EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CARE CONCEPTS I, INC., a Delaware corporation,
THE PRINCIPAL STOCKHOLDERS OF CARE CONCEPTS, INC.
AND
IBID AMERICA, INC., a Florida corporation
NOVEMBER ___ 2002
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of November __, 2002,
by and among CARE CONCEPTS I, INC., a Delaware corporation ("CCI"), the
stockholders of CCI listed on the signature page (collectively, the "Principal
Stockholders") and IBID AMERICA, INC., a Florida corporation ("IBID"). The
corporate parties hereto are sometimes hereinafter referred to collectively as
the "Companies," or individually as a "Company."
WHEREAS, the respective Boards of Directors of the Companies deem it
advisable and in the best interests of their respective stockholders that IBID
be acquired by and become a wholly owned subsidiary of CCI and, in furtherance
thereof, the Boards of Directors of the Companies have approved, as applicable,
the merger of a Florida corporation to be formed and to be a wholly owned
subsidiary of CCI ("Acquisition Sub") with and into IBID, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
Article I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2 hereof), Acquisition Sub shall be
merged (the "Merger") with and into IBID, with IBID being the surviving
corporation in the Merger (the "Surviving Corporation") and the separate
existence of Acquisition Sub shall thereupon cease. The Merger shall have the
effects set forth in Section 607.1106 of the Florida Business Corporation Act
(the "FBCA").
1.2 Effective Time of the Merger. The Merger shall become effective (the
"Effective Time") upon the completion of the filing of properly executed
Articles of Merger with the Secretary of State of the State of Florida, which
filing shall be made on the Closing Date after satisfaction of the conditions
set forth in Article VIII hereof.
Article II
CCI AND THE SURVIVING CORPORATION
2.1 Articles of Incorporation of the Surviving Corporation. The Articles of
Incorporation of IBID shall be the Articles of Incorporation of the Surviving
Corporation, except that such Articles of Incorporation shall be amended and
restated at the Effective Time to read in their entirety substantially the same
as the Articles of Incorporation of Acquisition Sub (with the name of IBID being
substituted for that of Acquisition Sub).
2.2 Bylaws of the Surviving Corporation. The Bylaws of Acquisition Sub as
in effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.3 Directors and Officers of the Surviving Corporation.
(a) The directors of IBID at the Effective Time shall be the initial
directors of the Surviving Corporation of the Merger and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Articles of Incorporation
and Bylaws of the Surviving Corporation, or as otherwise provided by law.
(b) The officers of IBID at the Effective Time shall be the initial
officers of the Surviving Corporation of the Merger and shall hold office from
the Effective Time until removed or until their respective successors are duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
Article III
CONVERSION OF SHARES
3.1 Exchange Ratio. At the Effective Time and subject to Section 7, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Each share of common stock of IBID ("IBID Common Share") issued
and outstanding immediately prior to the Effective Time (other than the Excluded
IBID Shares as defined in Section 3.6 below and IBID Shares held by CCI or any
subsidiary of CCI, if any), shall be converted at the Effective Time into the
right to receive one share of restricted common stock, par value $.0001 per
share, of CCI ("CCI Shares"). The aggregate number of CCI shares to be received
by the IBID shareholders shall be 12,080,827.
(b) At the Effective Time each share of Preferred Stock of IBID ("IBID
Preferred Shares") issued and outstanding immediately prior to the Effective
Time shall be converted at the Effective Time into the right to receive one
share of Preferred Stock of CCI having the same rights, preferences and
privileges as the outstanding Series of IBID Preferred Stock, respectively. The
IBID Common Shares and IBID Preferred Shares are referred to as the "IBID
Shares".
(c) Notwithstanding anything to the contrary in this Agreement, any
holder of IBID Shares who shall exercise the rights of a dissenting shareholder
pursuant to and strictly in accordance with the provisions of the FBCA shall be
entitled to receive only the payment therein provided for and shall not be
entitled to receive IBID Shares. Such payment shall be made directly by the
Surviving Corporation.
(d) At the Effective Time, all IBID Shares (other than the Excluded
IBID Shares) shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously
representing any such IBID Shares shall thereafter represent the CCI Shares,
into which such IBID Shares have been converted. Certificates representing IBID
Shares shall be exchanged for certificates representing whole CCI Shares.
(e) If, prior to the Effective Time, CCI should split or combine any
of its outstanding stock or securities, or pay a stock dividend or other stock
distribution in, then the IBID Exchange Ratio shall be appropriately adjusted to
reflect such split, combination, dividend, or other distribution.
(f) Each IBID Share held in treasury (or a subsidiary, as such term is
defined in Article IV hereof) and each such IBID Share held by CCI or any
subsidiary of CCI immediately prior to the Effective Time shall be canceled and
retired and cease to exist, and no CCI Shares shall be issued in exchange
therefor.
(g) Each share of common stock of Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchangeable for one share of common stock of the Surviving Corporation
of the Merger.
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3.2 Exchange of Shares.
(a) Prior to the Effective Time, CCI shall select and enter into an
agreement with a bank or trust company to act as Exchange Agent hereunder (the
"Exchange Agent"). No later than the Effective Time, CCI shall make available,
and each holder of IBID Shares (other than Excluded IBID Shares) shall be
entitled to receive, upon surrender to the Exchange Agent of one or more
certificates representing such IBID Shares for cancellation, certificates
representing the number of CCI Shares into which such IBID Shares are converted
in the Merger. The CCI Shares into which the IBID Shares shall be converted in
the Merger shall be deemed to have been issued at the Effective Time.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding IBID Shares (the "Certificates") whose Shares were converted into
CCI Shares pursuant to Section 3.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as CCI and the
other Companies may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing CCI Shares. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole CCI Shares which such holder has
the right to receive in respect of the Certificates surrendered pursuant to the
provisions of this Article III.
(c) In the event that any stock certificate representing IBID Shares
shall have been lost, stolen, or destroyed, upon the making of an affidavit of
that fact by the person claiming such certificate to be lost, stolen, or
destroyed, CCI shall issue or cause to be issued in exchange for such lost,
stolen, or destroyed certificate the number of CCI Shares into which such shares
are converted in the Merger in accordance with this Article III. When
authorizing such issuance in exchange therefor, the Board of Directors of CCI
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed certificate to give CCI a
bond in such sum as it may direct as indemnity, or such other form of indemnity
as it shall direct, against any claim that may be made against CCI with respect
to the certificate alleged to have been lost, stolen, or destroyed.
3.3 Dividends; Transfer Taxes. No dividends that are declared on CCI Shares
shall be paid to persons entitled to receive certificates representing CCI
Shares until such persons surrender their certificates representing IBID Shares.
Upon such surrender, there shall be paid to the person in whose name the
certificates representing such CCI Shares shall be issued any dividends which
shall have become payable with respect to such CCI Shares between the Effective
Time and the time of such surrender. In no event shall the person entitled to
receive such dividends be entitled to receive interest on such dividends. If any
certificates for any CCI Shares are to be issued in a name other than that in
which the certificate representing IBID Shares surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such CCI Shares in
a name other than that of the registered holder of the certificate surrendered,
or shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of Shares for
any CCI Shares or dividends thereon or, in accordance with Section 3.4 hereof,
the cash payment for fractional interests, delivered to a public official
pursuant to applicable escheat laws.
3.4 No Fractional Securities. No certificates or scrip representing
fractional CCI Shares shall be issued upon the surrender for exchange of
certificates representing Shares pursuant to this Article III and no dividend,
stock split-up, or other change in the capital structure of CCI shall relate to
any fractional security, and such fractional interests shall not entitle the
owner thereof to vote or to any rights of a security holder. In lieu of any such
fractional securities, each holder of Shares who would otherwise have been
entitled to a fraction of an CCI Share upon surrender of stock certificates for
exchange pursuant to this Article III shall be paid cash upon such surrender in
an amount equal to the product of such fraction multiplied by the average
closing price for a CCI Share on the Nasdaq National Market for the five (5)
trading days immediately following the Closing Date (as defined below).
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3.5 Closing of Transfer Books. At the Effective Time, the stock transfer
books of IBID shall be closed and no transfer of IBID Shares shall thereafter be
made. If, after the Effective Time, certificates representing IBID Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing CCI Shares in accordance with the terms hereof. At and
after the Effective Time, the holders of IBID Shares to be exchanged for CCI
Shares pursuant to this Agreement shall cease to have any rights as shareholders
of IBID except for the right to surrender such stock certificates in exchange
for CCI Shares as provided hereunder.
3.6 Dissenting Shares. If holders of IBID Shares are entitled to dissent
from the Merger and demand appraisal of any such IBID Shares in accordance with
the provisions of the FBCA concerning the right of such holders to dissent from
the Merger and demand appraisal of their shares ("Dissenting Holders"), any IBID
Shares held by a Dissenting Holder as to which appraisal has been so demanded
("Excluded IBID Shares") shall not be converted as described in Section 3.1, but
shall from and after the Effective Time represent only the right to receive such
consideration as may be determined to be due to such Dissenting Holder pursuant
to the FBCA; provided, however, that each IBID Share held by a Dissenting Holder
who shall, after the Effective Time, withdraw his demand for appraisal or lose
his right of appraisal with respect to such IBID Shares, in either case pursuant
to the FBCA, shall not be deemed Excluded IBID Shares but shall be deemed to be
converted, as of the Effective Time, into the right to receive CCI Shares in
accordance with the IBID Exchange Ratio, as applicable.
3.7 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Xxxxxx & Xxxx, P.A., 000 Xxxx
Xxx Xxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, at 9 a.m., local
time, on the first business day (the "Closing Date") after the later of (a) the
day on which the meeting of the stockholders of IBID approving the Merger is
held or the Required Stockholders' Consent is executed and delivered to IBID in
compliance with applicable law, or (b) the day on which all of the conditions
set forth in Article VIII hereof are satisfied or waived (other than those
conditions which are to be satisfied at Closing), or at such other date, time
and place as the Companies shall agree.
3.8 Supplementary Action. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either CCI or IBID, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of each, in the name of and on behalf of them as appropriate, to execute
and deliver any and all things necessary or proper to vest or to perfect or
confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
Article IV
REPRESENTATIONS AND WARRANTIES OF IBID
As used in this Agreement, (i) the term "Material Adverse Effect" means,
with respect to CCI or IBID, as the case may be, a material adverse effect on
the business, assets, results of operations, or financial condition of such
party and its subsidiaries taken as a whole or in the ability of such party to
perform its obligations hereunder, and (ii) the word "subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party or any other subsidiary of
such party is a general partner (excluding partnerships the general partnership
interests of which held by such party or any subsidiary of such party do not
have a majority of the voting interests in such partnership) or of which at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporations or other
organizations is directly or indirectly owned or controlled by such party and/or
by any one or more of the subsidiaries.
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IBID represents and warrants, with respect to IBID and its subsidiaries,
except as disclosed to CCI in the IBID Schedule of Exceptions (the "IBID
Schedule"), attached hereto and incorporated herein by this reference, as
follows:
4.1 Organization. Each of IBID and its subsidiaries is a corporation or
limited liability company duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has the corporate or
other power to carry on its business as it is now being conducted or presently
proposed to be conducted. Each of IBID and its subsidiaries is duly qualified as
a foreign corporation or entity to do business, and is in good standing (to the
extent the concept of good standing exists), in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified shall not have a Material Adverse Effect.
4.2 Capitalization. The authorized capital stock of IBID and each of its
subsidiaries is as set forth in Section 4.2 of the IBID Schedule. As of the date
hereof and as of the Effective Time, the number of Shares of IBID which are
issued and outstanding is as set forth in Section 4.2 of the IBID Schedule. All
of the issued and outstanding Shares of IBID are validly issued, fully paid, and
non-assessable and free of preemptive rights or similar rights created by
statute, the Articles of Incorporation or Bylaws of IBID or any agreement by
which IBID or any of its subsidiaries is a party or by which it is bound. Except
(a) as set forth above or, (b) as disclosed in Section 4.2 of the IBID Schedule,
there are not as of the date of this Agreement any shares of capital stock of
IBID issued or outstanding or any options, warrants, subscriptions, calls,
rights, convertible securities, or other agreements or commitments obligating
IBID to issue, transfer, or sell any shares of its capital stock. As of the date
hereof, no bonds, debentures, notes, or other indebtedness having the right to
vote (or convertible into or exercisable for securities having the right to
vote) on any matters on which shareholders of IBID may vote ("Voting Debt") were
issued and outstanding.
4.3 Authority Relative to this Agreement. IBID has the corporate power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by IBID and the consummation by IBID of
the transactions contemplated hereby have been duly authorized by its Board of
Directors, and, except for approval by the requisite votes cast by IBID's
shareholders at the meeting provided for herein or the Required Stockholders'
Consent, no other corporate proceedings on the part of IBID are necessary to
approve this Agreement or the transactions contemplated hereby.
4.4 Consents and Approvals; No Violations. Except filing and recordation of
Articles of Merger under the FBCA, no filing with, and no permit, authorization,
consent, or approval of, any public body or authority is necessary for the
consummation by IBID of the transactions contemplated by this Agreement. Except
as set forth in Section 4.4 of the IBID Schedule, neither the execution and
delivery of this Agreement by IBID, nor the consummation by it of the
transactions contemplated hereby, nor compliance by IBID with any of the
provisions hereof, shall (a) result in any breach of the Articles of
Incorporation or Bylaws of IBID, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, or acceleration) under, any
of the terms, conditions, or provisions of any note, bond, mortgage, indenture,
license, contract, agreement, or other instrument or obligation to which IBID or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (c) violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to IBID, any of its subsidiaries
or any of their properties or assets, except in the case of clauses (b) and (c)
for violations, breaches, or defaults that would not have a Material Adverse
Effect.
4.5 Financial Statements. Except as set forth in Section 4.5 of the IBID
Schedule, the audited balance sheet dated December 31, 2001 and unaudited
balance sheet dated September 30, 2002 (including in the case of the audited
balance sheet, the related notes) fairly presents in all material respects the
consolidated financial position of IBID and its subsidiaries as of the
respective dates thereof, and the other related statements (including in the
case of the audited balance sheet, the related notes) included therein fairly
present in all material respects the results of operations, changes in
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stockholders' equity and cash flows of IBID and its subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein and the absence of any
notes thereto.
4.6 Absence of Certain Changes or Events; Undisclosed Liabilities.
(a) Since December 31, 2001, except as set forth in Section 4.6 of the
IBID Schedule, neither IBID nor any of its subsidiaries has: (i) taken any of
the actions set forth in Sections 6.1 hereof; (ii) incurred any liability
material to IBID and its subsidiaries on a consolidated basis, except in the
ordinary course of its business, consistent with past practices; (iii) suffered
a change, or any event involving a prospective change, in the business, assets,
financial condition, or results of operations of IBID or any of its subsidiaries
which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect, (other than as a result of changes or
proposed changes in federal or state regulations of general applicability or
interpretations thereof, changes in generally accepted accounting principles,
and changes that could, under the circumstances, reasonably have been
anticipated in light of disclosures made in writing by IBID to CCI pursuant
hereto); or (iv) subsequent to the date hereof, except as permitted by Section
6.1 hereof, conducted its business and operations other than in the ordinary
course of business and consistent with past practices.
(b) Neither IBID nor any of its subsidiaries has any liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rising to any liability) except for (i) liability set forth on the face of the
September 30 balance sheet and (ii) liabilities which have risen after the
September 30, 2002 balance sheet in the ordinary course of business (none of
which is material or results from, arises out of, relates to, is in the nature
of, or was caused by any breach of contract, tort, infringement, or violation of
law).
4.7 Litigation. As of the date of this Agreement, (i) there is no action,
suit, judicial, or administrative proceeding, arbitration or investigation
pending or, to the best knowledge of IBID, threatened against or involving IBID
or any of its subsidiaries, or any of their properties or rights, before any
court, arbitrator, or administrative or governmental body; (ii) there is no
judgment, decree, injunction, rule, or order of any court, governmental
department, commission, agency, instrumentality, or arbitrator outstanding
against IBID or any of its subsidiaries; and (iii) IBID and its subsidiaries are
not in violation of any term of any judgments, decrees, injunctions, or orders
outstanding against them. IBID has furnished to CCI in writing, a copy of which
is set forth in Section 4.7 of the IBID Schedule, a description of all
litigation, actions, suits, proceedings, arbitrations, investigations known to
it, judgments, decrees, injunctions or orders pending; or to its best knowledge,
threatened against or involving IBID or any of its subsidiaries, or any of their
properties or rights as of the date hereof.
4.8 Contracts.
(a) Each of the material contracts, instruments, mortgages, notes,
security agreements, leases, agreements, or understandings, whether written or
oral, to which IBID or any of its subsidiaries is a party that relates to or
affects the assets or operations of IBID or any of its subsidiaries or to which
IBID or any of its subsidiaries or their respective assets or operations may be
bound or subject is a valid and binding obligation of IBID and in full force and
effect (with respect to IBID or such subsidiary), except for where the failure
to be in full force and effect would not, individually or in the aggregate, have
a Material Adverse Effect. Section 4.8(a) of the IBID Schedule sets forth a
complete list of all material contracts. For purposes of this Agreement a
material contract shall be any contract or agreement, which involves
consideration in excess of $25,000. Except to the extent that the consummation
of the transactions contemplated by this Agreement may require the consent of
third parties, as disclosed in the IBID Schedule, there are no existing defaults
by IBID or any of its subsidiaries thereunder or, to the knowledge of IBID, by
any other party thereto, which defaults, individually or in the aggregate, would
have a Material Adverse Effect; and no event of default has occurred, and no
event, condition, or occurrence exists, that (whether with or without notice,
lapse of time, or the happening or occurrence of any other event) would
constitute a default by IBID or any of its subsidiaries thereunder which default
would, individually or in the aggregate, have a Material Adverse Effect.
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(b) Except for this Agreement and those set forth on Section 4.8(b) of
the IBID Schedule, neither IBID nor any of its subsidiaries is a party to any
oral or written (i) consulting agreement not terminable on 60 days' or less
notice requiring the payment of more than $25,000 per annum, in the case of any
such agreement with an individual; (ii) joint venture agreement; (iii)
noncompetition or similar agreements that restricts IBID or its subsidiaries
from engaging in a line of business; (iv) agreement with any executive officer
or other employee of IBID or any subsidiary the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving IBID of the nature contemplated by this Agreement and
which provides for the payment of in excess of $10,000; (v) agreement with
respect to any executive officer of IBID or any subsidiary providing any term of
employment or compensation guaranty in excess of $15,000 per annum; or (vi)
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan, or stock purchase plan, any of the benefits of
which shall be increased, or the vesting of the benefits of which shall be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which shall be calculated on
the basis of any of the transactions contemplated by this Agreement.
(c) Except as set forth in Section 4.8(c) of the IBID Schedule, all
employment, consulting, stock option or other similar agreements of IBID and
subsidiaries will be terminated at the Effective Time and no obligations or
liabilities of IBID or its subsidiaries will exist thereunder or as the result
of such termination or otherwise.
4.9 Employee Benefit Plans.
(a) Disclosed in Section 4.9 of the IBID Schedule is a true and
complete list of each written employee benefit plan (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) policy or
agreement that is maintained (all of the foregoing, the "Benefit Plans"), or is
or was contributed to by IBID or any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with IBID would be deemed a
"single employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). A copy of each Benefit Plan
as currently in effect and, if applicable, the most recent Annual Report (Form
5500 Series), Actuarial Report or Valuation, Summary Plan Description, Trust
Agreement, and a Determination Letter issued by the IRS for each Benefit Plan
have heretofore been delivered to CCI. No Benefit Plan was or is subject to
Title IV of ERISA or Section 412 of the Code (including any "multiemployer
plan," as defined in Section 3(37) of ERISA).
(b) Each of the Benefit Plans that are subject to ERISA is in
substantial compliance with ERISA; each of the Benefit Plans intended to be
"qualified" within the meaning of Section 401 (a) of the Internal Revenue Code
of 1986, as amended (the "Code") is so qualified; and no event has occurred, and
to IBID's knowledge, there exists no condition or set of circumstances, in
connection with which IBID or any ERISA Affiliate is or could be subject to
liability (except liability for benefit claims and funding obligations payable
in the ordinary course) under ERISA, the Code, or any other applicable law with
respect to any Benefit Plan.
4.10 Taxes. For the purposes of this section, the term "tax" shall include
all taxes, charges, withholdings, fees, levies, penalties, additions, interest,
or other assessments imposed by any United States federal, state, or local
authority or any other taxing authority on IBID or any of its Tax Affiliates (as
hereinafter defined) as to their respective income, profit, franchise, gross
receipts, payroll, sales, employment, worker's compensation, use, property,
withholding, excise, occupancy, environmental, and other taxes, duties, or
assessments of any nature, whatsoever. Except as set forth in Section 4.10 of
the IBID Schedule, IBID has filed or caused to be filed timely all material
federal, state, local, and foreign tax returns required to be filed by each of
its and any member of its consolidated, combined, unitary, or similar group
(each such member a "Tax Affiliate"). Such returns, reports, and other
information are accurate and complete in all material respects. IBID has paid or
caused to be paid or has made adequate provision or set up an adequate accrual
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or reserve for the payment of, all taxes shown to be due in respect of the
periods for which returns are due, and has established (or shall establish at
least quarterly) an adequate accrual or reserve for the payment of all taxes
payable in respect of the period subsequent to the last of said periods required
to be so accrued or reserved. Neither IBID nor any of its Tax Affiliates has any
material liability for taxes in excess of the amount so paid or accruals or
reserves so established. Except as set forth in Section 4.10 of the IBID
Schedule, neither IBID nor any of its Tax Affiliates is delinquent in the
payment of any tax in excess of the amount reserved or provided therefor, and no
deficiencies for any tax, assessment, or governmental charge in excess of the
amount reserved or provided therefor have been threatened, claimed, proposed, or
assessed. No waiver or extension of time to assess any taxes has been given or
requested. The Internal Revenue Service or comparable state agencies have never
audited IBID's federal and state income tax returns.
4.11 Compliance With Applicable Law. IBID and each of its subsidiaries
holds all material licenses, franchises, permits, variances, exemptions, orders,
approvals, and authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of each of IBID and its subsidiaries is
not being conducted in violation of, any provision of any material federal,
state, local, or foreign statute, law, ordinance, rule, regulation, judgment,
decree, order, concession, grant, franchise, permit or license, or other
governmental authorization or approval applicable to IBID or any of its
subsidiaries.
4.12 Subsidiaries. Section 4.12 of the IBID Schedule lists all the
subsidiaries of IBID as of the date of this Agreement and indicates for each
such corporate or limited liability company subsidiary as of such date the
jurisdiction of incorporation or organization. All of the outstanding shares of
capital stock or other equity interests of each of the subsidiaries are (i) held
by IBID or one of such wholly-owned subsidiaries; (ii) fully paid and
non-assessable; and (iii) owned by IBID or one of such wholly owned subsidiaries
free and clear of any claim, lien, or encumbrance.
4.13 Intellectual Property.
(a) Except to the extent that the inaccuracy of any of the following
(or the circumstances giving rise to such inaccuracy) does not have or could not
reasonably be expected to have a Material Adverse Effect:
(i) IBID and each of its subsidiaries owns, or is licensed or
otherwise has the legally enforceable right to use (in each case, clear of any
liens or encumbrances of any kind), all Intellectual Property (as hereinafter
defined) used in or necessary for the conduct of its business as currently
conducted;
(ii) no claims are pending or, to the best knowledge of IBID,
threatened that IBID or any of its subsidiaries is infringing on or otherwise
violating the rights of any person with regard to any Intellectual Property used
by, owned by, and/or licensed to IBID or any of its subsidiaries and, to the
best knowledge of IBID, there are no valid grounds for any such claims;
(iii) except as set forth on Schedule 4.13(a)(iii) of the IBID
Schedule, to the best knowledge of IBID, no person is infringing on or otherwise
violating any right of IBID or any of its subsidiaries with respect to any
Intellectual Property owned by and/or licensed to IBID or any of its
subsidiaries;
(iv) to the best knowledge of IBID, there are no valid grounds
for any claim challenging the ownership or validity of any Intellectual Property
owned by IBID or any of its subsidiaries or challenging IBID's or any of its
subsidiaries' license or legally enforceable right to use any Intellectual
Property licensed by it; and
(v) to the best knowledge of IBID, all patents, registered
trademarks, service marks, and copyrights held by IBID and each of its
subsidiaries are valid and subsisting.
8
(b) For purposes of this Agreement, "Intellectual Property" means
trademarks (registered or unregistered), service marks, brand names,
certification marks, trade dress, assumed names, trade names, and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patented, patentable, or not in any jurisdiction; trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works of authorship, whether
copyrighted, copyrightable, or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights and computer programs and software (including source code, object code,
and data); licenses, immunities, covenants not to xxx, and the like relating to
the foregoing; and any claims or causes of action arising out of or related to
any infringement or misappropriation of any of the foregoing.
Section 4.13(c) of the IBID Schedule sets forth a list of all domain
names, tradenames, copyrights and trademarks owned by IBID. IBID has full and
complete ownership of all domain names.
4.14 Disclosure of the Representations and Warranties. The representations
and warranties in this Section 4 do not knowingly contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Section 4 in light of the
circumstances when made not misleading.
4.15 IBID Shareholders. Shareholders of IBID are either accredited
investors as such term is defined in the Securities Act of 1933 as amended or
have such knowledge and experience in financial and business matters that are
capable of evaluating the merits and risk of investment in CCI. The number of
accredited investors and non-accredited, sophisticated investors are as set
forth in Section 4.15 of the IBID Schedule. Upon completion of the merger, the
IBID Shareholders shall cause the officers of CCI to file a Form D and make
appropriate state blue sky filing.
IBID acknowledges that each certificate representing a CCI Share shall
contain the following legend:
This security has not been registered under the Securities Act of 1933, as
amended, or any state securities laws. Securities may not be transferred,
signed, sold or offered for sale except pursuant to an effective registration
under said Act in any applicable state securities law or an opinion of counsel,
in form and substance acceptable to CCI, that registration is not required
because of any applicable exemption from such registration requirements.
4.16 Shareholder Approval. IBID has obtained the consent to this Agreement
and the transactions reflected hereby of each of the IBID Shareholders, who are
"accredited investors," and each of the IBID shareholders listed on Schedule
4.16 has agreed to vote their Shares in favor of the Merger, all as reflected in
the agreement among IBID and the IBID Shareholders included in the IBID
Schedule. Schedule 4.16 also lists the ownership of IBID shares held by each
such Shareholder.
Article V
REPRESENTATIONS AND WARRANTIES OF CCI AND THE PRINCIPAL STOCKHOLDERS OF CCI
CCI and the Principal Stockholders represent and warrant, with respect to
CCI and its subsidiaries, which as of the Effective Time shall include
Acquisition Sub, except as disclosed to IBID in the CCI Schedule of Exceptions
(the "CCI Schedule"), attached hereto and incorporated herein by this reference,
as follows:
5.1 Organization. Each of CCI and its subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be conducted.
9
Each of CCI and its subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing (to the extent the concept of good standing
exists), in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified shall not have a Material
Adverse Effect.
5.2 Capitalization.
(a) As of the date hereof, the authorized capital stock of CCI
consists of 30,000,000 shares of common stock and 5,000,000 shares of preferred
stock. As of the date hereof, the number of shares of CCI common stock
outstanding are 600,000. The are no shares of preferred stock outstanding nor
designated. All of the issued and outstanding shares of the capital stock of CCI
are validly issued, fully paid, and non-assessable and free of preemptive rights
or similar rights created by statute, the Articles of Incorporation or Bylaws of
CCI or any agreement by which CCI or any of its subsidiaries is a party or by
which it is bound. There are not as of the date of this Agreement, any issued or
outstanding options, warrants, subscriptions, calls, rights, convertible
securities, or other agreements or commitments obligating CCI to issue,
transfer, or sell any shares of its capital stock.
(b) As of the date hereof, CCI has no assets nor liabilities and all
previously outstanding promissory notes and other forms of indebtedness issued
by CCI have been waived and forgiven by their holders.
(c) As of the date hereof, CCI has no cash or cash equivalents on
deposit with its banks or in accounts maintained with its brokers, all of which
are unrestricted and are not subject to any lien or encumbrance, other than
rights of set-off available to such banks or brokers.
5.3 Authority Relative to this Agreement. CCI has the corporate power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by CCI and the consummation by CCI of
the transactions contemplated hereby have been duly authorized by its Board of
Directors, no other corporate proceedings on the part of CCI are necessary to
approve this Agreement or the transactions contemplated hereby.
5.4 Consents and Approvals; No Violations. Except for applicable
requirements, the Securities Act of 1933 and the Securities Exchange Act of
1934, state law relating to takeovers, if applicable, state securities or blue
sky laws, and, as applicable, filing and recordation of Articles of Merger under
the FBCA, no filing with, and no permit, authorization, consent, or approval of,
any public body or authority is necessary for the consummation by CCI of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by CCI, nor the consummation by it of the transactions
contemplated hereby, nor compliance by CCI with any of the provisions hereof,
shall (a) result in any breach of the Articles of Incorporation or Bylaws of
CCI, (b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, or acceleration) under, any of the terms, conditions,
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement, or other instrument or obligation to which CCI or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (c) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to CCI, any of its subsidiaries or any of their
properties or assets, except in the case of clauses (b) and (c) for violations,
breaches, or defaults that would not have a Material Adverse Effect.
5.5 Financial Statements. The audited balance sheet dated December 31, 2001
and unaudited balance sheet dated September 30, 2002 (including in the case of
the audited balance sheet, the related notes) fairly present in all material
respects the consolidated financial position of CCI and its subsidiaries as of
the respective dates thereof, and the other related statements (including in the
case of the audited balance sheet, the related notes) included therein fairly
present in all material respects the results of operations, changes in
stockholders' equity and cash flows of CCI and its subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein and the absence of any
notes thereto.
10
5.6 Absence of Certain Changes or Events; Undisclosed Liabilities.
(a) Since December 31, 2001, neither CCI nor any of its subsidiaries
has: (i) taken any of the actions set forth in Sections 6.2 hereof; (ii)
incurred any liability material to CCI and its subsidiaries on a consolidated
basis, except in the ordinary course of its business, consistent with past
practices; (iii) suffered a change, or any event involving a prospective change,
in the business, assets, financial condition, or results of operations of CCI or
any of its subsidiaries which has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, (other than as a
result of changes or proposed changes in federal or state regulations of general
applicability or interpretations thereof, changes in generally accepted
accounting principles, and changes that could, under the circumstances,
reasonably have been anticipated in light of disclosures made in writing by CCI
to CCI pursuant hereto); or (iv) subsequent to the date hereof, except as
permitted by Section 6.1 hereof, conducted its business and operations other
than in the ordinary course of business and consistent with past practices.
(b) Neither CCI nor any of its subsidiaries has any liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rising to any liability) except for (i) liability set forth on the face of the
September 30, 2002 balance sheet and (ii) liabilities which have risen after the
September 30, 2002 balance sheet in the ordinary course of business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, tort, infringement, or violation of law).
5.7 Litigation. As of the date of this Agreement, (i) there is no action,
suit, judicial, or administrative proceeding, arbitration or investigation
pending or, to the best knowledge of CCI, threatened against or involving CCI or
any of its subsidiaries, or any of their properties or rights, before any court,
arbitrator, or administrative or governmental body; (ii) there is no judgment,
decree, injunction, rule, or order of any court, governmental department,
commission, agency, instrumentality, or arbitrator outstanding against CCI or
any of its subsidiaries; and (iii) CCI and its subsidiaries are not in violation
of any term of any judgments, decrees, injunctions, or orders outstanding
against them.
5.8 Taxes. For the purposes of this section, the term "tax" shall include
all taxes, charges, withholdings, fees, levies, penalties, additions, interest,
or other assessments imposed by any United States federal, state, or local
authority or any other taxing authority on CCI or any of its Tax Affiliates (as
hereinafter defined) as to their respective income, profit, franchise, gross
receipts, payroll, sales, employment, worker's compensation, use, property,
withholding, excise, occupancy, environmental, and other taxes, duties, or
assessments of any nature, whatsoever. CCI has filed or caused to be filed
timely all material federal, state, local, and foreign tax returns required to
be filed by each of its and any member of its consolidated, combined, unitary,
or similar group (each such member a "Tax Affiliate"). Such returns, reports,
and other information are accurate and complete in all material respects. CCI
has paid or caused to be paid or has made adequate provision or set up an
adequate accrual or reserve for the payment of, all taxes shown to be due in
respect of the periods for which returns are due, and has established (or shall
establish at least quarterly) an adequate accrual or reserve for the payment of
all taxes payable in respect of the period subsequent to the last of said
periods required to be so accrued or reserved. Neither CCI nor any of its Tax
Affiliates has any material liability for taxes in excess of the amount so paid
or accruals or reserves so established. Neither CCI nor any of its Tax
Affiliates is delinquent in the payment of any tax in excess of the amount
reserved or provided therefor, and no deficiencies for any tax, assessment, or
governmental charge in excess of the amount reserved or provided therefor have
been threatened, claimed, proposed, or assessed. No waiver or extension of time
to assess any taxes has been given or requested. The Internal Revenue Service or
comparable state agencies have never audited CCI's federal and state income tax
returns.
5.9 Compliance With Applicable Law. CCI and each of its subsidiaries holds
all licenses, franchises, permits, variances, exemptions, orders, approvals, and
authorizations necessary for the lawful conduct of its business under and
pursuant to, and the business of each of CCI and its subsidiaries is not being
conducted in violation of, any provision of any federal, state, local, or
foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license, or other governmental
authorization or approval applicable to CCI or any of its subsidiaries.
11
5.10 Reports and Financial Statements. CCI has filed all reports required
to be filed by it with the SEC pursuant to the Exchange Act for the past three
years, including, without limitation, an Annual Report on Form 10-KSB for the
year ended December 31, 2001 (collectively, the "CCI SEC Reports"), and has
previously furnished or made available to IBID true and complete copies of all
such CCI SEC Reports. None of such CCI SEC Reports, as of their respective dates
(as amended or supplemented through the date hereof), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the balance
sheets (including the related notes) included in the CCI SEC Reports fairly
presents in all material respects the consolidated financial position of CCI and
its subsidiaries as of the respective dates thereof, and the other related
statements (including the related notes) included therein fairly present in all
material respects the results of operations and cash flows of CCI and its
subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein and
the absence of any notes thereto.
5.11 Absence of Certain Changes or Events. Except as disclosed in the CCI
SEC Reports filed prior to the date of this Agreement, since September 30, 2002,
neither CCI nor any of its subsidiaries has: (a) incurred any liability material
to CCI and its subsidiaries on a consolidated basis, except in the ordinary
course of its business, consistent with past practices; (b) suffered a change,
or any event involving a prospective change, in the business, assets, financial
condition, or results of operations of CCI or any of its subsidiaries which has
had, or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect, (other than as a result of changes or proposed changes
in federal or state regulations of general applicability or interpretations
thereof, changes in generally accepted accounting principles, and changes that
could, under the circumstances, reasonably have been anticipated in light of
disclosures made in writing by CCI to IBID pursuant hereto).
5.12 OTCBB Listing. CCI currently meets and as of the Effective Time, will
meet the requirements for continued listing of its shares of common stock on the
Over the Counter Bulletin Board.
Article VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of IBID's Business Pending the Merger. IBID agrees on its own
behalf and on behalf of its subsidiaries that, during the period from the date
of this Agreement and continuing until the Effective Time:
(a) except as set forth in Schedule 6.1, the respective businesses of
IBID and its subsidiaries shall be conducted only in the ordinary and usual
course of business and consistent with past practices;
(b) IBID and its subsidiaries shall not (i) sell or pledge or agree to
sell or pledge any stock owned by it in any of its subsidiaries; (ii) amend its
Articles of Incorporation or Bylaws; or (iii) split, combine, or reclassify any
shares of its outstanding capital stock or declare, set aside, or pay any
dividend or other distribution payable in cash, stock, or property in respect of
its capital stock, or directly or indirectly redeem, purchase, or otherwise
acquire any shares of its capital stock or other securities or shares of the
capital stock or other securities of any of its subsidiaries;
(c) IBID and its subsidiaries shall not (i) authorize for issuance,
issue, sell, pledge, dispose of, encumber, deliver, or agree or commit to issue,
sell, pledge, or deliver any additional shares (including any shares issuable
12
upon exercise of warrants, stock options or other contractual obligations) of,
or rights of any kind to acquire any shares of, its capital stock of any class
or exchangeable into shares of stock of any class or any Voting Debt (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase, or otherwise); (ii) acquire, dispose of,
transfer, lease, license, mortgage, pledge, or encumber any fixed or other
substantial assets other than in the ordinary course of business and consistent
with past practices; (iii) incur, assume, or prepay any material indebtedness,
liability, or obligation or any other material liabilities or issue any debt
securities other than in the ordinary course of business and consistent with
past practices; (iv) assume, guarantee, endorse, or otherwise become liable or
responsible (whether directly, contingently, or otherwise) for the obligations
any other person (other than a subsidiary) in a material amount other than in
the ordinary course of business and consistent with past practices; (v) make any
material loans, advances, or capital contributions to, or investments in, any
other person, other than to subsidiaries, other than in the ordinary course of
business and consistent with past practices; (vi) fail to maintain adequate
insurance consistent with past practices for their businesses and properties; or
(vii) enter into any contract, agreement, commitment, or arrangement with
respect to any of the foregoing;
(d) IBID shall preserve intact the business organization of IBID and
its subsidiaries, to keep available the services of its and their present
officers and key employees, and to preserve the goodwill of those having
business relationships with it and their respective subsidiaries; provided,
however, that no breach of this covenant shall be deemed to have occurred if a
failure to comply with this Section 6.1(d) occurs as a result of any matter
arising out of the transactions contemplated by this Agreement;
(e) IBID and its subsidiaries shall not knowingly take or allow to be
taken or fail to take any action which act or omission would jeopardize
qualification of the Merger as a "reorganization" within the meaning of Section
368(a) of the Code; and
(f) IBID and its subsidiaries shall use all reasonable efforts to
prevent any representation or warranty of IBID herein from becoming untrue or
incorrect in any material respect.
6.2 Conduct of CCI's Business Pending the Merger. CCI agrees on its own
behalf and on behalf of its subsidiaries that, during the period from the date
of this Agreement and continuing until the Effective Time:
(a) the respective businesses of CCI and its subsidiaries shall be
conducted only in the ordinary and usual course of business and consistent with
past practices;
(b) CCI and its subsidiaries shall not (i) sell or pledge or agree to
sell or pledge any stock owned by it in any of its subsidiaries; (ii) amend its
Articles of Incorporation or Bylaws; or (iii) split, combine, or reclassify any
shares of its outstanding capital stock or declare, set aside, or pay any
dividend or other distribution payable in cash, stock, or property in respect of
its capital stock, or directly or indirectly redeem, purchase, or otherwise
acquire any shares of its capital stock or other securities or shares of the
capital stock or other securities of any of its subsidiaries;
(c) CCI and its subsidiaries shall not (i) authorize for issuance,
issue, sell, pledge, dispose of, encumber, deliver, or agree or commit to issue,
sell, pledge, or deliver any additional shares of, or rights of any kind to
acquire any shares of, its capital stock of any class or exchangeable into
shares of stock of any class or any Voting Debt (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase,
or otherwise), except that CCI may issue Shares required to be issued upon
exercise of existing stock options, warrants, or similar plans, or under other
contractual commitments previously made, which options, warrants, plans, or
commitments have been disclosed in writing to CCI in the CCI Schedule; (ii)
acquire, dispose of, transfer, lease, license, mortgage, pledge, or encumber any
fixed or other substantial assets other than in the ordinary course of business
and consistent with past practices; (iii) incur, assume, or prepay any material
indebtedness, liability, or obligation or any other material liabilities or
issue any debt securities other than in the ordinary course of business and
consistent with past practices; (iv) assume, guarantee, endorse, or otherwise
become liable or responsible (whether directly, contingently, or otherwise) for
13
the obligations any other person (other than a subsidiary) in a material amount
other than in the ordinary course of business and consistent with past
practices; (v) make any material loans, advances, or capital contributions to,
or investments in, any other person, other than to subsidiaries, other than in
the ordinary course of business and consistent with past practices; (vi) fail to
maintain adequate insurance consistent with past practices for their businesses
and properties; or (vii) enter into any contract, agreement, commitment, or
arrangement with respect to any of the foregoing;
(d) CCI shall preserve intact the business organization of CCI and its
subsidiaries, to keep available the services of its and their present officers
and key employees, and to preserve the goodwill of those having business
relationships with it and their respective subsidiaries; provided, however, that
no breach of this covenant shall be deemed to have occurred if a failure to
comply with this Section 6.2(d) occurs as a result of any matter arising out of
the transactions contemplated by this Agreement;
(e) CCI and its subsidiaries shall not knowingly take or allow to be
taken or fail to take any action which act or omission would jeopardize
qualification of the Merger as a "reorganization" within the meaning of Section
368(a) of the Code; and
(f) CCI and its subsidiaries shall use all reasonable efforts to
prevent any representation or warranty of CCI herein from becoming untrue or
incorrect in any material respect.
6.3 Current Information. From the date of this Agreement to the Effective
Time, IBID shall cause one or more of its designated representatives to confer
on a regular and frequent basis with representatives of CCI and to report the
general status of its ongoing operations and to deliver to CCI monthly unaudited
consolidated balance sheets and related consolidated statements of income for
the period since the last such report. IBID shall promptly notify the others of
any material change in the normal course of business or in its or its
subsidiaries' properties.
6.4 Legal Conditions to Merger. Each of CCI and IBID shall, and shall cause
their subsidiaries to, use all reasonable efforts (a) to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on such party or its subsidiaries with respect to the
Merger and to consummate the transactions contemplated by this Agreement,
subject to the appropriate vote or consent of shareholders, and (b) to obtain
(and to cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any governmental entity and/or any
other public or private third party which is required to be obtained or made by
such party or any of its subsidiaries in connection with the Merger and the
transactions contemplated by this Agreement; provided, however, that a party
shall not be obligated to take any action pursuant to the foregoing if the
taking of such action or such compliance or the obtaining of such consent,
authorization, order, approval, or exemption would, in such party's reasonable
opinion, (i) be materially burdensome to such party and its subsidiaries taken
as a whole or impact in such a materially adverse manner the economic or
business benefit of the transactions contemplated by this Agreement as to render
inadvisable the consummation of the Merger, or (ii) result in the imposition of
a condition or restriction on such party or on the Surviving Corporation of the
type referred to in Section 8.1(c). Each of CCI and IBID shall promptly
cooperate with and furnish information to the other in connection with any such
burden suffered by, or requirement imposed upon, any of them or any of their
subsidiaries in connection with the foregoing.
6.5 Advice of Changes; Government Filings. Each party shall confer on a
regular and frequent basis with the other, report on operational matters and
promptly advise the other orally and in writing of any change or event having,
or which, insofar as can reasonably be foreseen, could have, a Material Adverse
Effect on such party or which would cause or constitute a material breach of any
of the representations, warranties, or covenants of such party contained herein.
Each Company shall file all reports required by regulation to be filed by it
with the SEC between the date of this Agreement and the Effective Time and shall
deliver to the other party copies of all such reports promptly after the same
are filed. Except where prohibited by applicable statutes and regulations, each
party shall promptly provide the other (or its counsel) with copies of all other
filings made by such party with any state or federal government entity in
connection with this Agreement or the transactions contemplated hereby.
14
Article VII
ADDITIONAL AGREEMENTS
7.1 Access and Information.
(a) IBID and CCI shall afford to the other party and its financial
advisors, legal counsel, accountants, consultants, and other representatives
access during normal business hours throughout the period from the date hereof
to thirty days subsequent to the date hereof to all of its books, records,
properties, facilities, personnel commitments, and records (including but not
limited to Tax Returns) and, during such period, each shall furnish promptly all
information concerning its business, properties, and personnel as such other
party may reasonably request in order for such other party to fully investigate
the business and affairs of IBID or CCI, as applicable prior to the Effective
Time (the "Inspection").
(b) All information furnished by a party pursuant hereto shall be
treated as the sole property of the furnishing party until consummation of the
Merger contemplated hereby.
7.2 Public Announcements. So long as this Agreement is in effect, each
Company agrees that it shall obtain the approval of the other party prior to
issuing any press release and shall use its best efforts to consult with the
others before otherwise making any public statement or responding to any press
inquiry with respect to this Agreement or the transactions contemplated hereby,
except as may be required by law or any governmental agency if required by such
agency or the rules of the Nasdaq Stock Market.
7.3 Expenses. Subject to Section 9.2 hereof, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except that if the Merger is consummated, each party
shall pay its legal and accounting expenses incurred in connection with the
Merger.
7.4 Additional Agreements.
(a) Subject to the terms and conditions herein provided, including
without limitation those set forth in the proviso to Section 6.4 hereof, each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper,
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents, and approvals, and
to effect all necessary registrations and filings. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors of the
Companies shall take all such necessary action.
(b) Subject to the terms and conditions herein provided, including
without limitation those set forth in the proviso to Section 6.4 hereof, each
Company shall cooperate with the others and use all reasonable efforts to
prepare all necessary documentation to effect promptly all necessary filings and
to obtain all necessary permits, consents, approvals, orders, and authorizations
of or any exemptions by, all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement.
15
(c) At the Effective Time, all members of the CCI Board of Directors
shall resign. Prior to the resignations of the members of the CCI Board of
Directors, the Board of Directors shall nominate the individuals ("New Board of
Directors") listed on Schedule 7.4(c) to serve on the CCI Board of Directors in
accordance with CCI's Articles of Incorporation and Bylaws. The nominations of
the New Board of Directors shall be effective upon compliance with the
requirements of Rule 14f-1 of the Exchange Act. In addition, simultaneously upon
the Effective Time the officers of CCI shall resign their office positions. A
new slate of officers shall be appointed by the New Board of Directors.
(d) Within thirty (30) days after the Effective Time, the New Board of
Directors agree to file on behalf of CCI with the Securities and Exchange
Commission a Form SB-2 Registration Statement for the purpose of registering the
shares of CCI listed on Schedule 7.4(d) which includes all of the shares of the
CCI Principal Stockholders. The New Board of Directors agrees to use its best
efforts to have the Registration Statement declared effective by the SEC as soon
as possible.
7.5 Survival of Representations and Warranties. The respective
representations and warranties of CCI and IBID contained in this Agreement shall
survive the Closing Date for a period of two years (the "Survival Period"), at
the end of which Survival Period no claim may be made with respect to any such
representation or warranty unless such claim shall have been asserted in writing
to the Indemnifying Party during such period.
7.6 Issuance of Securities. For the period commencing as of the date hereof
and ending as of the Effective Time, IBID and CCI agree that they shall not
issue any of their shares of common stock. Following the effective time, CCI
shall not register any shares or options under Form S-8 until the promissory
note issued under a separate agreement with the CCI Principal Stockholders (the
"Purchase Note") shall have been paid in full.
7.7 Indemnification by CCI and the Principal Stockholders. CCI and the
Principal Stockholders, jointly and severally, hereby agree to indemnify and
hold IBID, the Surviving Corporation and their officers, directors, affiliates,
representatives, trustees, grantors, beneficiaries and agents, and any
successors thereto (the "IBID Indemnitees"), harmless from any and all damages,
losses, costs or reasonable expenses (including, without limitation, reasonable
fees and expenses of investigation and reasonable attorneys' and consultants'
fees and expenses in connection with any action suit, or proceeding)
(collectively, "Damages") incurred or suffered as a result of or arising out of:
(i) the breach of any representation or warranty made by or on behalf of CCI or
the Principal Stockholders pursuant to Article V of this Agreement or any other
certificate or document delivered by CCI or the Principal Stockholders pursuant
to this Agreement, and (ii) the breach of any covenant or agreement made or to
be performed by CCI pursuant to this Agreement. Indemnification by an individual
Principal Stockholder is limited to the value of the individual Principal
Stockholder's shares of capital stock of CCI.
7.8 Indemnification by IBID. IBID hereby agrees to indemnify and hold the
Principal Stockholders (the "Principal Stockholder Indemnitees"), harmless from
any and all damages, losses, costs or reasonable expenses (including, without
limitation, reasonable fees and expenses of investigation and reasonable
attorneys' and consultants' fees and expenses in connection with any action
suit, or proceeding) (collectively, "Damages") incurred or suffered as a result
of or arising out of: (i) the breach of any representation or warranty made by
or on behalf of IBID pursuant to Article IV of this Agreement or any other
certificate or document delivered by IBID pursuant to this Agreement, and (ii)
the breach of any covenant or agreement made or to be performed by IBID pursuant
to this Agreement.
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Article VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to the Companies' Obligation to Effect the Merger. The
respective obligations of all Companies to effect the transactions contemplated
herein shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions, any one of which may be waived by a writing signed by
CCI and IBID:
(a) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the shareholders of IBID in
accordance with applicable law or by a written consent of stockholders of IBID
holding majority of the shares of capital stock of IBID entitled to vote on the
Merger (the "Required Stockholders' Consent").
(b) No preliminary or permanent injunction or other order by any
federal, state, or foreign court of competent jurisdiction which prohibits the
consummation of any Merger shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been enacted, entered, issued, promulgated, or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger. Other than the filing of Articles of Merger with the Department of State
for the State of Florida, all authorizations, consents, orders or approvals of,
or declarations or filings with, and all expirations of waiting periods imposed
by, any governmental entity (all of the foregoing, "Consents") which are
necessary for the consummation of the Merger, other than Consents the failure to
obtain which would have no material adverse effect on the consummation of the
Merger or on the Surviving Corporation and its subsidiaries, taken as a whole,
shall have been filed, occurred, or been obtained (all such permits, approvals,
filings, and consents and the lapse of all such waiting periods being referred
to as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect. All state securities or blue sky
permits and other authorizations necessary to issue the CCI Shares in exchange
for the Shares of IBID and to consummate the Merger shall have been received.
(c) There shall not be any action taken, or any statute, rule,
regulation, or order enacted, entered, enforced, or deemed applicable to any
Merger, by any federal or state governmental entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon any Surviving Corporation or its subsidiaries (or, in the ease
of any disposition of assets required in connection with such Requisite
Regulatory Approval, upon any Company or its subsidiaries), including, without
limitation, requirements relating to the disposition of assets, which in any
such case would so materially adversely impact the economic or business benefits
of the transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(d) The other Company shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or prior
to the Effective Time and the representations and warranties of the other
Company contained in this Agreement shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such time,
except as contemplated by this Agreement, and each Company shall have received a
certificate of the Chairman of the Board, the President, or an Executive Vice
President of the other Company as to the satisfaction of this condition.
(e) Each Company shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions contemplated hereby, under any loan or credit agreement, note,
mortgage, indenture, lease, license, or other agreement or instrument, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a material adverse effect on the
Surviving Corporation and its subsidiaries taken as a whole or upon the
consummation of the transactions contemplated hereby.
17
8.2 Conditions to Obligations of CCI. The obligations of CCI to carry out
the transactions contemplated by this Agreement are subject, at the option of
CCI, to the satisfaction, or waiver by CCI, of the following conditions:
(a) No proceeding which IBID shall be a debtor, defendant, or party
seeking an order for its own relief or reorganization shall have been brought or
be pending by or against such person under any United States or state bankruptcy
or insolvency law.
(b) IBID shall have delivered a certificate of an officer of IBID that
it shall have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Effective Time and
the representations and warranties of IBID contained in this Agreement shall be
true and correct in all material respects at and as of the Effective Time as if
made at and as of such time, except as contemplated by this Agreement.
(c) CCI shall have received evidence, satisfactory to it that
transactions contemplated by this Agreement, can be consummated in accordance
with an exemption from applicable state and federal securities laws.
8.3 Conditions to Obligations of IBID. The obligations of IBID to carry out
the transactions contemplated by this Agreement are subject, at the option of
IBID, to the satisfaction, or waiver by IBID, of the following conditions:
(a) No proceeding which CCI shall be a debtor, defendant, or party
seeking an order for its own relief or reorganization shall have been brought or
be pending by or against such person under any United States or state bankruptcy
or insolvency law.
(b) CCI shall deliver (i) a certificate of good standing issued by the
Secretary of the State of Delaware and (ii) a corporate resolution executed by
the CCI Board of Directors approving this Agreement and the transactions herein.
(c) The Principal Stockholders shall deliver executed "lock-up"
agreements in the form of lock-up attached hereto on Schedule 8.3, enforceable
for the purpose of limiting the transfer of the shares of CCI common stock
beneficially owned by the Principal Shareholders. The lock-up agreements shall
be void if the Purchase Note is in default.
(d) CCI shall have delivered a certificate of an officer of CCI that
(i) it shall have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Effective Time and
(ii) the representations and warranties of CCI contained in this Agreement shall
be true and correct in all material respects at and as of the Effective Time as
if made at and as of such time, except as contemplated by this Agreement.
(e) IBID shall have received evidence, satisfactory to it that
transactions contemplated by this Agreement, can be consummated in accordance
with an exemption from applicable state and federal securities laws.
(f) CCI shall deliver the resignations of the members of the CCI Board
of Directors, in a form satisfactory to IBID.
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Article IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the shareholders of IBID:
(a) By mutual written consent of all of the Companies.
(b) By either CCI or IBID if the Merger shall not have been
consummated on or before November 30, 2002, through no fault of the terminating
party.
(c) By CCI or IBID if there shall have been any material breach of a
material obligation of the other hereunder and, if such breach is curable, such
default shall have not been remedied within 10 days after receipt by the other
Company, as the case may be, of notice in writing from such Company specifying
such breach and requesting that it be remedied; provided, that such 10-day
period shall be extended for so long as the other Company shall be making
diligent attempts to cure such default.
(d) By either CCI or IBID if any court of competent jurisdiction in
the United States or other United States governmental body shall have issued an
order, decree, or ruling or taken any other action restraining, enjoining, or
otherwise prohibiting the Merger and such order, decree, ruling, or any other
action shall have become final and non-appealable.
9.2 Effect of Termination. In the event of termination of this Agreement as
provided above, this Agreement shall forthwith become of no further effect and,
except for a termination resulting from a breach by a party to this Agreement,
there shall be no liability or obligation on the part of any Company or their
respective officers or directors. Nothing contained in this Section 9.2 shall
relieve any party from liability for willful breach of this Agreement that
results in termination of this Agreement. Upon request therefor, each party
shall redeliver all documents, work papers, and other material of any other
party relating to the transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing same.
9.3 Amendment. This Agreement may be amended by action taken at any time
before or after approval hereof by the shareholders of IBID, but, after any such
approval, no amendment shall be made which alters the Exchange Ratio or which in
any way materially adversely affects the rights of such shareholders, without
the further approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.4 Waiver. At any time prior to the Effective Time, the parties hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto,
and (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Such extensions or waivers shall be in writing, executed
by each of CCI and IBID. Such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
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Article X
GENERAL PROVISIONS
10.1 Brokers. Each Company represents and warrants to the others that no
broker, finder, or financial advisor is entitled to any brokerage, finder's, or
other fee or commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any party hereto, except as reflected in the IBID Schedule or the CCI Schedule.
10.2 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by telex or telecopy or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to CCI, to:
CARE CONCEPTS, INC.
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
Xxxx X. Agron, Esq.
0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(b) If to IBID, to:
IBID AMERICA, INC.
000 Xxxx XxXxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxx, P.A.
Suite 1700
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
10.3 Descriptive Headings. The headings contained in this Agreement are for
reference Purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.4 Entire Agreement: Assignment. This Agreement (including the Exhibits,
Schedules, and other documents and instruments referred to herein) (a)
constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof; and (b) shall not be assigned by operation
of law or otherwise.
10.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to the
provisions thereof relating to conflicts of law.
20
10.6 Parties in Interest. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefit, or
remedies of any nature whatsoever or by reason of this Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.[include a facsimiles provision]
10.8 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
10.9 Jurisdiction and Venue. Each Party hereto hereby agrees that any
proceeding relating to this Agreement and the Merger shall be brought in the
United States District Court for the Southern District of Florida. Each party
hereto hereby consents to personal jurisdiction in any such action brought in
such court, consents to service of process by registered mail made upon such
party and such party's agent and waives any objection to venue in any such court
or to any claim that such court is an inconvenient form.
10.10 Investigation. The respective representations and warranties of each
Company contained herein or in the certificates or other documents delivered
prior to the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party hereto.
10.11 Consents. For purposes of any provision of this Agreement requiring,
permitting, or providing for the consent of any or Company, the written consent
of the Chief Executive Officer or President of a Company shall be sufficient to
constitute such consent.
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IN WITNESS WHEREOF, each Company has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
CARE CONCEPTS I, INC., a Delaware IBID AMERICA, INC., a Florida corporation
Corporation
By: By:
--------------------------------- -----------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx Xxxxxxx
Title: President Title: President
PRINCIPAL STOCKHOLDERS:
---------------------------------
Xxxx X. Xxxxx
Xxxxxx Family Partners, Ltd.
By:
---------------------------------
Name:
---------------------------------
Its:
---------------------------------
---------------------------------
Xxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
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