity's Corporate Documents.
(c) Accountants' Letter. Imagenuity shall have
delivered to Kinetiks and Elinear at the Effective Time a letter
from Xxxxxx X. Xxxxxxxxx & Company, P.C., dated as of that date,
addressed to Kinetiks and Elinear, in form and substance satisfactory
to Kinetiks and Elinear, stating in effect that on the basis of
procedures (but not an examination made in accordance with
generally accepted auditing standards) consisting of a reading of
the latest available unaudited interim financial statements of
Imagenuity (with an indication of the date of the latest available
unaudited interim financial statements), and inquiries to certain
officers and other employees of Imagenuity responsible for
financial and accounting matters, nothing has come to its attention
that caused it to believe that the unaudited financial statements
of Imagenuity were not prepared in accordance with generally
accepted accounting principles consistently applied or are not a
fair presentation of the information purported to be shown.
(d) Other Closing Documents; Waive of Conflicts.
Imagenuity shall have delivered to Kinetiks at or prior to the
Effective Time such other documents (including certificates of
officers of Imagenuity and a copy of a letter agreement agreeing to
the engagement of Xxxx & Xxxxxx, attorneys-at-law) as Kinetiks and
Elinear may reasonably request in order to enable Kinetiks and
Elinear to determine whether the conditions to its obligations
under this Agreement have been satisfied and otherwise to carry out
the provisions of this Agreement.
(e) Review of Proceedings. All actions, proceedings,
instruments, and documents required to carry out this Agreement and
all other related legal matters shall be subject to the reasonable
approval of Xxxx & Xxxxxx, and Imagenuity shall have furnished the
documents that such counsel have reasonably requested.
(f) Legal Action. There shall not have been instituted
or threatened any legal proceeding relating to, or seeking to prohibit
or otherwise challenge the consummation of the transactions
described in this Agreement or to obtain substantial damages with
respect to this Agreement or the Merger.
(g) No Governmental Action. There shall not have
been any action taken, or any law, rule, regulation, order, judgment,
or decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions described in this Agreement by any
federal, state, local, or other governmental authority or by any
court or other tribunal, including the entry of a preliminary or
permanent injunction, which, in the sole discretion of Kinetiks,
(i) makes this Agreement, the Merger, or any of the other
transactions described this Agreement illegal, (ii) results in a
delay in the ability of Imagenuity or Kinetiks to consummate the
Merger or any of the other transactions described in this
Agreement, (iii) requires the divestiture by Kinetiks of a material
portion of the business of either Kinetiks taken as a whole, or of
Imagenuity taken as a whole, or (iv) otherwise prohibits,
restricts, or delays consummation of the Merger or any of the other
transactions described in this Agreement or impairs the benefits to
Kinetiks of this Agreement, the Merger, or any of the other
transactions described in this Agreement.
(h) "Blue-Sky" Law Compliance. At or prior to the
Effective Time, Kinetiks shall have made all filings, and taken all
actions, necessary to comply with all applicable "blue-sky" laws
with regard to the issuance of Kinetiks Capital Stock as described
in this Agreement and the issuance of the Private Placement Shares
described in the Inducement Agreement described in Subsection
7.01(j). Without limiting the generality of the foregoing, any
prescribed periods within which a "blue-sky" or securities law
administrator may disallow Kinetiks' notice of reliance on an
exemption from such state's requirements, shall have elapsed at or
prior to the Effective Time.
(i) Contractual Consents. The parties to this
Agreement shall have obtained at or prior to the Effective Time all
consents required for the consummation of the Merger and the other
transactions described in this Agreement from any party to any
contract, agreement, instrument, lease, license, arrangement, or
understanding to which any of them, or to which any of their
respective businesses, properties, or assets are subject.
(j) Inducement Agreement. The parties have entered
into an agreement under which The Rockies Funds, Inc. (the "Fund"),
and Malibu Holdings (the "Sponsors") have agreed to cause or arrange
for additional capital (the "Financing Condition") to be available
to Kinetiks in the operation of Elinear's business as the Surviving
Corporation and the Fund and Xxxxxxx Xxxxxxxx have agreed to
arrange for the satisfaction or extinguishment of the Kinetiks
Liabilities (the "Inducement Agreement"). The Inducement Agreement
shall have been duly authorized, executed, and delivered by each of
the parties at or prior to the Effective Time, shall be in full
force, valid, and binding upon those parties, and shall (subject to
applicable bankruptcy, insolvency, and other laws affecting the
enforceability of creditors' rights generally) be enforceable by
them in accordance with their terms at the Effective Time, and no
party shall be in violation of or in default in complying with any
material provision of the Inducement Agreement. All conditions
described in the Inducement Agreement, including the Financing
Condition, required to be performed prior to or concurrently with
the Effective Time shall have been satisfied.
(k) Employment Agreement. At or prior to the
Effective Time, Xxx X. Xxxxxx, who will be appointed president of
Elinear, shall have entered into an employment agreement with
Elinear in form and substance agreeable to the Sponsors.
(l) Performance Agreement. On or before the
Effective Time, Xxx X. Xxxxxx, the sole shareholder of Imagenuity,
shall have executed and delivered an agreement acceptable to the
Sponsors under which he has agreed to return to Kinetiks up to
1,500,000 shares of the Kinetiks Common Stock for cancellation to
secure certain performance obligations of Elinear (as the successor
to Imagenuity's business) during a period ending December 31, 2002.
(m) Pledge. On May 19, 1999, Imagenuity entered
into an Agreement with Xxxxx Xxxxxxx ("Xxxxxxx") under which, among
other things, Xxxxxxx was issued 125 shares of Imagenuity Common Stock
(the "Xxxxxxx Employment Agreement"). Effective October 6, 1999,
Imagenuity terminated the Xxxxxxx Employment Agreement and redeemed
the 125 shares of Imagenuity Common Stock issued to Xxxxxxx, all as
provided in the Xxxxxxx Employment Agreement. On or before the
Effective Time, Xxx X. Xxxxxx shall have executed and delivered to
Kinetiks such agreements as are acceptable to the Sponsors to pay
personally, and indemnify Kinetiks and Elinear against, any
liability arising from the termination of Xxxxxxx and the
redemption of his shares of Imagenuity Stock and to secure those
obligations with a pledge of 4,500,000 shares of the Kinetiks
Common Stock issued to him.
Section 7.02 Right of Imagenuity to Abandon
Imagenuity shall have the right to abandon or
terminate the Merger if any of the following shall not be true or
shall not have occurred, as the case may be, as of the specified
date or dates:
(a) Accuracy of Representations and Compliance
With Conditions. All representations and warranties of Kinetiks and
Elinear contained in this Agreement shall be accurate when made
and, in addition, shall be accurate as of the Effective Time as
though such representations and warranties were then made in
exactly the same language by Kinetiks and Elinear; as of the
Effective Time Kinetiks and Elinear shall have performed and
complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by them at or
before the Effective Time by this Agreement; and Imagenuity shall
have received a certificate executed by a duly authorized officer
of Kinetiks dated the Effective Time to that effect.
(b) Legal Opinions. Imagenuity shall have received
at the Effective Time opinions of Messrs. Xxxx & Xxxxxx, attorneys-at-law,
dated as of such dates, to the effect that:
(i) To the best of their knowledge, based on
their review of the Kinetiks Corporate Documents and a telephone
confirmation from the offices of the Secretary of State of Delaware,
Kinetiks is a corporation validly existing and in good standing under
the laws of the State of Delaware;
(ii) Elinear is a corporation validly existing
and in good standing under the laws of the State of Colorado, with all
requisite corporate power and authority to own, lease, license and
use its properties and assets and to carry on the business in which
it intends to engage;
(iii) To the best of their knowledge, based on
their review of the Kinetiks Corporate Documents, Kinetiks has all
requisite corporate power and authority to execute, deliver, and
perform this Agreement and this Agreement has been duly authorized,
executed, and delivered by Kinetiks, constitutes the legal, valid, and
binding obligation of Kinetiks, and (subject to applicable
bankruptcy, insolvency, and other laws affecting the enforceability
of creditors' rights generally) is enforceable against Kinetiks in
accordance with its terms; and
(iv) Elinear has all requisite corporate power
and authority to execute, deliver, and perform this Agreement and this
Agreement has been duly authorized, executed, and delivered by Elinear,
constitutes the legal, valid, and binding obligation of Elinear,
and (subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally) is
enforceable against Elinear in accordance with its terms.
(c) Accountants' Letter. Kinetiks shall have delivered
to Imagenuity at the Effective Date, letters from Xxxxxx X. Xxxxxxxxx
& Company, P.C., dated as of that date, addressed to Imagenuity, in
form and substance satisfactory to Imagenuity, stating in effect:
(i) During the period covered by its report(s)
relating to the Kinetiks Financial Statements, it was an independent
certified public accountant with respect to Kinetiks within the meaning of
the Securities Act of 1933 and the rules and regulations
thereunder;
(ii) In its opinion, the Kinetiks Financial
Statements covered by their report comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act of 1933 and the Exchange Act of 1934 and the rules and regulations
thereunder; and
(iii) On the basis of procedures (but not an
examination made in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited
interim financial statements of Kinetiks (with an indication of the
date of the latest available unaudited interim financial statements),
and inquiries to certain officers and other employees of each of
Kinetiks and Elinear responsible for financial and accounting
matters, nothing has come to its attention that caused it to
believe that (A) the unaudited financial statements of Kinetiks do
not comply as to form in all material respects with the applicable
accounting requirements of the Securities Act of 1933 and the
Exchange Act of 1934 and the rules and regulations thereunder, or
such unaudited financial statements were not prepared in
accordance with generally accepted accounting principles consistent
in all material respects with those followed in the preparation of
the audited financial statements, or are not a fair presentation of
the information purported to be shown.
(d) Other Closing Documents; Waiver of Conflicts.
Kinetiks and Elinear each shall have delivered to Imagenuity at or
prior to the Effective Time such other documents (including
certificates of their officers and a copy of a letter agreeing to
the limited engagement of Xxxx & Xxxxxx, attorneys-at-law) as
Imagenuity may reasonably request in order to enable Imagenuity to
determine whether the conditions to its obligations under this
Agreement have been met and otherwise to carry out the provisions
of this Agreement.
(e) Review of Proceedings. All actions, proceedings,
instruments, and documents required to carry out this Agreement or
incidental thereto and all other related legal matters shall be
subject to the reasonable approval of Xxxx & Xxxxxx, and Kinetiks
shall have furnished such counsel such documents as such counsel
may have reasonably requested.
(f) Legal Action. There shall not have been
instituted or threatened any legal proceeding relating to, or seeking
to prohibit or otherwise challenge the consummation of, the transactions
described in this Agreement, or to obtain substantial damages with
respect to this Agreement or the Merger.
(g) No Governmental Action. There shall not have
been any action taken, or any law, rule, regulation, order, judgment, or
decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions described in this Agreement by any
federal, state, local, or other governmental authority or by any
court or other tribunal, including the entry of a preliminary or
permanent injunction, which, in the sole judgment of Imagenuity,
(i) makes this Agreement, the Merger, or any of the other
transactions described in this Agreement illegal, (ii) results in
a delay in the ability of Kinetiks, Elinear, or Imagenuity to
consummate the Merger or any of the other transactions described in
this Agreement, or (iii) otherwise prohibits, restricts, or delays
consummation of the Merger or any of the other transactions
described in this Agreement or impairs the contemplated benefits to
the stockholders of Imagenuity of this Agreement, the Merger, or
any of the other transactions contemplated by this Agreement.
(h) Contractual Consents. The parties to this
Agreement shall have obtained at or prior to the Effective Time
all consents required for the consummation of the Merger and the other
transactions described in this Agreement from any party to any
contract, agreement, instrument, lease, license, arrangement, or
understanding to which either of them, or to which any of them or
any of their respective businesses, properties, or assets are
subject.
(i) Inducement Agreement. The Inducement Agreement
shall have been duly authorized, executed, and delivered by the parties
thereto at or prior to the Effective Time, shall be in full force,
valid, and binding upon the parties thereto, and shall (subject to
applicable bankruptcy, insolvency, and other laws-affecting the
enforceability of creditors' rights generally) be enforceable in
accordance with its terms at the Effective Time. The Financing
Condition shall have been satisfied on or before the Effective
Time.
(j) Resignation of Directors. Xxxxxxx Xxxx and
Xxxxxxx-Xxxxxx Xxxxx each shall have submitted, and Kinetiks shall have
accepted, all as of the Effective Time, their resignations as
directors of Kinetiks.
Section 7.03 Mandatory Abandonment
The Merger shall be abandoned if (i) the board of
directors of Kinetiks, the sole shareholder of Elinear, shall not
have voted in favor of the adoption and approval of this Agreement,
the Merger, and the other transactions described in this Agreement;
(ii) the sole shareholder of Imagenuity shall not have voted in
favor of the adoption and approval of this Agreement, the Merger,
and the other transactions described in this Agreement; or (iii)
the Sponsors have failed to satisfy the Financing Condition set
forth in the Inducement Agreement as of the Effective Time.
Section 7.04 Optional Abandonment
The Merger may be abandoned or terminated at or
before the Effective Time notwithstanding its adoption and approval
by the parties upon the following terms: (i) by mutual agreement of the
boards of directors of Kinetiks and Imagenuity; (ii) at the option
of Kinetiks' Board of Directors or Imagenuity's Board of Directors,
if the Effective Time shall not have occurred on or before November
1, 1999; (iii) at the option of Kinetiks, if facts exist which
render impossible compliance with one or more of the conditions set
forth in Section 7.01 and such are not waived by Kinetiks; and (iv)
at the option of Imagenuity, if facts exist which render impossible
compliance with one or more of the conditions set forth in Section
7.02 and such are not waived by Imagenuity.
Section 7.05 Effect of Abandonment
If the Merger is rightfully abandoned or terminated,
(i) except as specified in Section 7.05, this Agreement shall become
wholly void and of no effect without liability on the part of any
party to this Agreement or on the part of any officer, director,
controlling person (if any), employee, counsel, agent, or
stockholder thereof. However, nothing in this Section 7.05 shall
release either of the parties or any of their officers, directors,
controlling persons (if any), employees, agents, or stockholders
from liability for a willful failure to carry out their respective
obligations under this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Further Assurances
At any time and from time to time, each party agrees,
at its expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes
of this Agreement.
Section 8.02 Availability of Equitable Remedies
Since a breach of the provisions of this Agreement
could not adequately be compensated by money damages, either party shall
be entitled, either before or after the Effective Time, in addition
to any other right or remedy available to it, to an injunction
restraining such breach or threatened breach and to specific
performance of any such provision of this Agreement, and, in either
case, no bond or other security shall be required in connection
therewith, and the parties consent to the issuance of such an
injunction and to the ordering of specific performance.
Section 8.03 Survival
The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall
not survive the Effective Time. The statements contained in any
document executed by each of Kinetiks and Elinear relating to this
Agreement or delivered to Imagenuity in connection with the
transactions described in this Agreement, or in any statement,
certificate, or other instrument delivered to Imagenuity by or on
behalf of Kinetiks or Elinear in connection with this Agreement
shall be deemed representations and warranties, covenants and
agreements, or conditions, as the case may be, of each of Kinetiks
and Elinear for all purposes of this Agreement. The statements
contained in any document executed by Imagenuity relating to this
Agreement delivered to Kinetiks or Elinear in connection with the
transactions described in this Agreement, or in any statement,
certificate, or other instrument delivered to Kinetiks or Elinear
by or on behalf of Imagenuity shall be deemed representations and
warranties, covenants and agreements, or conditions, as the case
may be, of Imagenuity for all purposes of this Agreement.
Section 8.04 Modification
This Agreement sets forth the entire understanding
of the parties with respect to the subject matter of the Merger (except
as provided in Section 8.03) and supersedes all existing agreements
among them concerning such subject matter. This Agreement may be
amended prior to the Effective Time (notwithstanding stockholder
adoption and approval) by a written instrument executed by
Kinetiks, Elinear, and Imagenuity with the approval of their
respective boards of directors. No such amendment shall, however,
without stockholder adoption and approval by an appropriate vote by
stockholders of a party whose stockholders have been adversely
affected, change the number of shares of Kinetiks Capital Stock
which may be issued, pursuant to this Agreement or materially and
adversely affect the rights of Kinetiks' or Imagenuity's
stockholders. No amendment to accelerate or postpone the Effective
Time shall be deemed to change such number of shares or affect
adversely the rights of the Kinetiks' or Imagenuity's stockholders.
Section 8.05 Notices
Any notice or other communication required or
permitted under this Agreement shall be in writing and shall be mailed
by certified mail, return receipt requested or by Federal Express,
Express Mail, or similar overnight delivery or courier service or
delivered (in person or by telecopy, telex, or similar
telecommunications equipment) against receipt, to the party to whom
it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party
shall have furnished in writing in accordance with the provisions
of this Section 8.05). Any notice shall be addressed to the
attention of the corporate president. Any notice or other
communication given by certified mail shall be deemed given at the
time of such certification, except for a notice changing a party's
address which will be deemed given at the time it is received. Any
notice given by other means permitted by this Section 8.05 shall be
deemed given at the time it is received.
Section 8.06 Waiver
No waiver by a party of a breach of any provision
of this Agreement shall operate as or be construed to be a waiver of
any other breach of that provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver or deprive that party of
the right after such time to insist upon strict adherence to that
term or any other term of this Agreement. Any waiver must be in
writing and be authorized by a resolution of the board of directors
or by an officer of the waiving party. No party shall have the
right to waive compliance with the stockholder approval conditions
described in this Agreement.
Section 8.07 Binding Effect
The provisions of this Agreement shall be binding
upon and inure to the benefit of Kinetiks, Elinear, and Imagenuity and
their respective successors and assigns.
Section 8.08 No Third-Party Beneficiaries
This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a
party to this Agreement.
Section 8.09 Separability
If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other
persons and circumstances.
Section 8.10 Headings
The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
Section 8.11 Counterparts; Governing Law
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. It
shall be governed by and construed in accordance with the laws of
Colorado, without giving effect to conflict of laws. Any action,
suit, or proceeding arising out of, based on, or in connection with
this Agreement, the Merger, or the other transactions described in
this Agreement may be brought only in the District Court for the
City and County of Denver and each party covenants and 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 its subject matter may not be enforced in or by such
court.
IN WITNESS WHEREOF, this Agreement has been
approved by resolutions duly adopted by each of the boards of
directors of Kinetiks, Elinear and Imagenuity and has been signed
by duly authorized officers of each of those corporations, all as
of the date first above written.
XXXXXXXX.XXX, INC. IMAGENUITY, INC.
By:___________________________ By:___________________________
Xxxxxxx Xxxx, Secretary Xxx X. Xxxxxx, President
ELINEAR CORPORATION
By:___________________________
Xxx X. Xxxxxx, President
SCHEDULE 6.01(b)
Ownership of Imagenuity Common Stock
Owner Number of Shares Owned
Xxx X. Xxxxxx 500
SCHEDULE 6.01(h)
Encumbrances on Imagenuity Properties
None
SCHEDULE 6.02(b)
Kinetiks Authorized Securities
Description Number
$0.001 par Common Stock 20,000
$0.001 par value Preferred
Stock (undesignated) 250,000
$0.001 par value Series A
Preferred Convertible Stock 150,000
Options to purchase
Common Stock
Warrants
SCHEDULE 6.02(d)
Kinetiks Liabilities
A Royal Coach Limosines $ 95.00
Airborne 30.00
Xxxxxxx Corporation 305.00
Ameritech 196.63
Xxxxxxx & Xxxxx 4,620.43
AT&T Telephone 6,100.73
Aviation Lifestyles 1,530.00
Bay Tact 409.00
Xxxx South 537.18
Xxxxxx & Company 44,435.00
Best Brew Coffee 492.80
Black Creek Consulting 451.25
Celestian Vettical 2,500.00
Centel 6,861.52
Chelsea Deli & Cafe 354.07
Colorado Department of Revenue 1,600.39
Computer Staff Recruiters 6,000.00
Computerized Lettering 318.00
ConferTech International 253.70
Copyworld 222.80
Xxxx Xxxxxx Xxxxxxxx, Inc. 24.32
Deluxe Business Forms 234.53
Depository Trust Company 75.00
Xxxxxxxxx, Xxxx 300.00
Xxxx'x Office Supply 10.23
DPC 1,413.37
e-Commlink 2,520.00
Earthlink Network 5,000.00
Entex 88.78
Ernst & Young 20,465.00
Eveready Moving & Storage 2,510.96
Exhibit Network 2,557.38
Xxxxx, Xxxxxxx 6,225.00
Fallon Communications 989.22
Florida Department of Revenue 300.00
Fortis Insurance Group 14,375.75
GE Computer Service 5,950.77
Geodex 27.00
Gold Key Lease 363.09
Gulf Coast Newspapers 58.26
Xxxxxx County Utility 57.13
Image Club Graphics 122.62
In-Line Copier & Fax 211.67
Indianapolis Life 223.59
InterOffice Bahla Mar 107.83
Kingwood Country Club 652.44
Kinko's 888.79
Krishnan, Gnapaffy 583.30
Liason Consulting Group 5,200.00
Lenox Suites 2,120.75
Xxxx Press Clippings 1,298.03
Lycos 20,785.75
MacWarehouse 872.95
Marina Association of Texas 350.00
Marine Industries Association 150.00
Xxxxxxx Xxxxxx 139.22
XxXxxxxxx, Xxxxx 1,804.24
MCI 17,765.83
Metropolitan Pier & Expo 599.50
Micro Age CDS 244.53
MicroSystems Warehouse 854.85
Miscellaneous 38,235.34
Motor Boating & Sailing 21,847.00
Multiple Zones International, Inc. 1,478.76
Northpark Business Center & Assoc. 230.00
NPI Digital 33.82
NPL, Inc. 77.50
NSPAN 3,495.00
Observer Group Newspapers 58.26
Office Depot 3,058.99
Office Max 826.38
Ozarka Water 1,362.75
Page Mart 577.96
Pathfinder Insurance 222.00
Xxxxxx Network 1,200.00
Paychex 5.37
PC People 171.03
Xxxxxx-Xxxx Yachts 2,585.47
Performance Marketing Resources 216.90
Personal Computer Rentals 1,661.64
Pitney Xxxxx Credit Corporation 1,240.71
Pitney Xxxxx Purchase Power 35.42
PR Newswire 425.00
Promotion Connection (The) 173.63
Prudential Securities 13.45
Quality Graphics 1,918.77
Quill Corporation 24.73
Ricoh 4,407.24
Xxxxxx, Xxxx 6,870.93
SEC 100.00
Shurgard of Kingwood 200.00
Skill Builders 325.20
Skytel 156.81
Softbank/Comdex 8,990.00
Sprint 4,967.95
Sprint (Florida) 61.97
Staffware Consulting 24,363.81
Standard & Poors 925.00
State Farm Insurance 223.94
Superhighway consulting 1,200.00
Supertravel 338.82
Texas Franchise Tax 6,131.81
Texas, Xxxxxx County Property Tax 4,016.02
Texas, Xxxxxxxxxx County 2,969.52
Theme Media 7,950.00
Xxxxxx Reprographics 722.90
Times Mirror Magazine 10,545.00
Tritech 20.72
UPS 211.94
ViaCrypt 326.39
Viking Office Products 327.90
Vision Service Plan 2,083.22
West Group Payment Center 12,204.02
Woodland Printing 1,111.11
Xxxxxxxx, Xxxx 3,734.00
Xxxxxx, Xxxx 1,717.50
Xxxxxx, Xxxxxxx 2,064.36
Xxxxxxxxxx, Xxx 143.52
Xxxxxxxx, Xxxxx 7,906.88
Xxxxxxxx, Xxxxx X. 157.02
Case, Xxxxxxx 3,404.10
Xxxxxxx, Xxxxxxx 2,676.96
Xxxxxx, Xxxx 2,708.82
Fear, Xxxxx 2,578.63
Xxxxxx, Xxxx 710.00
Xxxxxxx, Xxx 805.69
Xxxxx, Xxxxxx 1,950.00
Xxxxx, Xxxxx 2,649.67
Xxxxx Xxxxxxx 2,282.76
Xxxxxx, Xxx 2,498.71
Xxxxxxxxx, Xxxx 2,730.09
Xxxxxx Xxxxxxx 5.70
Xxxxxxxxx, Xxxxxxx 7,148.34
Xxxxx, Xxxxxxx 213.09
Xxxxx, Xxxxx 175.00
Xxxxxxx, Xxxx 3,461.76
XxxXxxxx, Xxxxxxx 148.62
Xxxxxxx, Xxx 15,912.56
TOTAL $ 462,650.00
SCHEDULE 6.02(e)
Kinetiks Litigation and Claims
Creditor Type of Claim Amount
Xxxxxx & Co. Judgment $ 44,435.00
Staffware, Inc. Judgment $ 25,865.11
Xxxxxxxxxx County, Texas Judgment $ 5,533.95
California Labor Commission Judgment $ 6,870.93
Xxxxxxxxx Labor Complaint $ 7,640.18
SCHEDULE 6.02(f)
Contracts and Other Instruments
None
SCHEDULE 6.02(h)
Kinetiks' Intangibles
None
