Exhibit 2.02
REORGANIZATION AGREEMENT
SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc.
AND
IC One, Inc.
June 30, 1999
TABLE OF CONTENTS
ARTICLE I - ACQUISITION; PURCHASE PRICE
1.01 Acquisition
ARTICLE II - THE CLOSING
2.01 Time, Date, and Place of Closing
2.02 Events Comprising the Closing
2.03 Public Company's Conditions of Closing
2.04 Private Company's Conditions
2.05 Deliveries by the Private Company
2.06 Deliveries by the Public Company
2.07 Filings
2.08 Return of Items
ARTICLE III - PRIVATE COMPANY'S REPRESENTATIONS AND WARRANTIES
3.01 Status of the Private Company
3.02 Financials
3.03 Tax Returns; Taxes
3.04 Real and Personal Property
3.05 Patents; Trademarks; Trade Names, Licenses, Etc.
3.06 Contracts; Powers of Attorney
3.07 Insurance
3.08 Officers and Directors; Employment Relationships
3.09 Transactions with Affiliates
3.10 No Misleading Statements or Omissions
3.11 Litigation; Compliance with Law
3.12 Absence of Restrictions and Conflicts
3.13 Attorneys Review of Contracts
ARTICLE IV - PUBLIC COMPANY'S REPRESENTATIONS AND WARRANTIES
4.01 Status of Public Company
4.02 Financials
4.03 Tax Returns; Taxes
4.04 Real and Personal Property
4.05 Patents; Trademarks; Trade Names, Licenses, Etc.
4.06 Contracts; Powers of Attorney
4.07 Insurance
4.08 Officers and Directors; Employment Relationships
4.09 Transactions with Affiliates
4.10 No Misleading Statements or Omissions
4.11 Litigation; Compliance with Law
4.12 Absence of Restrictions and Conflicts
4.13 Attorneys Review of Contracts
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ARTICLE V - SURVIVAL; INDEMNIFICATION
5.01 Survival
5.02 No Liabilities
5.03 Indemnification
ARTICLE VI - OTHER AGREEMENTS
6.01 Continuing Operation of Business
6.02 Inspection; Updated Financial Statements
6.03 No Negotiations
6.04 Good Faith Efforts; Further Assurances; Cooperation
6.05 Brokerage Commissions
6.06 Public Announcements
6.07 Anti-Dilution
6.08 Right of Registration
ARTICLE VII - TERMINATION AND ABANDONMENT; SPECIFIC PERFORMANCE
7.01 Termination and Abandonment
7.02 Specific Performance and Other Remedies
7.03 Rights and Obligations on Termination
ARTICLE VIII - MISCELLANEOUS PROVISIONS
8.01 Notices
8.02 Exhibits and Schedules
8.03 Time of the Essence; Computation of Time
8.04 Assignment; Successors in Interest
8.05 Number; Gender
8.06 Captions; Certain Definitions
8.07 Controlling Law; Integration; Amendment; Wavier
8.08 Expenses
8.09 Arbitration of Disputes
8.10 Counterparts
8.11 Consent to Jurisdiction
8.12 Severability
8.13 Board of Directors of Public Company
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EXHIBITS
Exhibit A - Shareholder List
Exhibit B - Assignment and Assumption
Exhibit C - Employment Agreements
Exhibit D - Disclosure Schedule
Exhibit E - Memorandum of Understanding
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REORGANIZATION AGREEMENT
SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc.
AND
IC One, Inc.
This is a Reorganization Agreement (the "Agreement") dated as of June
30, 1999 by and between SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc. and its
shareholders (the "Public Company") a Florida corporation, with its stock listed
on the NASD bulletin board having its principal office at 00000 Xxxxxx Xx.,
Xxxxxxx Xxxx, XX 00000 and IC One, Inc., a Delaware corporation, having its
principal office at 000 Xxxx 000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000
(the "Private Company") and the Private Company Shareholders listed in Exhibit A
(the "Private Company Shareholders"). This agreement is the direct result of the
Memorandum of Understanding entered into by the Public Company and the Private
Company on June 2, 1999 and attached as Exhibit E and incorporated into this
document by reference.
In consideration of the mutual promises contained in this Agreement and
for other good and valuable consideration the Private Company agrees to issue
pro rata to all the Shareholders of the Public Company (the "Public Company
Shareholders") 5,000,000 shares of total 50,000,000 outstanding and committed
equity shares of the Private Company representing 10% of all outstanding and
committed shares of the Private Company. These 5,000,000 shares are to be
transferred by or on behalf of the recipients to the Public Company.
Further, the parties agree that the Private Company will create a new
company called IC Smartworld, Inc. IC Smartworld, Inc. plans to issue all its
shares to the Private Company Shareholders on a pro rata basis to their current
holdings in the Private Company. At the closing of this transaction the Private
Company will transfer the ownership of the patent #5,806,045 and will license,
royalty-free, the use of the Private Company's software to IC Smartworld, Inc.
consistent with any use of the patent. Simultaneously, IC Smartworld, Inc. shall
provide the Public Company with an exclusive (except as determined by mutual
agreement of the Boards of Directors of the Public Company and IC Smartworld)
and royalty-free license of patent #5,806,045, for the life of the patent, and
any and all ancillary rights (including re-licensing and any rights to currently
existing trademarks or trade names).
The Private Company agrees to solicit its Private Company Shareholders
to tender the minimum number of shares to the Public Company to give the Public
Company control of at least 805 of the outstanding and committed shares held by
the Private Company Shareholders by July 12, 1999 (including the 5,000,000
shares referred to above). If the Private Company Shareholders fail to tender
enough shares by that date the private Company and the Public Company agree to
rewrite the Agreement so that it complies in all respects with the Memorandum of
Understanding dated June 2, 1999 signed by the parties and attached as Exhibit E
to this Agreement. Upon receipt of tenders for at least 80% of the outstanding
and committed shares of the Private Company, the Public Company will issue .858
shares of the Public Company for each share tendered by the Private Company. The
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total number of shares to be issued by the Public Company will not exceed
42,900,000 shares, reduced as set forth below. The Private Company agrees that
it will not enter into any transaction that will dilute the interest of the
pre-merger Public Company shareholders, IC Smartworld, Inc., IC One, Inc.,
SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc. or any of their successors without
he written consent of Xxxxx Xxxxx.
The Public Company shares to be issued to Private Company Shareholders
within the IC One, Inc. Shareholder base will be reduced pro rata by a total of
4,700,000 shares of the Public Company (the "MGM/MCI Allotment"), which shares
shall instead be issued to MGM/MCI Finance. The IC One Shareholder Base is
defined as the shares of the Private Company presently issued and outstanding
plus any additional shares committed to be issued, all as set forth in Exhibit A
attached to this Agreement.
ARTICLE I CLOSING; PURCHASE PRICE; ADJUSTMENTS
1.01 Closing. At the Closing described below the Private Company shall
issue and transfer 5,000,000 shares representing 10% of its outstanding and
committed shares in the Private Company to or for the benefit of the Public
Company Shareholders, pro rated by their ownership percentage. Simultaneously,
the Public Company Shareholders shall transfer these 5,000,000 shares to the
Public Company. The Private Company shall simultaneously transfer the ownership
in patent #5,806,045 to IC Smartworld, Inc., which shall sign the license
agreement and issue its shares to the Private Company Shareholders on a pro rata
basis. The Private Company shall provide to the Public Company the tenders of at
least 80% of its outstanding shares signed by Private Company Shareholders. The
Public Company shall issue and transfer .858 shares of the Public Company for
each share of the Private Company that has been tendered, to a maximum of
42,900,000 shares (less the MGM/MCI allotment). The Public Company shall issue
4,700,000 shares to MGM/MCI Finance, or order.
ARTICLE II THE CLOSING
2.01 Time, Date and Place of Closing. The Closing shall take place at
the offices of the Private Company, at 10:00 AM local time, as of July 12, 1999.
The Closing may also take place at such other location and time on which the
parties hereto shall mutually agree. The date upon which the Closing is to take
place is defined as the "Closing Date." Failure to close the transactions
contemplated herein on the Closing Date shall not in and of itself constitute a
reason for a party to terminate this Agreement, termination being governed by
Article VII, and so long as this Agreement is not so terminated, the parties
hereto shall continue as set forth in this Agreement to cause the Closing to
occur as soon as practicable.
2.02 Events Comprising the Closing. The Closing, which shall be subject
to the satisfaction of the conditions set forth in Sections 2.03 and 2.04 shall
consist of the delivery by the Private Company of all outstanding Shares to
Public Company and the documents to be delivered pursuant to Section 2.05, the
delivery by the Public Company of the Acquisition Shares and the documents to be
delivered pursuant to Section 2.06. The Closing of any and all of the
transactions hereby shall be deemed not to have occurred unless and until all
transactions constituting that Closing shall have been completed and duly
accepted by the parties and all such transactions shall be deemed to have taken
place simultaneously.
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2.03 Public Company's Conditions of Closing. Consummation by the Public
Company of the Closing is subject to the fulfillment prior to or at the Closing
Date of each of the following conditions, any one or more of which may be waived
by the Public Company in whole or in part.
(a) The representations and warranties of the Private Company contained
in this Agreement or in any certificate, schedule, exhibit or other agreement
delivered pursuant to the provisions of this Agreement shall be true in all
material respects as of the date when made, shall be deemed to be made again at
and as of the Closing Date and shall be true in all material respects at and as
of the Closing Date.
(b) The Private Company, in all material respects, shall have performed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by each of them prior to or at the
Closing Date.
(c) The Private Company in all material respects, shall be in full
compliance with all the required terms and conditions of all agreements material
to its business.
(d) The Private Company shall warrant that all Trademarks and
Intellectual Property including the patent #5,806,045 on the Smart Card and
other technologies are owned by the Private Company.
(e) No material adverse change shall have taken place in the business
or financial condition of the Private Company between the date hereof and the
Closing Date, other than changes occurring with the prior written consent of the
Public Company.
(f) All required consents of governmental authorities and contracting
or other third parties (including without limitation Federal and state
securities authorities) to the transactions contemplated by this Agreement shall
have been properly obtained and evidence thereof provided to the Public Company
insofar as is material to consummation of the purchase of the Company Shares.
(g) There shall be no judgment, decree, injunction, ruling, order or
notice of any court or governmental authority outstanding against the Private
Company or the Public Company, or any claim or proceeding or threat of any such
action ("a Litigation Problem") which prohibits, restricts or delays, or could
in the reasonable opinion of counsel for the Public Company prohibit, restrict
or delay the consummation of any of the transactions contemplated by the
Agreement, provided, however that the Public Company may in its sole discretion
waive in writing prior to the Closing all or any part of this condition as to
any particular Litigation Problem.
(h) Except for the filing of any required certificate amending
Certificates of Incorporation or similar documents of the Company, the Public
Company to reflect the Closing, all consents, authorizations, orders and
approvals of, and filings and registrations with any governmental authority
which are required for, or in connection with the execution and delivery of this
Agreement and the consummation by each party hereto of the transactions
contemplated hereby shall have been obtained or made.
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(i) The execution of this Agreement and the sale and transfer of the
Private Company's shareholders shall have received any required approval by the
holders of the outstanding shares or other equity interests of the Company
entitled to vote thereon in accordance with the provisions of the corporation
and other applicable laws of its state of incorporation and with its certificate
of incorporation or similar founding document.
(j) The Private Company shall have delivered to the Public Company a
balance sheet and income statement of the Private Company dated as of recent
date, in form and substance acceptable to the Public Company.
(k) The Private Company agrees that Xxxxx Xxxxx will be elected to and
remain on the Board of Directors of the Public Company or any successor
organizations, IC One, Inc. and IC Smartworld, Inc. and SCHIMATIC Cash
Transactions Xxxxxxx.xxx, Inc.
2.04 Private Company's Conditions of Closing. Consummation by the
Private Company of the Closing is subject to the fulfillment prior to or at the
Closing Date of each of the following conditions, any one or more of which may
be waived by the Private Company in whole or in part:
(a) The representations and warranties of the Public Company contained
in this Agreement or in any certificate, schedule, exhibit or other agreement
delivered pursuant to the provisions of this Agreement shall be true in all
material respects as of the date when made, shall be deemed to be made again at
and as of the Closing Date and shall be true in all material respects at and as
of the Closing Date.
(b) The Public Company, in all material respects, shall have performed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by each of them prior to or at the
Closing Date.
(c) The Public Company in all material respects, shall be in full
compliance with all the required terms and conditions of all agreements material
to its business.
(d) The Public Company shall warrant that all Trademarks are owned by
the Public Company.
(e) No material adverse change shall have taken place in the business
or financial condition of the Public Company between the date hereof and the
Closing Date, other than changes occurring with the prior written consent of the
Private Company.
(f) All required consents of governmental authorities and contracting
or other third parties (including without limitation Federal and state
securities authorities) to the transactions contemplated by this Agreement shall
have been properly obtained and evidence thereof provided to the Private Company
insofar as is material to consummation of the purchase of the Company Shares.
(g) There shall be no judgment, decree, injunction, ruling, order or
notice of any court or governmental authority outstanding against the Private
Company or the Public Company, or any claim or proceeding or threat of any such
action ("a Litigation Problem") which prohibits, restricts or delays, or could
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in the reasonable opinion of counsel for the Private Company prohibit, restrict
or delay the consummation of any of the transactions contemplated by the
Agreement, provided, however that the Private Company may in its sole discretion
waive in writing prior to the Closing all or any part of this condition as to
any particular Litigation Problem.
(h) Except for the filing of any required certificate amending
Certificates of Incorporation or similar documents of the Company, the Private
Company to reflect the Closing, all consents, authorizations, orders and
approvals of, and filings and registrations with any governmental authority
which are required for, or in connection with the execution and delivery of this
Agreement and the consummation by each party hereto of the transactions
contemplated hereby shall have been obtained or made.
(i) The execution of this Agreement and the sale and transfer of the
Public Company's shares shall have received any required approval by the holders
of the outstanding shares or other equity interests of the Company entitled to
vote thereon in accordance with the provisions of the corporation and other
applicable laws of its state of incorporation and with its certificate of
incorporation or similar founding document.
(j) The Public Company shall have delivered to the Private Company a
balance sheet and income statement of the Public Company dated as of recent
date, in form and substance acceptable to the Private Company.
2.05 Deliveries by the Private Company. It shall be a Public Company's
Condition of Closing that the Private Company shall deliver the following at the
Closing, all of which shall be satisfactory in form and substance to the Public
Company (all documents shall be dated the Date of Closing unless otherwise
specified):
(a) Certificates for five million (5,000,000) newly issued shares of
the Private Company in the names of the Public Company Shareholders.
(b) Certificates signed by the Private Company updating the Disclosure
Schedule delivered pursuant to Article III and confirming the accuracy of all
representations and warranties as of the Closing date.
(c) Consents to the transactions contemplated hereby of the parties to
all material contracts, agreements, commitments and understandings to which the
Private Company is party or to which it or its assets are subject, to the extent
reasonably required to consummate the purchase of the Private Company's
outstanding shares.
(d) Secretary's Certificate attaching true, correct and complete copies
of (i) the by-laws, operating agreements or other similar documents of the
Private Company and (ii) votes or consents of directors and shareholders
required to accomplish the transactions contemplated by this Agreement and
certifying that they are in full force and effect and were properly authorized.
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(e) Certificates for not less than 80% of the Private Company's issued
and committed Shares, together with an Assignment and Assumption of such shares
from the Private Company Shareholders to the Public Company, substantially in
the form attached as Exhibit B to this Agreement.
(f) A certificate or certificates in the name of the Public Company,
evidencing (i) the shares transferred to Public Company by Private Company
Shareholders in (e) above and surrendered for cancellation and (ii) the
5,000,000 newly issued shares of the Private Company which were transferred back
to the Public Company as provided in Section 2.06(f), made out in the name of
the Public Company. Such new certificate(s) shall bear a restrictive legend.
(g) Corporate books and records of the Private Company, including
minutes, stock records, financial records and all, tax, accounting and other
business records and documents in the possession of the Private Company or the
Shareholder necessary to continue operation of the Private Company.
(h) Such other documents, certificates and opinions as the Public
Company may reasonably request for the purpose of enabling its counsel to
provide opinions under this Agreement and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Private Company.
(i) Employment Agreements are to be negotiated between the Private
Company and Xxxxx Xxxxx and Xxxxxx Xxxxxx. Salaries and benefits will be
comparable to the salaries and benefits of the comparable employees and
executives of the Private Company.
2.06 Deliveries by the Public Company. It shall be a Private Company's
Condition of Closing that the Public Company shall deliver the following at the
Closing, all of which shall be satisfactory in form and substance to the Private
Company (all documents shall be dated the Date of Closing unless otherwise
specified):
(a) Certified copy of the Certificate of Incorporation of the Public
Company.
(b) Secretary's Certificate attaching true, correct and complete copies
of (i) the by-laws of the Public Company and (ii) votes or consents of directors
and shareholders required to accomplish the transactions contemplated by this
Agreement and certifying that they are in full force and effect and were
properly authorized.
(c) A certificate dated the Date of Closing and executed by an officer
of the Public Company certifying that (i) the representations and warranties of
the Public Company contained in this Agreement or in any exhibit, schedule,
certificate or other document delivered by the Public Company pursuant to this
Agreement are true and correct on and as of the Date of Closing with the same
effect as though such representations and warranties had been made on and as of
such date or, if not, in what respects they are not and (ii) each and all of the
agreements and covenants of the Public Company to be performed on or before the
Date of Closing pursuant to the terms of this Agreement have been duly performed
or, if not, in what respects they have not.
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(d) A certificate or certificates evidencing up to 42,900,000 fully
paid and non-assessable shares of Common Stock of the Public Company (less the
MGM/MCI Allotment) issued in the names of the Private Company's Shareholders
with such restrictions on transfer as counsel shall require to comply with legal
requirements.
(e) A certificate or certificates evidencing 4,700,000 shares of common
stock of the Public Company issued in accordance with the MGM/MCI Allotment with
such restrictions on transfer as counsel shall require to comply with legal
requirements.
(f) An assignment by or on behalf of all the Public Company
Shareholders to the Public Company of all their right, title and interest in and
to the 5,000,000 shares of the Private Company issued in their name.
(g) Such other documents, certificates and opinions as the Private
Company may reasonably request for the purpose of enabling its counsel to
provide opinions under this Agreement and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Public Company.
(f) Corporate books and records of the Public Company, including
minutes, stock records, financial records and all, tax, accounting and other
business records and documents in the possession of the Private Company or the
Shareholder necessary to continue operation of the Private Company.
(g) Such other documents, certificates and opinions as the Private
Company may reasonably request for the purpose of enabling its counsel to
provide opinions under this Agreement and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Private Company.
(h) Certificate signed by the Public Company updating the Disclosure
Schedule pursuant to Article IV and confirming the accuracy of all
representations and warranties as of the Closing date.
2.07 Filings. Immediately after the delivery of the items set forth in
Sections 2.05 and 2.06 by the parties thereto, any required filings shall be
made with corporate and other authorities.
2.08 Return of Items. If for any reason the Closing is not consummated
after the deliveries provided for in Sections 2.05 and 2.06, all items delivered
shall be returned to the party or parties delivering them.
ARTICLE III PRIVATE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Private Company represents and warrants to the Public Company as of
the date hereof and as of the Closing Date, as follows, EXCEPT AS SET FORTH IN
THE DISCLOSURE SCHEDULE ATTACHED HERETO AS EXHIBIT D, AS UPDATED:
3.01 Status of the Private Company.
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(a) Organization. The Private Company is a corporation duly organized
and validly existing in good standing under the laws of Delaware and has full
corporate power to own or lease its properties and conduct its business as now
being conducted. True and accurate copies of (i) the articles of incorporation,
as amended to date, (ii) a short form Certificate of Good Standing (listing all
amendments, restatements, any articles of merger or similar action affecting the
articles of incorporation) from the office of the Delaware Secretary of State
and dated not more than ten (10) business days prior to the date of the Closing
and (iii) the bylaws and any amendments thereto certified by the Secretary as
being in full force and effect without modification, have been furnished to the
Public Company. The Private Company is duly qualified and in good standing to
transact business as a foreign corporation and has paid all taxes and other fees
due in each state or jurisdiction where it does business, except where the
failure to so qualify and be in good standing would not have a material adverse
effect on the business of the Company. The Company does not own, lease nor use
real or personal property nor have employees or agents located in any state or
jurisdiction outside Utah and California. The Company has no subsidiaries or
affiliates or equity securities of, investments in or loans or advances to any
corporation, LLC, partnership, joint venture or other business enterprise or any
agreements or commitments for such. The minute books of the Company reflect all
material actions and proceedings taken at meetings or by written consent of the
shareholders or Board of Directors and any committee thereof. The stock records
of the Company accurately reflect all stock issuances and transfers of record.
(b) Capitalization; Ownership Interests. All outstanding shares of
capital stock of the Private Company are owned by Private Company's Shareholders
as set forth on Exhibit A of this Agreement. No warrants, subscriptions, calls
or other rights or commitments to issue or acquire any capital stock or other
securities of the Private Company or rights or obligations of any kind
convertible into securities of any kind or class of the Private Company are
authorized, outstanding or otherwise existing. Except as described in the
Disclosure Schedule there are no agreements or understandings of any kind to
which the Private Company is a party or by which it is bound relating to the
issuance, voting, purchase, repurchase, redemption or transfer of stock or other
equity interest of the Private Company or any other securities of any Company
and no agreements or other understandings as to joint venture, profit sharing or
other interests in operations or ownership. No stock or other equity interest in
the Private Company has been issued or sold and delivered in violation of any
preemptive or similar right or in violation of any corporate, business
organization or securities law. No shareholder or equity owner or former
shareholder or equity owner and no shareholder of any corporation or other
entity heretofore merged or consolidated with or into the Private Company or its
predecessors has any claim or cause of action whatsoever against it or its
shareholders or equity owners arising out of or in any way connected with any
occurrence or state of facts in existence prior to the date of this Agreement
and no such shareholder, equity owner, or former shareholder or equity owner
shall come to have any claim or cause of action whatsoever against the Private
Company or the Public Company arising out of or in any way connected with any
occurrence or state of facts in existence prior to the date of this Agreement.
(c) Authorization. The execution and delivery of this Agreement and the
due consummation by the Private Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary action on the part of the
Board of Directors and shareholders of the Private Company in compliance with
applicable law and this Agreement constitutes the valid and binding agreement of
the Private Company and the Shareholders, enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy, reorganization,
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insolvency, moratorium and similar laws from time to time in effect and to
general principles of equity. The Private Company and the Shareholders are duly
authorized to execute this Agreement and all other agreements or documents
attached as exhibits or referred to therein and to engage in and consummate all
the transactions and other acts contemplated thereby. Except as described in the
Disclosure Schedule, the Private Company knows of no claim, law or regulatory or
contract provision that would prevent or impede the due execution and delivery
of all such documents by the Private Company and the completion of all such
transactions and acts.
3.02 Financials.
(a) Financial Statements. Attached as exhibits to the Disclosure
Statement are true, correct and complete copies of a balance sheet of the
Company as of May 31, 1999, plus related statements of net income for the period
year ended May 31, 1999, (all of which, including the notes thereto, together
with the financial statements hereafter delivered are referred to herein as the
"Private Company's Financials"). Except as described in the Disclosure Schedule,
the Company Financials are consistent in all material respects with the books
and records of the Company taken as a whole, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods covered by such statements and fairly present the
financial position of the Company as of their respective dates and the results
of operations of the Company for the periods then ended.
(b) Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the Private Company's Financials or expressly
described in the Note thereto or in the Disclosure Schedule, and except for
trade payables and similar liabilities and obligations arising in the ordinary
course of business since May 31, 1999 or which in the aggregate do not exceed
$10,000, the Private Company will have on the Closing Date (i) no known
liabilities or obligations of a type that would be required by generally
accepted accounting principles to be accrued or otherwise reflected on a balance
sheet (or the notes thereto) dated as of the Closing and (ii) no other material
liability of any nature, whether accrued, absolute, contingent or otherwise,
known or unknown, arising from any state of facts existing on or before the
Closing Date.
(c) No Liabilities as Guarantor; Warranties. Except as set forth in the
Disclosure Schedule, the Private Company is not directly or indirectly liable,
by guaranty, surety or otherwise with respect to any debt, dividend or other
obligation of any person, corporation, association, partnership or other entity,
except endorsements made in the ordinary course of business in connection with
the deposit of items for collection. Except as set forth in the Disclosure
Schedule and except as provided by applicable law relating to the sale of goods
and services, there are no outstanding warranties or guaranties upon any goods
or services sold by the Company.
(d) Absence of Certain Changes. Except as set forth in the Disclosure
Schedule or as contemplated by or disclosed in this Agreement, since May 31,
1999, there has not been (i) any material adverse change in the financial
condition, assets, liabilities or business of the Private Company, (ii) any
cancellation by any of them of any indebtedness owing to the Private Company, or
any other material waiver of any rights held by the Private Company, or
settlement of any dispute involving more than $5,000, (iii) any sale,
assignment, transfer, license, disposition or lapse of any franchise, patent,
license, trademark, trade name or copyright or other contract or intangible
right of the Private Company, (iv) any loan or advance by any Company to any
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person, except a normal travel advance or other reasonable expense advance, (v)
any capital expenditure or commitment by any Company in excess of $10,000 for an
individual project or $50,000 in the aggregate, (vi) any agreement or
arrangement entered into by the Private Company with any affiliate or associate
or employee other than for reimbursement of ordinary and necessary expenses
incurred in connection with employment, (vii) other than in the ordinary course
of business, any sale or granting to any party or parties of any license,
franchise, option, contract or other right of any nature whatsoever to sell,
distribute, or otherwise deal in or with the product or services provided by the
Private Company or to use any license or permit, patent, trade name, trademark,
service xxxx, copyright, pending applications therefor, trade secrets or other
contract or proprietary rights of the Private Company, or any agreement therefor
(viii) any new contract, agreement, commitment or understanding entered into by
the Private Company (other than for the purchase of raw materials, products,
supplies and services and the sale of products and services entered into in the
ordinary course of business) involving payment by or to the Private Company of
$10,000 or more individually or, when added to all others, $50,000 or more in
the aggregate; or (ix) any other transaction entered into by the Private Company
other than in the ordinary course of business.
(e) Accounts Receivable. Except as set forth on the Disclosure
Schedule, any and all accounts receivable of the Private Company as reflected in
the Private Company's Financials, to the extent uncollected, are valid and, to
the best of the knowledge of the Private Company, are fully collectible without
resort to legal proceedings and represent moneys due for products or services
sold and delivered. There are no refunds or other adjustments, except discounts
given in the ordinary course of business, payable in respect of any of such
accounts receivable. To the knowledge of the Private Company, there are no
defenses, rights of set-off, assignments, restrictions, encumbrances or
conditions enforceable by third parties on or affecting any thereof.
3.03 Tax Returns; Taxes. The Private Company warrants it has filed all
applicable income tax returns in the U. S. and in the States in which it
operates. Except as set forth in the Disclosure Schedule all amounts shown as
due and payable have been paid and all accrued liabilities are properly
reflected on the Financial Statements. All taxes or other assessments and levies
which the Private Company is or was required by law to withhold or collect have
been duly withheld and collected, and have been paid over to the proper
governmental authorities or are held by the Private Company in a depository bank
account for such payment and all such withholdings and collections and all other
payments due in connection therewith are duly set forth on the books of the
Private Company. All taxes or other assessments and levies which the Private
Company is or was required by law to withhold or collect have been duly withheld
and collected, and have been paid over to the proper governmental authorities or
are held by the Private Company in a depository bank account for such payment
and all such withholdings and collections and all other payments due in
connection therewith are duly set forth on the books of the Private Company. No
tax return of the Private Company has been audited by any federal, state or
local tax authority. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state or local tax
return for any period with respect to the Private Company.
3.04 Real and Personal Property.
(a) Ownership. The Private Company owns no real property. All of the
personal property, including contract rights, patents, trademarks or names,
licenses, permits and applications therefor (the "Assets") are scheduled in
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Exhibit B, are reflected on the Company Financials and are owned free and clear
by the Private Company and, except as clearly set forth or described in the
Private Company's Financials or in the Disclosure Schedule, none of such
personal property is subject to any material mortgage, pledge, lien,
restriction, encumbrance, charge or other adverse claim.
(b) Leases; Subleases. The Private Company has no leases or subleases,
except as listed in Schedule D.
(c) Documentation; Records. The products, services and systems provided
or used by the Private Company and included in the Private Company's Assets are
documented, and any software includes source code, all software is written in
standard language in accordance with normal industry standards and can readily
be archived, accessed (subject to password and other security requirements),
retrieved and utilized by trained personnel without the addition of codes, keys
or other encryption or security devices not transferred or provided to the
Public Company.
3.05 Patents; Trademarks; Trade Names, Licenses, Etc.
(a) Ownership. The Private Company warrants that it is the rightful
owner of a patent referred to as a loyalty chip and that all such patents and
that the Private Company will grant to the Public Company an exclusive license
to all of its proprietary intellectual property, exclusive of licenses already
granted in the ordinary course of business to others.
(b) No Violations. To the best of the Private Company's knowledge, the
Company has not violated or infringed any patent, trademark, service xxxx, trade
name, copyright, technology, know-how, process, license, permit, trade secret or
other rights or other intellectual properties of any third party.
3.06 Contracts; Powers of Attorney.
(a) Contracts. Each written or oral contract, agreement, commitment or
understanding to which the Private Company or any person constituting the
Private Company a party or to which any of their properties is subject which is
material to the operation of the business or the Private Company's Assets being
transferred is listed in the Disclosure Schedule. All such contracts,
agreements, commitments or understandings are referred to herein as "Contracts."
Except as set forth in the Disclosure Schedule neither the Private Company nor
is in default in connection with any Contracts nor, so far as any of them knows,
is there any basis for any material claim or default in, any respect under any
Contract; so far as any of them knows, no other party is in material default
under any of the Contracts, no act or event (other than overdue payments not
more than 60 days late) has occurred which, with notice or lapse of time, or
both, would constitute a default under any of the Contracts and, so far as they
both know, there is no basis for such; there is no outstanding notice of
cancellation or termination in connection therewith; and to the best of the
Private Company's knowledge, each of the Contracts is a valid and binding
obligation of the signatory, and, so far as they know, of the other parties
thereto, which is in full force and effect in accordance with its terms. To the
extent requested by the Public Company in writing before the date hereof, the
Private Company has furnished to the Public Company letters or other written
evidence acceptable to it from contracting parties evidencing the due compliance
by the Private Company with the terms and conditions of applicable contracts and
that they are in full force and effect.
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(b) Powers of Attorney. Except as set forth in the Disclosure Schedule
there are no persons holding powers of attorney or similar rights from the
Company or the Private Company.
3.07 Insurance. The Company maintains no insurance except those listed
in Schedule D.
3.08 Officers and Directors; Employment Relationships. The Disclosure
Schedule sets forth a list of all of the officers and directors of the Private
Company, specifying their office and annual rate of compensation, and a list of
each employee of the Private Company as of the date of the Schedule setting
forth each employee's compensation, date of hire and whether or not
contributions are made for him or her under the employee benefit plans described
in the Disclosure Schedule. Other than as described in the Disclosure Schedule
and other than benefits that by their terms are available to substantially all
the Private Company's employees, the Private Company has no material obligations
or commitments, contingent or otherwise, under any employment contract or
arrangement, bonus, incentive or deferred compensation plan or arrangement,
pension, profit-sharing, stock purchase or other such plan or arrangement,
insurance or other retirement, compensation or fringe benefit plan or
arrangement or collective bargaining agreement.
3.09 Transactions with Affiliates. Except as set forth in the
Disclosure Schedule there is no lease, sublease, contract, agreement,
commitment, understanding, or other arrangement of any kind whatsoever entered
into by the Company or either Shareholder with any affiliated firm, person or
corporation.
3.10 No Misleading Statements or Omissions. No representation or
warranty by the Private Company in this Article III or in any written exhibit,
statement, certificate or agreement required to be furnished by the Private
Company to the Public Company pursuant to this Agreement intentionally contains
or will contain any untrue statement of a material fact, or intentionally omits
or will omit to state a material fact necessary to make the statements herein or
therein not misleading.
3.11 Litigation; Compliance with Law.
(a) The Private Company is not engaged in or a party to or, to the best
knowledge of either of them, threatened with any claim, controversy, legal
action, or other proceeding whether or not before any court or administrative
agency and whether by a private or public party, any adverse determination of
which might adversely affect it or its business and, so far as either of them
knows, there is no basis for such;
(b) No governmental authority in the last five years has (i) charged
the Private Company with the commission of a crime or (ii) given notice to the
Private Company that it was conducting any investigation of which the Company or
either Shareholder was the subject.
(c) The Private Company has complied in all material respects with each
federal, state or other statute, law, judgment, order, decree, regulation or
rule of any court or governmental authority applicable to it, including without
limitation all trademark, copyright, antitrust and trade regulation laws, all
communications laws, and all rules and regulations promulgated under such laws.
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Except as set forth in the Disclosure Schedule, the Company holds all required
licenses and permits to conduct the business done and intended to be done by it.
3.12 Absence of Restrictions and Conflicts. The execution and delivery
of this Agreement, the consummation of the transactions contemplated by this
Agreement and the fulfillment of and compliance with the terms and conditions of
this Agreement do not and will not with the passing of time or the giving of
notice or both (a) constitute a violation of, conflict with, constitute a breach
of or default under or result in the creation or imposition of any security
interest, lien or other encumbrance, upon any of the Assets under (i) any term
or provision of the articles of incorporation or bylaws or other similar basic
document of the Company or (ii) any agreement, commitment or understanding to
which the Company or either Shareholder is a party or to which any of them or
any of their properties is subject; (iii) any judgment, decree or order of any
court or governmental authority or agency; or (iv) any statute, law, regulation
or rule or (b) create, or cause the acceleration of maturity of, any debt,
obligation or liability of the Private Company. No consent, approval, order or
authorization of, or registration, declaration or filing with any governmental
authority or other person, corporation, firm or entity with respect to the
Private Company is required in connection with the execution or delivery of or
the performance under this Agreement or the consummation of the transactions
contemplated by this Agreement other than as set forth in the Disclosure
Schedule or described elsewhere herein.
3.13 Attorney's Review of Contracts. All parties have involved their
own attorneys in reviewing these documents and are fully informed of their
rights and responsibilities.
ARTICLE IV PUBLIC COMPANY'S REPRESENTATIONS AND WARRANTIES
The Public Company represents and warrants to the Public Company as of
the date hereof and as of the Closing Date, as follows, EXCEPT AS SET FORTH IN
THE DISCLOSURE SCHEDULE ATTACHED HERETO AS EXHIBIT D, AS UPDATED:
4.01 Status of the Public Company.
(a) Organization. The Public Company is a corporation duly organized
and validly existing in good standing under the laws of Florida and has full
corporate power to own or lease its properties and conduct its business as now
being conducted. True and accurate copies of (i) the articles of incorporation,
as amended to date, (ii) a short form Certificate of Good Standing (listing all
amendments, restatements, any articles of merger or similar action affecting the
articles of incorporation) from the office of the Florida Secretary of State and
dated not more than ten (10) business days prior to the date of the Closing and
(iii) the bylaws and any amendments thereto certified by the Secretary as being
in full force and effect without modification, have been furnished to the Public
Company. The Public Company is duly qualified and in good standing to transact
business as a foreign corporation and has paid all taxes and other fees due in
each state or jurisdiction where it does business, except where the failure to
so qualify and be in good standing would not have a material adverse effect on
the business of the Company. The Company does not own, lease nor use real or
personal property nor have employees or agents located in any state or
jurisdiction outside Utah and California. The Company has no subsidiaries or
affiliates or equity securities of, investments in or loans or advances to any
corporation, LLC, partnership, joint venture or other business enterprise or any
agreements or commitments for such. The minute books of the Company reflect all
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material actions and proceedings taken at meetings or by written consent of the
shareholders or Board of Directors and any committee thereof. The stock records
of the Company accurately reflect all stock issuances and transfers of record.
(b) Capitalization; Ownership Interests. All outstanding shares of
capital stock of the Public Company are owned by Shareholders as set forth on
Exhibit A of this Agreement. No warrants, subscriptions, calls or other rights
or commitments to issue or acquire any capital stock or other securities of the
Public Company or rights or obligations of any kind convertible into securities
of any kind or class of the Public Company are authorized, outstanding or
otherwise existing. Except as described in the Disclosure Schedule there are no
agreements or understandings of any kind to which the Public Company is a party
or by which it is bound relating to the issuance, voting, purchase, repurchase,
redemption or transfer of stock or other equity interest of the Public Company
or any other securities of any Company and no agreements or other understandings
as to joint venture, profit sharing or other interests in operations or
ownership. No stock or other equity interest in the Public Company has been
issued or sold and delivered in violation of any preemptive or similar right or
in violation of any corporate, business organization or securities law. No
shareholder or equity owner or former shareholder or equity owner and no
shareholder of any corporation or other entity heretofore merged or consolidated
with or into the Public Company or its predecessors has any claim or cause of
action whatsoever against it or its shareholders or equity owners arising out of
or in any way connected with any occurrence or state of facts in existence prior
to the date of this Agreement and no such shareholder, equity owner, or former
shareholder or equity owner shall come to have any claim or cause of action
whatsoever against the Public Company or the Public Company arising out of or in
any way connected with any occurrence or state of facts in existence prior to
the date of this Agreement.
(c) Authorization. The execution and delivery of this Agreement and the
due consummation by the Public Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary action on the part of the
Board of Directors and shareholders of the Public Company in compliance with
applicable law and this Agreement constitutes the valid and binding agreement of
the Public Company and the Shareholders, enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws from time to time in effect and to
general principles of equity. The Public Company and the Shareholders are duly
authorized to execute this Agreement and all other agreements or documents
attached as exhibits or referred to therein and to engage in and consummate all
the transactions and other acts contemplated thereby. Except as described in the
Disclosure Schedule, the Public Company knows of no claim, law or regulatory or
contract provision that would prevent or impede the due execution and delivery
of all such documents by the Public Company and the completion of all such
transactions and acts.
4.02 Financials.
(a) Financial Statements. Attached as exhibits to the Disclosure
Statement are true, correct and complete copies of a balance sheet of the
Company as of May 31, 1999, plus related statements of net income for the period
year ended May 31, 1999, (all of which, including the notes thereto, together
with the financial statements hereafter delivered are referred to herein as the
"Public Company's Financials"). Except as described in the Disclosure Schedule,
the Company Financials are consistent in all material respects with the books
and records of the Company taken as a whole, have been prepared in accordance
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14
with generally accepted accounting principles applied on a consistent basis
throughout the periods covered by such statements and fairly present the
financial position of the Company as of their respective dates and the results
of operations of the Company for the periods then ended.
(b) Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the Public Company's Financials or expressly
described in the Note thereto or in the Disclosure Schedule, and except for
trade payables and similar liabilities and obligations arising in the ordinary
course of business since the date of the financial statements or which in the
aggregate do not exceed $10,000, the Public Company will have on the Closing
Date (i) no known liabilities or obligations of a type that would be required by
generally accepted accounting principles to be accrued or otherwise reflected on
a balance sheet (or the notes thereto) dated as of the Closing and (ii) no other
material liability of any nature, whether accrued, absolute, contingent or
otherwise, known or unknown, arising from any state of facts existing on or
before the Closing Date.
(c) No Liabilities as Guarantor; Warranties. Except as set forth in the
Disclosure Schedule, the Public Company is not directly or indirectly liable, by
guaranty, surety or otherwise with respect to any debt, dividend or other
obligation of any person, corporation, association, partnership or other entity,
except endorsements made in the ordinary course of business in connection with
the deposit of items for collection. Except as set forth in the Disclosure
Schedule and except as provided by applicable law relating to the sale of goods
and services, there are no outstanding warranties or guaranties upon any goods
or services sold by the Company.
(d) Absence of Certain Changes. Except as set forth in the Disclosure
Schedule or as contemplated by or disclosed in this Agreement, since May 31,
1999, there has not been (i) any material adverse change in the financial
condition, assets, liabilities or business of the Public Company, (ii) any
cancellation by any of them of any indebtedness owing to the Public Company, or
any other material waiver of any rights held by the Public Company, or
settlement of any dispute involving more than $5,000, (iii) any sale,
assignment, transfer, license, disposition or lapse of any franchise, patent,
license, trademark, trade name or copyright or other contract or intangible
right of the Public Company, (iv) any loan or advance by any Company to any
person, except a normal travel advance or other reasonable expense advance, (v)
any capital expenditure or commitment by any Company in excess of $10,000 for an
individual project or $50,000 in the aggregate, (vi) any agreement or
arrangement entered into by the Public Company with any affiliate or associate
or employee other than for reimbursement of ordinary and necessary expenses
incurred in connection with employment, (vii) other than in the ordinary course
of business, any sale or granting to any party or parties of any license,
franchise, option, contract or other right of any nature whatsoever to sell,
distribute, or otherwise deal in or with the product or services provided by the
Public Company to use any license or permit, patent, trade name, trademark,
service xxxx, copyright, pending applications therefor, trade secrets or other
contract or proprietary rights of the Public Company, or any agreement therefor
(any new contract, agreement, commitment or understanding entered into by the
Public Company (other than for the purchase of raw materials, products, supplies
and services and the sale of products and services entered into in the ordinary
course of business) involving payment by or to the Public Company of $10,000 or
more individually or, when added to all others, $50,000 or more in the
aggregate; or (ix) any other transaction entered into by the Public Company
other than in the ordinary course of business.
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(e) Accounts Receivable. Except as set forth on the Disclosure
Schedule, any and all accounts receivable of the Public Company as reflected in
the Public Company's Financials, to the extent uncollected, are valid and, to
the best of the knowledge of the Public Company, are fully collectible without
resort to legal proceedings and represent moneys due for products or services
sold and delivered. There are no refunds or other adjustments, except discounts
given in the ordinary course of business, payable in respect of any of such
accounts receivable. To the knowledge of the Public Company, there are no
defenses, rights of set-off, assignments, restrictions, encumbrances or
conditions enforceable by third parties on or affecting any thereof.
4.03 Tax Returns; Taxes. The Public Company warrants it has no
liability for income taxes in the U. S. and in the States in which it operates
as it has operated at a loss from inception to the present date. Except as set
forth in the Disclosure Schedule all amounts shown as due and payable have been
paid and all accrued liabilities are properly reflected on the Financial
Statements. All taxes or other assessments and levies which the Public Company
is or was required by law to withhold or collect have been duly withheld and
collected, and have been paid over to the proper governmental authorities or are
held by the Public Company in a depository bank account for such payment and all
such withholdings and collections and all other payments due in connection
therewith are duly set forth on the books of the Public Company. All taxes or
other assessments and levies which the Public Company is or was required by law
to withhold or collect have been duly withheld and collected, and have been paid
over to the proper governmental authorities or are held by the Public Company in
a depository bank account for such payment and all such withholdings and
collections and all other payments due in connection therewith are duly set
forth on the books of the Public Company. No tax return of the Public Company
has been audited by any federal, state or local tax authority. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal, state or local tax return for any period with respect
to the Public Company.
4.04 Real and Personal Property.
(a) Ownership. The Public Company owns no real property. All of the
personal property, including contract rights, patents, trademarks or names,
licenses, permits and applications therefor (the "Assets") are scheduled in
Exhibit B, are reflected on the Company Financials and are owned free and clear
by the Public Company and, except as clearly set forth or described in the
Public Company's Financials or in the Disclosure Schedule, none of such personal
property is subject to any material mortgage, pledge, lien, restriction,
encumbrance, charge or other adverse claim.
(b) Leases; Subleases. The Public Company has no leases or subleases,
except as listed in Schedule D.
(c) Documentation; Records. The products, services and systems provided
or used by the Public Company and included in the Public Company's Assets are
documented, and any software includes source code, all software is written in
standard language in accordance with normal industry standards and can readily
be archived, accessed (subject to password and other security requirements),
retrieved and utilized by trained personnel without the addition of codes, keys
or other encryption or security devices not transferred or provided to the
Public Company.
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4.05 Patents; Trademarks; Trade Names, Licenses, Etc.
(a) No Violations. To the best of the Public Company's knowledge, the
Company has not violated or infringed any patent, trademark, service xxxx, trade
name, copyright, technology, know-how, process, license, permit, trade secret or
other rights or other intellectual properties of any third party.
4.06 Contracts; Powers of Attorney.
(a) Contracts. Each written or oral contract, agreement, commitment or
understanding to which the Public Company or any person constituting the Public
Company a party or to which any of their properties is subject which is material
to the operation of the business or the Public Company's Assets being
transferred is listed in the Disclosure Schedule. All such contracts,
agreements, commitments or understandings are referred to herein as "Contracts."
Except as set forth in the Disclosure Schedule neither the Public Company nor is
in default in connection with any Contracts nor, so far as any of them knows, is
there any basis for any material claim or default in, any respect under any
Contract; so far as any of them knows, no other party is in material default
under any of the Contracts, no act or event (other than overdue payments not
more than 60 days late) has occurred which, with notice or lapse of time, or
both, would constitute a default under any of the Contracts and, so far as they
both know, there is no basis for such; there is no outstanding notice of
cancellation or termination in connection therewith; and to the best of the
Public Company's knowledge, each of the Contracts is a valid and binding
obligation of the signatory, and, so far as they know, of the other parties
thereto, which is in full force and effect in accordance with its terms. To the
extent requested by the Public Company in writing before the date hereof, the
Public Company has furnished to the Public Company letters or other written
evidence acceptable to it from contracting parties evidencing the due compliance
by the Public Company with the terms and conditions of applicable contracts and
that they are in full force and effect.
(b) Powers of Attorney. Except as set forth in the Disclosure Schedule
there are no persons holding powers of attorney or similar rights from the
Company or the Public Company.
4.07 Insurance. The Company maintains no insurance except those listed
in Schedule D.
4.08 Officers and Directors; Employment Relationships. The Disclosure
Schedule sets forth a list of all of the officers and directors of the Public
Company, specifying their office and annual rate of compensation, and a list of
each employee of the Public Company as of the date of the Schedule setting forth
each employee's compensation, date of hire and whether or not contributions are
made for him or her under the employee benefit plans described in the Disclosure
Schedule. Other than as described in the Disclosure Schedule and other than
benefits that by their terms are available to substantially all the Public
Company's employees, the Public Company has no material obligations or
commitments, contingent or otherwise, under any employment contract or
arrangement, bonus, incentive or deferred compensation plan or arrangement,
pension, profit-sharing, stock purchase or other such plan or arrangement,
insurance or other retirement, compensation or fringe benefit plan or
arrangement or collective bargaining agreement.
4.09 Transactions with Affiliates. Except as set forth in the
Disclosure Schedule there is no lease, sublease, contract, agreement,
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commitment, understanding, or other arrangement of any kind whatsoever entered
into by the Company or either Shareholder with any affiliated firm, person or
corporation.
4.10 No Misleading Statements or Omissions. No representation or
warranty by the Public Company in this Article IV or in any written exhibit,
statement, certificate or agreement required to be furnished by the Public
Company to the Public Company pursuant to this Agreement intentionally contains
or will contain any untrue statement of a material fact, or intentionally omits
or will omit to state a material fact necessary to make the statements herein or
therein not misleading.
4.11 Litigation; Compliance with Law.
(a) The Public Company is not engaged in or a party to or, to the best
knowledge of either of them, threatened with any claim, controversy, legal
action, or other proceeding whether or not before any court or administrative
agency and whether by a private or public party, any adverse determination of
which might adversely affect it or its business and, so far as either of them
knows, there is no basis for such.
(b) No governmental authority in the last five years has (i) charged
the Public Company with the commission of a crime or (ii) given notice to the
Public Company that it was conducting any investigation of which the Company or
either Shareholder was the subject.
(c) The Public Company has complied in all material respects with each
federal, state or other statute, law, judgment, order, decree, regulation or
rule of any court or governmental authority applicable to it, including without
limitation all trademark, copyright, antitrust and trade regulation laws, all
communications laws, and all rules and regulations promulgated under such laws.
Except as set forth in the Disclosure Schedule, the Company holds all required
licenses and permits to conduct the business done and intended to be done by it.
4.12 Absence of Restrictions and Conflicts. The execution and delivery
of this Agreement, the consummation of the transactions contemplated by this
Agreement and the fulfillment of and compliance with the terms and conditions of
this Agreement do not and will not with the passing of time or the giving of
notice or both (a) constitute a violation of, conflict with, constitute a breach
of or default under or result in the creation or imposition of any security
interest, lien or other encumbrance, upon any of the Assets under (i) any term
or provision of the articles of incorporation or bylaws or other similar basic
document of the Company or (ii) any agreement, commitment or understanding to
which the Company or either Shareholder is a party or to which any of them or
any of their properties is subject; (iii) any judgment, decree or order of any
court or governmental authority or agency; or (iv) any statute, law, regulation
or rule or (b) create, or cause the acceleration of maturity of, any debt,
obligation or liability of the Public Company. No consent, approval, order or
authorization of, or registration, declaration or filing with any governmental
authority or other person, corporation, firm or entity with respect to the
Public Company is required in connection with the execution or delivery of or
the performance under this Agreement or the consummation of the transactions
contemplated by this Agreement other than as set forth in the Disclosure
Schedule or described elsewhere herein.
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4.13 Attorney's Review of Contracts. All parties have involved their
own attorneys in reviewing these documents and are fully informed of their
rights and responsibilities.
ARTICLE V SURVIVAL; INDEMNIFICATION
5.01 Survival. All representations and warranties made by the Public
Company and the Private Company in this Agreement or required by this Agreement
to be made in any exhibit, schedule, certificate, or instrument delivered
pursuant to this Agreement, shall be made at and as of the date of this
Agreement and at and as of the Closing Date hereunder. The representations,
warranties, covenants made by the Public Company and the Private Company in this
Agreement and in any exhibit, schedule, certificate, instrument delivered
pursuant to this Agreement shall survive the Closing for a period of two (2)
years. No investigation made by the Public Company or the Private Company or any
of their representatives shall affect the enforceability of any such
representations, warranties, covenants, or undertakings or their survival.
5.02 No Liabilities. On and after the Closing under this Agreement, no
former shareholder, officer or director of the Private Company or Public Company
shall, solely by virtue of such status, have any personal liability or
obligation for the debts or other liabilities incurred by the Private Company or
the Public Company or on behalf of the Private Company or Public Company from
and after the Closing. Nothing herein shall diminish in any way any liabilities
or obligations of any such person arising from the specific terms of this
Agreement, including representations and warranties, indemnification, etc.
5.03 Indemnification. The Private Company shall indemnify, defend and
hold harmless the Public Company and their successors and assigns, from and
against any and all loss, liability, claim or expense (including without
limitation reasonable attorneys' fees) incurred or suffered as a result of a
material breach of a representation or warranty by either of them or failure to
comply with this Agreement including all exhibits. The Public Company shall
indemnify and hold harmless the Private Company from and against all loss,
liability claim or expense (including reasonable attorneys fees) which either of
them may incur or suffer as a result of a material breach of a representation or
warranty by the Public Company or failure by the Public Company to comply with
this Agreement including all exhibits. The provisions of this Section 5.02 shall
survive the Closing. For purposes of this section, a loss, liability, claim or
expense shall not be deemed material except to the extent that it exceeds
$15,000. No claim for indemnity may be brought more than two years after the
Closing Date. This right of indemnity shall not be deemed exclusive of other
remedies provided by law or by contract.
ARTICLE VI OTHER AGREEMENTS
6.01 Continuing Operation of Business. The Public Company and the
Private Company agree that after execution of this Agreement and prior to the
Closing (except upon the prior written consent of the Public Company and/or the
Private Company which will not be unreasonably withheld) they will do the
following:
(a) Carry on their business diligently and in the ordinary course.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
19
(b) Not incur any additional liabilities or obligations in excess of
$10,000 except such liabilities or obligations as the Shareholders consider to
be reasonable and necessary for the business.
(c) Not to organize or engage in any other business or to divert any
business outside the Company.
(d) Not to increase the compensation of any employee of the Company.
(e) Not to license, assign, sell, transfer or encumber any of the
property or assets of the Company including development rights to any new
products or services, other than in the ordinary course of business.
(f) Not to do any act, or omit to do any act, or to permit any act or
omission to act, any of which will cause a breach of any contract, agreement,
commitment or understanding to which the Company is a party or by which it is
bound that is likely to materially and adversely affect its business or
financial condition; and
(g) To prepare and file all required returns for taxes, and other tax
reports, filings and amendments thereof required to be filed, and to allow
Public Company to review all such returns, reports, filings, and amendments
prior to the filing thereof.
6.02 Inspection; Updated Financial Statements.
(a) Inspection. The Private Company and the Public Company shall allow
the each other and their authorized employees and mutually approved
representatives full access during normal business hours and prior to the
Closing Date to all of the properties and records of the Company and shall at
their own expense furnish to the Public Company and its representatives such
information concerning the Company as they may reasonably request. The Public
Company and the Private Company and their representatives shall have the right
to review and copy such records as they may deem advisable, and shall advise the
each other of those items of which copies are made. All such investigations and
copies shall be undertaken in strictest confidence and upon request the Public
Company and the Private Company and, if requested, each representative shall
sign a confidentiality agreement before being permitted to proceed. The Public
Company, the Private Company and their representatives, if the transactions
contemplated herein are not consummated, the Public Company and the Private
Company and their representatives, shall treat all information obtained from
others, and not otherwise known to such party or already in the public domain,
as confidential, and if the transactions contemplated herein are not
consummated, each party shall return to each other party all materials and
copies made of materials belonging to the other party.
(b) Updated Financial Statements. Without limiting the foregoing, the
Public Company and the Private Company shall cause to be prepared and shall
deliver to each other monthly as requested, as soon as practicable after they
have been prepared, unaudited consolidated financial statements (including
without limitation, a balance sheet and statements of income and cash flow for
the month and cumulative) of their respective companies as prepared in the
ordinary course of business, for periods ending after the date of the last
Financials delivered hereunder.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
20
6.03 No Negotiations. From the date hereof until the Closing or until
this Agreement is terminated as provided in Article VII, the Private Company and
the Public Company shall not, and will direct the officers, directors,
representatives, financial advisors and counsel of the Private Company and the
Public Company not to solicit or enter into any discussions or negotiations
with, or furnish or cause to be furnished any information concerning, the
Private Company or the Public Company to any person or entity (other than the
other party and its representatives) in connection with any acquisition of all
or any interest in the Private Company or Public Company or product or service
developed by the Public Company or the Private Company, whether by merger, sale
or purchase of equity interests, sale of all or substantially all of the assets
or other takeover or business combination involving any of them.
6.04 Good Faith Efforts; Further Assurances; Cooperation. The parties
hereto shall in good faith undertake to perform their obligations herein, to
satisfy all conditions and to cause the transactions contemplated herein to be
carried out promptly in accordance with the terms hereof. Upon the execution of
this Agreement and thereafter, each party shall do such things as may be
reasonably requested by the other parties hereto in order more effectively to
consummate or document the transactions contemplated by this Agreement. The
parties shall cooperate fully with each other and their respective officers,
directors, employees, agents, counsel, accountants and other designees in
connection with any steps required to be taken as part of their respective
obligations under this Agreement.
6.05 Brokerage Commissions. Each of the parties hereby agrees for the
benefit of the others that, other than as stated in the Disclosure Schedule, no
person, firm, corporation or other entity is entitled to any brokerage
commission or finder's fee in connection with any of the transactions
contemplated by this Agreement, arising out of acts by him or it or his or its
employees or agents. The Public Company agrees to indemnify and hold harmless
the Private Company from and against any and all claims or demands for such
commissions or fees based on any arrangement made by the Public Company, and the
Private Company agrees to so indemnify and hold harmless the Public Company from
and against any and all claims or demands for such commissions or fees based on
any arrangement made by the Private Company.
6.06 Public Announcements. All press releases or other public
announcements or information provided relating to the Public Company or the
Private Company and their affairs shall be pre-approved by the President of each
party prior to release to the public or filing with regulatory authorities. All
parties will use their best efforts to cooperate to comply with legal
requirements applicable to the release of information about the transaction and
the Public Company and the Private Company.
6.07 Right of Registration. The shareholders of the Private Company
shall acquire the Shares of the Public Company for investment and not with a
view to distribution and all certificates evidencing the Shares will bear a
legend that they may not be sold or transferred except pursuant to an effective
registration statement or pursuant to an opinion of counsel that such sale or
transfer may take place without violation of law.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
21
ARTICLE VII TERMINATION AND ABANDONMENT; SPECIFIC PERFORMANCE
7.01 Termination and Abandonment. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual agreement of the Private Company and Public Company;
(b) by the Public Company if the conditions set forth in Sections 2.03
and 2.05 and Article III shall not have been complied with or performed in any
material respect and such non-compliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated) on or
before the Closing Date; provided, however, that if such non-compliance or
nonperformance can be cured or eliminated, the Public Company shall not so
terminate unless it has given the Private Company written notice that
non-compliance or non-performance has occurred, specifying the nature thereof
and the action required to cure, and (ii) such non-compliance or non-performance
shall not have been cured or eliminated within fifteen (15) days of receipt of
such notice;
(c) by the Private Company if the conditions set forth in sections 2.04
and 2.06 and Article IV shall have not been complied with or performed in any
material respect and such non-compliance or non-performance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated) on or
before the Closing Date; provided, however, if such non-compliance or
non-performance can be cured or eliminated, the Private Company shall not so
terminate unless and until (i) it has given the Public Company written notice
that non-compliance or non-performance has occurred, specifying the nature
thereof and the action required to cure, and (ii) such non-compliance or
non-performance shall not have been cured or eliminated within fifteen (15) days
of receipt of such notice;
(d) by the Public Company or the Private Company by written notice to
the other, if any action or proceeding shall have been instituted before any
court or other governmental body or by any public authority or any private
person, firm, corporation or entity to restrain or prohibit or question the
validity or legality of the transactions contemplated by this Agreement or to
subject one or more of the parties to this Agreement or the directors or
officers of Public Company or the Private Company to liability on the grounds
that it or they have breached any law or regulation or otherwise acted
improperly in connection with such transactions, other than an action, suit or
proceeding instituted by a person other than a governmental authority which, in
the written opinion of counsel to the party receiving notice of termination,
does not have a substantial likelihood of success; or
(e) by the Public Company or the Private Company if the Closing has not
occurred on or before the required Date of Closing or any agreed upon extension.
7.02 Specific Performance and Other Remedies. The parties hereto each
acknowledge that the rights of the others to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails and refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the event
that he or it violates or fails or refuses to perform any covenant or agreement
made by him or it herein, the non breaching party or parties may, in addition to
any remedies at law for damages or other relief, institute and prosecute an
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
22
action in any court of competent jurisdiction to enforce specific performance of
such covenant or agreement or seek any other equitable relief. In addition,
within a period of six (6) months following the Date of Closing, should either
party be or become in default under any of the terms and conditions of this
Agreement which survive the Closing, either party may within such period, and
acting by vote of holders of a majority of the Company shares immediately
preceding the Closing, upon written notice delivered to the other party rescind
the transaction and tender all the Acquisition Shares and receive back in return
all the Company Shares, thus returning the Company to the status of a separate
and independent company which may continue to operate as its own separate
business. This is in addition to any other remedies possessed by the party at
law or in equity.
7.03 Rights and Obligations on Termination.
(a) Redelivery. If this Agreement is terminated and abandoned as
provided herein, or should either party exercise its rights of rescission as set
forth in Section 7.02 above, each party hereto will redeliver all documents,
work papers and other materials and information, including all copies and
summaries thereof of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same, and all information received by any party hereto with
respect to the business of any other party shall not at any time be used for the
advantage of, or disclosed to third parties by, such party to the detriment of
the party furnishing such information; provided, however, that this paragraph
shall not apply to any documents, work papers, materials, or information which
are a matter of public knowledge or which have heretofore been or are hereafter
published in any publication for public distribution or filed as public
information with any governmental authority.
(b) Continuing Liability. The continuing liability of the parties to
this Agreement with respect to any breach of any representation, warranty,
covenant or agreement contained in this Agreement shall not be affected by such
termination.
ARTICLE VIII MISCELLANEOUS PROVISIONS
8.01 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
section hereunder pursuant to which it is given, and shall be deemed given on
the date delivered if delivered in person or on the third business day after it
is mailed if mailed certified first class mail return receipt requested (with
postage and other fees prepaid) as follows:
To the Public Company: SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc.
Xx. Xxxxx X. Xxxxx
00000 Xxxxxx Xx.
Xxxxxxx Xxxx, XX 00000
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
23
To the Private Company: IC One Inc.
Mr. Xxxx Xxxxxxx
700 South 000 Xxxx Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
or to such other representative or at such other address as a party hereto may
furnish to the other parties in writing. If notice is given of a permitted
successor or assign of a party hereto, the notice shall be given as set forth
above to such successor or assign of such party.
8.02 Exhibits and Schedules. All enumerated exhibits and schedules to
this Agreement, and any attachments thereto, are hereby incorporated into this
Agreement and hereby are made a part hereof as if set out in full in the first
place that reference is made thereto. All exhibits, schedules, certificates,
information and lists to be disclosed in writing and delivered pursuant to this
Agreement shall, if not attached to this Agreement, be delivered to the
appropriate party at the address indicated above, shall indicate the section
hereunder pursuant to which it was delivered or mailed, and shall be signed or
initialed by the party or parties or an attorney-in-fact of the party or parties
delivering the same.
8.03 Time of the Essence, Computation of Time. Time is of the essence
of each and every provision of this Agreement which, by its terms, calls for
performance by a specified date. Whenever the last day for the exercise of any
privilege or the discharge of any duty hereunder shall fall upon Saturday,
Sunday or any public or legal holiday, whether state or federal, the party
having such privilege or duty may exercise such privilege or discharge such duty
on the next succeeding regular business day.
8.04 Assignment; Successors in Interest. No assignment or transfer by
Public Company or Private Company of its rights and obligations hereunder prior
to the Closing shall be made except with the prior written consent of the other
party(ies). This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective legal representatives, heirs,
descendants and permitted successors and assigns, and any reference to a party
hereto shall also be a reference to a permitted successor or assign.
8.05 Number; Gender. Whenever the context so requires, the singular
number shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall include the other genders.
8.06 Captions; Certain Definitions. The titles and captions contained
in this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of the provisions hereof. The parties agree to all definitions in the
statement of parties hereto and in the other introductory language. Unless
otherwise specified to the contrary, all references to Articles and Sections are
references to Articles and Sections of this Agreement and all references to
Exhibits and Schedules are references to Exhibits and Schedules to this
Agreement.
8.07 Controlling Law, Integration, Amendment; Waiver. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Utah. This Agreement and the other agreements contemplated hereby
supersede all prior negotiations, agreements and understandings between the
parties with respect to the subject matter hereof, constitute the entire
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
24
agreement between the parties and may not be altered or amended except in
writing signed by the Public Company and the Private Company. The failure of any
party hereto at any time or times to require performance of any provisions
hereof shall in no manner affect the right to enforce the same. No waiver by any
party hereto of any condition, or of the breach of any term, provision,
warranty, representation, agreement or covenant contained in this Agreement or
the other agreements contemplated hereby, whether by conduct or otherwise, in
any one or more instances shall be deemed or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, provision, warranty,
representation, agreement or covenant herein or therein contained.
8.08 Expenses. Each party hereto agrees to pay its own expenses of this
Agreement and the transactions contemplated hereby.
8.09 Arbitration of Disputes. In the event of any controversy or claim
arising out of or relating to this Agreement or any act or omission of a party
hereunder (a "dispute"), either party (by written notice to the other) may
invoke the procedures of this section. Promptly after such notice is given, the
Shareholders and senior management of the Public Company and the Private Company
will meet to attempt to negotiate a settlement of all pending disputes. If for
any reason the parties have not entered into a written settlement of the
dispute(s) within 30 days after the original notice, either party may give
notice demanding arbitration. Thereafter all pending disputes shall be settled
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, or such other rules and procedures as the
parties may hereafter consent to in writing. The arbitration shall occur in Salt
Lake City, Utah, or such other location as is mutually acceptable to the
parties. The arbitrator (or a majority thereof, if more than one) shall be
licensed to practiced law in Utah and experienced in corporate and contract law,
and the arbitrator(s) shall be required to decide each claim in accordance with
applicable law and to set forth briefly in writing the award, the rationale of
the decision, and those facts considered by the arbitrator(s) to be material to
such decision. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. This agreement to arbitrate shall be
enforceable under the Uniform Arbitration Act. In any action to compel
arbitration under this section or to enforce an arbitrament, the prevailing
party shall be entitled to an award of its reasonable expenses, including
attorneys' fees.
8.10 Counterparts. This Agreement may be signed by each party upon a
separate copy and in such case one counterpart of this Agreement shall consist
of enough of such copies to reflect the signatures of each party. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement or the
terms hereof to produce or account for more than one of such counterparts. This
Agreement shall become effective when one or more counterparts have been signed
by each of the parties and delivered to each of the other parties.
8.11 Consent to Jurisdiction. Each of the parties agrees that any suit,
action or proceeding arising out of or relating to this Agreement may be
instituted in any state or federal court in Salt Lake County, Utah, and each of
the parties waives any objection which it may now or hereafter have to the venue
of any such suit, action or proceeding and irrevocably consents and submits to
the jurisdiction of any such court in any such suit, action or proceeding.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
25
8.12 Severability. In the event that any court of competent
jurisdiction shall determine that any provision of this Agreement is invalid,
such determination shall not affect the validity of any other provision of this
Agreement, which shall remain in full force and effect and which shall be
construed as to be valid under applicable law.
8.13 Board of Directors of Public Company. Upon Closing, the current
Board members of the Public Company will all resign after they have appointed an
interim Board of Directors, pending approval by a full shareholders meeting to
be made up of a total of five members. The new Board of Directors will be Xxx
Xxxxxx, Xxxx Xxxxxxxxxxx, Xxxxx Xxxxxx, and Xxxxx Xxxxx.
8.14 It is the intention of all parties to this agreement that the
pre-merger shareholders of the Public Company will own 10% of IC Smartworld,
Inc., when this contract has been consummated.
8.15 All parties to this contract agree to make any technical changes
to this contract required for legal or tax purposes.
DULY EXECUTED BY the parties hereto, under seal, as of the day and year first
above written.
Public Company: SCHIMATIC CASH TRANSACTIONS XXXXXXX.XXX, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Xxxxx Xxxxx
Private Company: IC ONE, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------------------
Xxxx Xxxxxxx
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
26
EXHIBIT A
Shareholders of IC One, Inc. (Private Company)
Shareholders of SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc. (Public Company)
XXXXX X. XXXXX 845,170
XXXXXXX XXXXX 805,000
XXXXXXX X. OR XXXX X. XXXX 596,176
XXX XXXXXXXX 449,750
XXXX XXXXXXX TRUST 200,750
XXXX X. XXXXX 205,625
XXXX XXXXXXXX 205,625
XXXXXX FAMILY TRUST 200,000
XXXXXXX X. XXXXXXX 300,500
XXXX XXXXXXX TRUST 125,000
XXXXX XXXXXX TRUST 150,000
XXXXX XXXXXX TRUST 150,000
DAY SIMON TRUST 150,000
XXXXXXX XXXXX TRUST 150,000
XXXXXXXX XXXXX TRUST 150,000
XXXXXX XXXX TRUST 150,000
XXXXX XXXXX TRUST 150,000
XXXXXX XXXXXX TRUST 150,000
XXXXX XXXXXX 106,045
XXX XXXXXXX 101,783
XXXX XXXXXXX TRUST 100,000
XXXXX XXXXXXX TRUST 100,000
XXXXXXX XXXXXX AL MUGHAIRY 100,000
XXXXXXX X. XXXXXX 100,000
XXXXXX X. XXXXXXX AND XXXXXXXX 53,272
XXX JTWROS XXXXXXX
XXXX MARKS 61,142
XXX XXXXXX 61,142
XXXXX XXXXXXXX TRUST 50,000
XXXXX XXXXXX 2000 SHARES TO XXXXXX 25,218
XXXXXX AND XXXXX XXXXXXXXXX 40,000
XXXXX AND XXXXX XXXXXX 40,000
XXXXXX XXXXXXX 40,000
XXXXXXX AND XXXXXX GILBERSTEIN 40,000
XXXXX XXXX illegible
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
A-1
XXXX XXX 39,356
XXXXXX XXXXXXXX illegible
XXXXX X. AND XXXXXX XXXX 29,833
XXXX X. XXXXX 25,000
XXXXX AND XXXXX XXXXXX illegible
XXXX XXXXXXXXX illegible
XXX XXXXXXXXX illegible
AVI X. XXXXXXXXX 20,000
XXXXX X. XXXXXXXX TRUST 20,000
XXXX XXXXXXXX illegible
XXXXXXX LAUTOUR 54,154
XXXX X. XXXXX TRUST 10,000
XXXXXX X. XXXXXXXX TRUST 10,000
XXXX XXXX 10,000
XXXXXX XXXXXXXXXXXX 10,000
XXXXX X. XXXXXXXX TRUST 10,000
XXXXXX X. XXXXXXXX TRUST 10,000
XXXXXX X. XXXXXXXX TRUST 10,000
XXXXXXXXX X. XXXXXXXX TRUST 10,000
XXXXX X. XXXXXXXX TRUST 10,000
XXXXX XXXXXXXX TRUST 10,000
XXXXX BLU XXXXXXX TRUST 10,000
XXXXXXX X. XXXXXXXX 10,000
XXXX X. XXXXXXXX TRUST 10,000
XXXXXX X. XXXXXX 8,524
XXXXX XXXXXXXX 8,000
XXXXX XXXXX 8,000
XXXX FOTO illegible
XXXXX XXXXXXX 5,001
XXXXXX XXXXXXX 5,001
BRESHA FAMILY TRUST 5,000
XXXXX XXXX 5,000
XXXXXXX X. XXXXXXXXX 5,000
XXXXXXX XXXXX 5,000
XXXXXX XXX TIRELLA 4,262
XXXXX XXXXX 4,262
XXXXX XXXXXX 4,262
CABKO CORPORATION 3,201
XXXXXX XXXXX 3,201
XXXXX X. AND/OR XXXXXXXXX XXXXXXXX 3,201
XXXXXX AND XXXXX XXXXXXX 2,500
XXXX XXXXX 2,367
XXXX XXXXXXXXXXX 2,367
XXXX XXXXXX 2,237
XXXXXX XXXXXX 2,131
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
A-2
XXXX XXXXXX illegible
WESTERN BARTER CORP illegible
XXX XXXXXXX illegible
XXXXX XXXXX illegible
XXXXXXX XXXXXX 1,419
XXXXXX X. XXXXXX 1,000
XXXXX XXXXXXX 1,000
XXXXXX X. XXXXXXXX 1,000
XXXXXXX XXXX 1,000
XXXXX XXXXXXXXX 1,000
XXXX XXXXXX 946
XXXXX XXXXXXX 000
XXXXX X'XXXX 000
XXXXXXX X. XXXXXXXX 482
X. XXXXXX AND/OR XXXXX X. XXXX 473
XXXX XXXXXX illegible
XXXXXXXX XXXXXX 320
XXXXXX X. XXXXXXXX 320
XXXXXXX X. XXXXXXXX 320
XXXXXXXX X. XXXXXXXX 320
XXXXXX XXX 250
XXXXX AND XXXX XXXXX 96
XXXXXX X. XXXXXX 136,000
CEDE & CO. 415,180
XXXXXX XXXXXX illegible
XXXXX XXXXXXXXXX illegible
XXXX XXXXXXXXX 1,000
LEWCO SECURITIES 1,000
XXXX X. XXXXXXX 125,000
XXXX XXXXXXX 1,000
XXXXXXX X. XXXXXXX 1,000
XXXXX XXXXXXXX illegible
XXXXX XXXXXXX 1,000
DIAMOND FAMILY TRUST 250,000
XXXXXXX & XXXX XXXXXX 2,000
XXXX XXXXXX 2,000
XXXXX XXXXXXXX 4,000
SIMON POLLTAKIS 2,000
XXXXXX XXXXXX 5,000
XXXX XXXX TRUST FUND illegible
XXXX XXXXXXXXX illegible
XXXXXX XXXXX 10,000
XXXXX XXXXXXXXX 10,000
XXXXXXXX X. XXXXXXX 500
XXXXXX XXXXXX 10,000
XXXXX XXXXXXX 2,000
XXXX XXXXXXX 1,000
XXXXXX XXXXXX 1,000
XXX XXXX 2,000
XXXXXXXXX XXXXX 20,000
XXXXX XXXXX illegible
XXXXX XXXX illegible
XXXXXXX XXXXXXX illegible
XXX XXXXXXX 7,000
XXX XXXXXXX 7,000
XXXXXXX XXXXXXX 21,000
XXXXXXXX XXXXXXXX 7,000
XXXXXXXXX XXXXX illegible
XXXXX XXXXX illegible
DIAMOND FAMILY TRUST 14,400
XXXXXXXX SYM 25,000
XXXXXX GERMAN 4,000
XXXX XXXXXX 5,000
XXXXXXX XXXXXXX 32,000
-----------
Total WILL BE REDUCED TO 7,100,000 7,970,000
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
A-3
EXHIBIT B
ASSIGNMENT AND ASSUMPTION
July ________, 1999
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged. The undersigned Xxxx Xxxxxxx (the "Shareholder"), by and on behalf
of all the shareholders listed on and signatory to Exhibit 1 attached, hereby
assigns, transfers, quitclaims, remises and releases to SCHIMATIC CASH
TRANSACTIONS XXXXXXX.XXX, INC., a Florida corporation (the "Assignee") all the
Assignor's right, title and interest in and to __________ (__________) shares of
Common Stock of IC One, Inc. a Delaware Corporation (the "Private Company")
constituting not less than eighty percent (80%) of the outstanding and committed
equity interests therein, together with all the Assignor's right, title and
interest in and to the business, properties, assets, good will, licenses and
every other property, thing, chose in action or other right or possession of the
Private Company, including but not limited to the Assets listed in Exhibit 2
attached hereto and made a part hereof. The Assignor agrees to defend title of
the Assignee in and to each and every thing transferred and to execute such
documents and to do all such other and further acts and things as the Assignee
shall reasonably request to confirm and transfer to the Assignee all the
foregoing assets and things.
SUBJECT NEVERTHELESS, to the terms and conditions set forth in the Purchase and
Sale Agreement dated as of June 30, 1999 by and between the Assignor and the
Assignee (the "Purchase and Sale Agreement"). IN WITNESS WHEREOF, each of the
Assignor and the Assignee has hereunto set its hand by its officer hereunto duly
authorized as of the date first set forth above.
ASSIGNOR: ______________________
, individually and on behalf of
Shareholders listed in Exhibit A
COMPANY: IC One, Inc.
By ___________________
Name and Title ___________________
ASSIGNEE:
SCHIMATIC CASH TRANSACTIONS XXXXXXX.XXX, INC.
By ________________________
Name and Title ___________________
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
B-1
EXHIBIT 1
SEE EXHIBIT A TO REVERSE MERGER AGREEMENT
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
B-2
EXHIBIT 2
ASSETS OF IC One, INC. (Private Company)
As of 5/31/99
LIABILITIES OF IC One, INC. (Private Company)
ASSETS OF SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc. (Public Company)
As of 5/31/99
LIABILITIES OF SCHIMATIC Cash Transactions Xxxxxxx.xxx, Inc. (Public Company)
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
B-3
EXHIBIT C
EMPLOYMENT AGREEMENTS
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
C-1
EXHIBIT D
DISCLOSURE SCHEDULE
REFERENCES ARE TO THE APPROPRIATE SECTIONS OF THE REVERSE MERGER
AGREEMENT DATED AS OF JUNE 30, 1999.
PRIVATE COMPANY'S DISCLOSURE
3.01(a) No Change
3.01(c) No Change
3.02(a) No Change
3.02(b) No Change
3.02(c) No Change.
3.02(d) No Change.
3.02(e) No Change.
3.03 No Change
3.04(a) No Change
3.04(b) No Change
3.04(c) No Change
3.05(a) No Change
3.05(b) No Change
3.06(a) List of Contracts. All contracts meet requirements of
Section 3.06(a)
3.06(b) No Change
3.07 No Change
3.08 Officers and Directors; Employment. All such relationships
meet the requirements of Section 3.08
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
-- --
D-1
3.09 No Change
3.10 No Misleading Statements. No such statements or omissions
are present.
3.11(a) No Change
3.11(b) No Change
3.11(c) No Change
3.12 No Change
PUBLIC COMPANY'S DISCLOSURE
4.01(a) No Change
4.01(c) No Change
4.02(a) No Change
4.02(b) No Change
4.02(c) No Change
4.02(d) No Change
4.02(e) MotorSportsApparel receivable is overdue and may be contested.
4.03 No Change
4.04(a) No Change
4.04(b) Laptop Lease.
Las Vegas office lease.
Wilshire office lease.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
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4.04(c) ECWare & Live Picture source code not owned products are
licensed. Cybercash & Verisign are subscribed to, only
integration code is owned.
4.05(a) Preview Marketing
PioneerNet USA
4.05(b) No Change
4.06(a) List of Contracts. All contracts meet requirements of
Section 4.06(a) XxxxxxxxxxxXxxxxxx.xxx Live Picture Cybercash
Verisign ECWare Laptop lease Wilshire office lease Las Vegas
office lease Xxxx Xxxxxxxxx Photography Axis Images Pioneer
Internet Access Xxx Xxxxxxx/Xxxx Xxxxxx Agreement Cell phones
Cohen, Brame, & Xxxxx
4.06(b) No Change
4.07 No Change
4.08 Officers and Directors; Employment. All such relationships
meet the requirements of Section 4.08
4.09 R&D pays to Xxxxx Xxxxx office rent in the amount of $800 per
month for use of Xxxxxxx Oaks office space (1000 sq. ft.).
4.10 No Change
4.11(a) No Change
4.11(b) No Change
4.11(c) No Change
4.12 No Change
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
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EXHIBIT E
MEMORANDUM OF UNDERSTANDING
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
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Various initials
Memorandum of Understanding
This Memorandum of Understanding ("MOU"), dated this June 2, 1999, is
executed by and between IC One, Inc., a Delaware corporation ("IC One"),
Schimatic Technologies, Inc., a Florida Corporation ("STI"), MGM Financial
Corporation, a California corporation ("MGM") and Mortgage Capital, Inc. a Utah
corporation ("MCI").
A. STI is a public corporation traded on NASDAQ (OTC-BB) trading under
the symbol SCTN and engaged in among others, electronic commerce and Internet
services.
B. IC One is a privately held corporation primarily engaged in enabling
electronic commerce using certain patented smart card technology and other
inventions for high speed Internet access.
C. MGM is a privately held corporation primarily engaged in providing
financial consulting services.
D. MCI is a privately held corporation primarily engaged in providing
financial consulting services.
E. IC One and STI want to expand their respective businesses by through
certain business combinations as outline herein. MGM and MCI are acting as
financial consultants to the parties for this transaction and for certain long
term financing.
1. Term. The term of this MOU shall commence on the date stated above
and shall, unless earlier terminated as provided herein, automatically terminate
sixty (60) days thereafter.
2. Documentation. The parties intend to finalize this transaction
through one or more final documents that will be drafted and negotiated as soon
as possible after the effective date of this MOU ("Final Documents").
3. IC One and STI Business Combination. IC One will agree to grant STI
an exclusive license to all of its proprietary intellectual property, exclusive
of licenses already granted in the ordinary course of business to others. IC One
will also transfer 10% of restricted common stock or approximately 5 million
shares, to STI. In exchange STI will issue 42.6 million shares of restricted
stock to IC One and 300 thousand shares to MGM. After the transaction, IC One
will own approximately 87% of STI. After the transaction, IC One agrees that it
will not, without the consent of a majority of the current shareholders if STI,
engage in any transaction that results in financial dilution to such
shareholders. After the transaction, IC One agrees to exercise its control of
STI to cause STI to execute an employment agreement with Xxxxx X. Xxxxx and to
elect him to the board of directors of IC One.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
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4. MGM Bridge Financing. MGM agrees to provide bridge financing to IC
One and STI in the amount of $250,000 and $50,000 respectively, by wire transfer
within twenty-four hours of the effective date of this MOU. The bridge financing
will be in the form of notes payable and the terms will be negotiated by the
parties thereto following the execution of this MOU.
5. Warranties and Representations.
5.1 IC One warrants and represents that it has authorized
capital of 50 million shares, of which approximately 48 million are issued,
outstanding or committed for issuance.
5.2 STI warrants and represents that it is a public
corporation currently traded on NASDAQ (OTC-BB) and has authorized capital of 50
million shares of which approximately 7.1 million shares are issued and
outstanding.
5.3 Each of the parties hereto shall be required to make usual
and customary warranties and representations regarding the transactions
contemplated hereby in the Final Documents. Such warranties and representations
shall be satisfactory to the parties that are intended to be beneficiaries of
such warranties and representations.
6. Long-Term Financing. The parties agree to cooperate in raising
additional financing for IC One and STI. The parties expect that IC One and MGM,
and STI and MGM will negotiate shortly after the execution of this MOU
additional financing agreements whereby IC One agrees to pledge as collateral
its key smart card patent for additional bridge financing in the amount of $2.75
million to carry IC One through the consummation of the transactions
contemplated hereby. MGM and STI will negotiate a bridge loan in the amount of
$250 thousand to carry it through the consummation of the transactions
contemplated hereby. MGM will release the patent as collateral upon payment of
the note.
7. Termination. Either STI or IC One may terminate this MOU upon
written notice to the other party in the event that either STI or IC One, as the
case may be, determines during the course of due diligence that any of the
warranties and representations made herein, or required to be made herein, are
materially false. In addition, either party may terminate this MOU if any party
fails to comply with its obligations hereunder.
8. Miscellaneous. The substantive laws of the State of Utah shall
govern this MOU. Any litigation undertaken under this MOU to enforce the terms
of this MOU or arising out of the negotiations leading up to this MOU shall be
subject to the exclusive jurisdiction in the State of Utah. This MOU integrates
all other discussions, memoranda, documentation coming within the scope of this
MOU and merges all prior such discussions, memoranda and documents.
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
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E-3
9. Signatures.
IC One, Inc. Schimatic Technologies, Inc.
Signature /s/ Xxxxxx X. Xxxxxxx Signature /s/ Xxxxx X. Xxxxx
------------------------ ------------------------
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxx
President Chief Executive Officer
MGM Financial Corporation Mortgage Capital, Inc.
Signature /s/ Xxxx Xxxxxxxx Signature /s/ Xxxxx X. Xxxxxx
------------------------ ------------------------
Xxxx Xxxxxxxx Xxxxx X. Xxxxxx
President President/Chairman
Initialed by Xxxx Xxxxxxx SB Initialed by Xxxxx Xxxxx DS
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E-4
