Exhibit 2.1
________________________________________
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
IDI GLOBAL, INC.
AND
SPORTS MEDIA INTERNATIONAL, INC.
AND
INTEGRATED COMMUNICATION SYSTEMS, INC.
Dated as of October 3, 2003
_________________________________________
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS..................................................3
ARTICLE 2 THE MERGER...................................................5
2.1 The Merger...................................................5
2.2 Effective Time; Closing......................................6
2.3 Effect of the Merger.........................................6
2.4 Organizational Documents.....................................6
2.5 Directors and Officers.......................................6
2.6 Merger Consideration.........................................7
2.7 Surrender of Certificates....................................8
2.8 No Further Ownership Rights in Company Stock.................8
2.9 Tax Consequences.............................................8
2.10 Taking of Necessary Action; Further Action...................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY................8
3.1 Authority....................................................8
3.2 Due Organization.............................................8
3.3 Capital Stock................................................9
3.4 Subsidiaries.................................................9
3.5 No Conflicts.................................................9
3.6 Financial Statements........................................10
3.7 Absence of Undisclosed Liabilities..........................10
3.8 Absence of Certain Changes..................................10
3.9 Taxes.......................................................10
3.10 Voting......................................................10
3.11 Litigation..................................................11
3.12 Intellectual Property.......................................11
3.13 Material Contracts; No Defaults.............................11
3.14 No Finders..................................................11
3.15 Employee Relations..........................................11
3.16 Transactions With Affiliates................................12
3.17 Compliance with Securities Laws.............................12
3.18 Disclosure..................................................12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER ENTITY ..........................................12
4.1 Authority ..................................................12
4.2 Organization of Parent......................................12
4.3 Organization of Merger Sub..................................12
4.4 Capital Stock of Parent.....................................13
4.5 Capital Stock of Merger Sub.................................13
4.6 Subsidiaries................................................13
4.7 No Conflicts................................................13
4.8 SEC Reports; Financial Statements...........................14
4.9 Absence of Undisclosed Liabilities..........................14
4.10 Absence of Certain Changes..................................14
4.11 Taxes.......................................................15
4.12 Litigation..................................................15
4.13 Intellectual Property.......................................15
4.14 Material Contracts; No Defaults.............................16
4.15 No Finders..................................................16
4.16 Securities Law Compliance...................................16
4.17 Employee Relations..........................................16
4.18 Compliance with Securities Laws.............................16
4.19 Disclosure..................................................16
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS OF
PARENT AND MERGER ENTITY....................................16
5.1 Representations and Warranties..............................16
5.2 Performance.................................................16
5.3 Orders and Laws.............................................17
5.4 Regulatory Consents and Approvals; Third Party Consents.....17
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY..............18
6.1 Representations and Warranties Performance..................18
6.3 Regulatory Consents and Approvals...........................18
6.4 Orders and Laws.............................................18
ARTICLE 7 COVENANTS...................................................18
7.1 Indemnification.............................................18
7.2 Conduct of Business Pending Completion of Merger............18
ARTICLE 8 TERMINATION OF REPRESENTATIONS AND WARRANTIES...............18
8.1 Termination of Representations, Warranties..................18
ARTICLE 9 TERMINATION.................................................18
9.1 Termination.................................................18
9.2 Effect of Termination.......................................19
ARTICLE 10 CERTAIN ADDITIONAL MATTERS..................................19
10.1 Management..................................................19
ARTICLE 11 RESOLUTION OF CONTROVERSIES AND DISPUTES....................19
11.1 Scope.......................................................19
ARTICLE 12 MISCELLANEOUS...............................................19
12.1 Notices.....................................................19
12.2 Entire Agreement............................................20
12.3 Expenses....................................................20
12.4 Waiver......................................................20
12.5 Amendment...................................................20
12.6 No Assignment; Binding Effect...............................20
12.7 Headings....................................................20
12.8 Invalid Provisions..........................................21
12.9 Governing Law...............................................21
12.10 Counterparts................................................21
12.11 No Negative Inference against Preparer......................21
12.12 Third Parties...............................................21
12.13 No Admission of Liability...................................21
TABLE OF EXHIBITS
Employment Agreement (Xxxx Xxxxxxx) Exhibit A
Integrated Communications System, Inc. Shareholder List Exhibit B
Indemnification Agreement Exhibit C
AGREEMENT AND PLAN OF MERGER
This Agreement And Plan Of Merger (this "Agreement") is made and entered
into as of October __, 2003, among IDI Global, Inc., a Nevada corporation
("IDI" or "Parent"), Sports Media International, Inc., a Nevada corporation
("Merger Sub") and Integrated Communication Systems, Inc., a New York
corporation ("ICS" or the "Company"), with principal reference to the
following facts:
RECITALS
A. When Parent, Merger Sub and the Company are referred to
collectively in this Agreement, they are the "Parties;" whenever the singular
or masculine is used in this Agreement the same shall be deemed to include the
plural or the feminine or the body corporate, as the context may require.
B. Upon the terms and subject to the conditions of this Agreement
and in accordance with the Nevada Revised Statutes ("Nevada Law"), Parent,
Merger Sub, and the Company intend to enter into a business combination
transaction wherein Parent will acquire all of the outstanding stock of the
Company through the Merger Sub, with such transaction being structured as a
merger.
C. The Board of Directors of the Company (i) has determined that
the Merger is fair and advisable to, and in the best interests of, the Company
and its stockholders (the "Shareholders" or "Stockholders"), (ii) has approved
this Agreement, the Merger and the other transactions contemplated by this
Agreement and (iii) subject to the terms and conditions of this Agreement, has
determined to recommend that the stockholders of the Company adopt and approve
this Agreement and approve the Merger.
D. The Board of Directors of Parent has determined that the Merger
is fair to, and in the best interests of Parent and Merger Sub and has
approved this Agreement, the Merger and the other transactions contemplated by
this Agreement.
E. The Parties intend, by executing this Agreement, to effect a
"forward triangular merger" by the applicable definition set forth in 26 CFR
1.358-6(b)(2)(i) of the Internal Revenue Code of 1986, as amended (the
"Code").
F. Contemporaneously with the execution and delivery of this
Agreement, a principal Stockholder will enter into and deliver an employment
agreement (hereinafter the "Employment Agreement"), a copy of which is
attached hereto as Exhibit "A".
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined have
the meanings set forth below. Unless the context otherwise requires, such
terms shall include the singular and plural and the conjunctive and
disjunctive forms of the terms defined.
"Actions or Proceedings" means any action, suit, proceeding, arbitration
or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means any Person that directly, or indirectly through one of
more intermediaries, controls, or is controlled by, or is under common control
with the Person specified. For purposes of this definition, control of a
Person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such Person whether by Contract or otherwise
and, in any event and without limitation of the previous sentence, any Person
who is the beneficial owner (as such term is used under Section 13(d) of the
Exchange Act) of ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without
limitation cash, cash equivalents, Investment Assets, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles, real
estate, equipment, inventory, goods and Intellectual Property.
"Business Day" means a day other than (i) Saturday, (ii) Sunday, or
(iii) any day on which banks located in the States of Nevada and New York are
authorized or obligated to close for business.
"Business or Condition" means the business, condition (financial or
otherwise), results of operations, Assets and Properties and prospects of the
referenced party taken as a whole. "Code" is defined as the Internal Revenue
Code of 1986, as amended.
"Company Disclosure Schedule" means the records delivered to Parent by
Company herewith, each containing the lists, descriptions, exceptions and
other information and materials as are required to be included therein
pursuant to this Agreement.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract
(whether written or oral).
"CFR" means the United States Code of Federal Regulations, as amended.
"Exchange Act" is defined as the Securities Exchange Act of 1934, as
amended.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality
of the United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision.
"Intellectual Property" means: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and re-examinations thereof; (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith; (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals); (e) all
computer software (including source code, data and related documentation), (f)
all other proprietary rights; and (g) all copies and tangible embodiments
thereof in whatever form or medium
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Authority.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale contract, title retention contract or other contract to
give any of the foregoing.
"Nevada Law" is defined as the applicable provisions of the Nevada
Revised Statutes (i) as such statutes apply to corporations formed and
organized within that state, or (ii) as said statutes apply to domestic
corporations entering into and performing contracts made and performed in
another jurisdiction within the United States; whereby, the terms and
provisions of any such contracts would encroach upon the assets of a Nevada
domestic corporation.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares
of capital stock of such Person or any security of any kind convertible into
or exchangeable or exercisable for any shares of capital stock of such Person
or (ii) receive or exercise any benefits or rights similar to any rights
enjoyed by or accruing to the holder of shares of capital stock of such
Person, including any rights to participate in the equity or income of such
Person or to participate in or direct the election of any directors or
officers of such Person or the manner in which any shares of capital stock of
such Person are voted.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Parent Disclosure Schedule" means the records delivered to the Company
by Parent herewith, each containing the lists, descriptions, exceptions and
other information and materials as are required to be included therein
pursuant to this Agreement.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust,
union, association or Governmental or Regulatory Authority.
ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time (as defined in Section 2.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Nevada Law, the Company shall be merged with and into
the Merger Sub (the "Merger"), the separate corporate existence of the Company
shall cease and the Merger Sub shall continue as the surviving entity. The
Merger Sub as the surviving entity after the Merger is hereinafter sometimes
referred to as the "Surviving Company."
2.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the Parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger with the Secretary of State of the State of New
York, and Articles of Merger with the Secretary of State of the State of
Nevada in accordance with the relevant provisions of New York Law and Nevada
Law (the "Certificates of Merger") (the time of such filing with the
Secretaries of State of the States of New York and Nevada (or such later time
as may be agreed in writing by the Company and Merger Sub and specified in the
Certificates of Merger) being the "Effective Time") as soon as practicable on
or after the Closing Date (as herein defined) but in no event later than 5
Business Days after the Closing Date. Unless the context otherwise requires,
the term "Agreement" as used herein refers collectively to this Agreement and
Plan of Merger and the Certificates of Merger. The closing of the Merger (the
"Closing") shall take place at the corporate offices of IDI Global, Inc. 000
Xxxx 000 Xxxxx, Xxxx, Xxxx 00000, at a time and date to be specified by the
Parties, which shall be no later than the fifth Business Day after the
satisfaction or waiver of the conditions set forth in Articles 5 and 6 (the
"Closing Date").
2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
New York and Nevada Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and the Merger Sub shall vest in the
Surviving Company, and all of the several debts, duties and obligations of the
Company and the Merger Sub, respectively, shall become the debts, liabilities,
duties and obligations of the Surviving Company.
2.4 Organizational Documents. Unless otherwise agreed to in writing by
the Company and Merger Sub prior to the Effective Time, the Articles of
Incorporation of the and Bylaws of the Merger Sub shall be the organizational
documents of the Surviving Company.
2.5 Directors and Officers. The directors and officers of the Company
shall be the directors and officers of the Surviving Company. Xxxx Xxxxxxx
shall have the authority to appoint and/or designate other officers.
2.6 Merger Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the Stockholders, or,
generally, the holders of any of the following securities, the following shall
occur:
(a) Conversion of Company Stock.
(i) At the Closing, the Shareholders will assign, transfer
and deliver to Parent, free and clear of all liens, pledges, encumbrances,
charges, restrictions or known claims of any kind, nature or description,
including but not limited to the conversions of ICS debt into equity
(pre-merger), 190.89 (one hundred ninety and a fractional share) shares of ICS
common stock which represents 100% of the issued and outstanding shares of ICS
(a copy of the shareholders list of ICS is attached hereto as "Exhibit B") in
exchange for 954,600 (nine hundred fifty four thousand six hundred) shares of
IDI's common stock, par value $.001 (the "Parent Stock"), and 378,450 (three
hundred seventy eight thousand four hundred fifty) warrants (the "Warrants")
to purchase common shares at $1.70 per share shall be delivered at the
Closing. The allocation of Parent Stock and the Warrants shall be delivered to
each Shareholder in accordance with Exhibit B attached hereto. Subsequent to
the date hereof, the Shareholders shall, upon the surrender of the ICS
certificates representing its beneficial and record ownership of the issued
and outstanding shares of ICS to Parent or as soon as practicable hereafter,
and pursuant to the exemptions from the registration provisions of Section 5
of the Securities Act of 1933, provided by Sections 3 and 4 of that Act, each
of the Shareholders shall be entitled to receive an exchange certificate(s)
evidencing shares of Parent Stock as provided for herein and a Warrant. The
954,600 (nine hundred fifty four thousand six hundred) common shares of Parent
Stock and 378,450 (three hundred seventy eight thousand four hundred fifty)
Warrants to purchase common stock shall have piggy back registration rights on
terms at least equal in all respects to the terms of piggy back registration
rights held by other holders of Parent's stock. Each Warrant shall contain
customary anti-dilution provisions. Upon the consummation of the triangular
merger transaction contemplated herein, ICS shall be merged into the Merger
Sub and thus become a wholly-owned subsidiary of Parent.
(ii) If any shares of Company Stock outstanding immediately prior
to the Effective Time are unvested or are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Stock issued in exchange for such shares of Company Stock will also be
unvested and subject to the same repurchase option, risk of forfeiture or
other condition, and the certificates representing such shares of Parent Stock
may accordingly be marked with appropriate legends. The Company shall take all
action that may be necessary to ensure that, from and after the Effective
Time, Parent is entitled to exercise any such repurchase option or other right
set forth in any such restricted stock purchase agreement or other agreement.
2.7 Surrender of Certificates.
(a) Exchange Procedures. Promptly after the Effective Time, Parent
shall make available for exchange in accordance with this Article 2, the
shares of Parent Stock issuable pursuant to Section 2.6 in exchange for
outstanding shares of Company Stock. Each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates") which,
as of such record date and immediately prior to the Effective Time,
represented the total issued and outstanding shares of Company Stock, whose
shares will be converted into the right to receive shares of Parent Stock
shall surrender its certificate or certificates, and shall be entitled to
receive in exchange therefore, a certificate or certificates representing the
number of whole shares of Parent Stock with respect to the shares of Company
Stock represented by such Certificate and the Certificates so surrendered
shall forthwith be canceled.
(b) Transfers of Ownership. If certificates for shares of Parent
Stock are to be issued in a name other than that in which the Certificates
surrendered in exchange therefore are registered, it will be a condition of
the issuance thereof that the Certificates so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the Persons
requesting such exchange will have paid to Parent or any agent designated by
it, any transfer or other taxes and any fees payable to the Parent's stock
transfer agent, required by reason of the issuance of certificates for shares
of Parent Stock in any name other than that of the registered holder of the
Certificates surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(c) Legends. The certificates evidencing the shares of Parent
Stock shall bear the legend set forth below (or substantially equivalent
legends), together with other legends required by the laws of the State of
Nevada:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 AS AMENDED, HAVING BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO REDISTRIBUTE. THEY MAY NOT BE SOLD OR OFFERED
FOR IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SHARES UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION AND AN EXEMPTION FROM THE SECURITIES ACT
OF 1933 AS AMENDED, IS AVAILABLE AND THAT SUCH REGISTRATION
IS NOT REQUIRED, OR IN THE ALTERNATIVE THAT SUCH SHARES
MAY BE SOLD UNDER RULE 144 AS PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION OF THE UNITED STATES.
2.8 No Further Ownership Rights in Company Stock. All shares of Parent
Stock issued upon the surrender for exchange of shares of Company Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Stock. There
shall be no further registration of transfers on the records of the Company or
the Surviving Company of shares of Company Stock, which were outstanding
immediately prior to the Effective Time. If after the Effective Time
certificates evidencing ownership on the Company are presented to the
Surviving Company or Parent for any reason, they shall be canceled and
exchanged.
2.9 Tax Consequences. It is intended by the Parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code, and in particular a triangular merger within the definition rendered
by 26 CFR 1.358-6(b)(2)(i). The Parties hereto adopt this Agreement in order
to effect a transaction that qualifies as a "plan of reorganization" and in
particular a "triangular merger" under Section 368(a)(1)(A) or under Section
368(a)(1)(G) of the Code by reason of the application of Section 368(a)(2)(D)
of the Code.
2.10 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Entity with full
right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and
directors of the Company and Merger Sub will take all such lawful and
necessary action, so long as such action is consistent with this Agreement.
Parent shall cause Merger Sub to perform fully all of its obligations relating
to this Agreement and the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Company Disclosure Schedule, the Company represents
and warrants to Parent and to Merger Sub as follows:
3.1 Authority. Except as set forth in Section 3.2 of the Company
Disclosure Schedule the Company has all requisite corporate power and
authority to enter into and deliver this Agreement, to perform its obligations
hereunder and, subject to authorization of the Merger and the transactions
contemplated hereby by the stockholders of the Company, to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
the Company have been duly authorized by all necessary corporate action on the
part of the Company, subject to authorization of the Merger and the
transactions contemplated hereby by the stockholders of the Company. This
Agreement has been duly and validly executed and delivered by the Company,
constitutes a legal, valid and binding obligation of the Company, and is
enforceable against Company in accordance with its terms.
3.2 Due Organization. Except as set forth in Section 3.2 of the
Company Disclosure Schedule, the Company, a New York corporation, is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is duly authorized, qualified
and licensed under all applicable laws, regulations, ordinances and orders of
public authorities to own, operate and lease its properties and assets and to
carry on its business in the places and in the manners it has been and is now
being conducted except for such failures to be so authorized, qualified and
licensed as could not reasonably be expected, in the aggregate, to have a
material adverse effect on the business, operations or financial condition of
the Company taken as a whole. Except as set forth in Section 3.2 of the
Company Disclosure Schedule, the Company is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for those jurisdictions in which the adverse effects of all
such failures by the Company could not be reasonably expected to have a
material adverse effect on its business or on the transactions contemplated by
this Agreement. The Company has, prior to the execution of this Agreement,
delivered to Parent true and complete copies of its Certificate of
Incorporation, bylaws, and other charter documents as in effect on the date
hereof.
3.3 Capital Stock.
(a) The authorized capital stock of the Company consists of:
190.89 (one hundred ninety and a fractional share) shares of Common Stock, of
which 190.89 (one hundred ninety and a fractional share) shares had been
issued and were outstanding as of the date hereof. As of the date of this
Agreement, there are no shares of Company Common Stock held in treasury by the
Company. No shares of the Company Common Stock are the subject of any
registration statement required to be filed, or having been filed, with the
Securities and Exchange Commission.
(b) As of the date of this Agreement, there are no outstanding
stock options, subscriptions, options, warrants, equity securities, or similar
ownership interests, calls, rights (including preemptive rights), commitments
or agreements of any character ("Equity Equivalents") to which the Company is
a party or by which it is bound obligating the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, or similar ownership interests of the Company or
obligating the Company to grant, extend, accelerate the vesting of or enter
into any such subscription, option, warrant, equity security, call, right,
commitment or agreement. Except as set forth in Section 3.3 of the Company
Disclosure Schedules, as of the date of this Agreement, except as contemplated
by this Agreement, there are no registration rights and there is no voting
trust, proxy, rights plan, anti-takeover plan or other agreement or
understanding to which the Company is a party or by which any of them is bound
with respect to any equity security of any class of the Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class.
3.4 Subsidiaries. The Company' does not have, nor has it ever had, any
Subsidiaries.
3.5 No Conflicts. The execution and delivery by the Company of this
Agreement does not, and the performance by it of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will
not:
(a) Conflict with or result in a material violation or breach of
any of the terms, conditions or provisions of any article contained in the
Certificate of Incorporation or by-laws of the Company;
(b) Conflict with or result in a material violation or breach of
any term or provision of any Law or Order applicable to Company or any of its
Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require the Company to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, (iv) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, (v) result
in or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under, or (vi) result in the
creation or imposition of any Lien upon any of the Assets or Properties of the
Company pursuant to, any Contract or License to which the Company is a party
or by which any of its Assets and Properties is bound, except for any of the
foregoing which, taken together, would not reasonably be expected to have a
material adverse effect on the business, operations or financial condition of
the Company taken as a whole.
3.6 Financial Statements. The Company has provided to a Parent an
unaudited (pro-forma basis) balance sheet and consolidated statement of income
and cash flows. The Company has also provided 2002 corporate tax returns.
Each of Parent and Merger Sub acknowledges and agrees that (a) the pro-forma
analysis includes projections or other forward-looking statements and
information regarding a variety of items; (b) such forward-looking statements
are based upon current expectations and involve risks and uncertainties; and
(c) actual results may differ materially from those stated in any
forward-looking statement based on a number of important factors and risks.
Although the Company may believe that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate or incorrect and, therefore, there can be no assurance that the
results contemplated in the forward-looking statements will be realized.
3.7 Absence of Undisclosed Liabilities. To the knowledge of the
Company, except (i) as and to the extent reflected or disclosed in the Company
Financial Statements and (ii) to the extent of reserves taken, the Company
does not have any material liabilities or obligations of a nature required by
GAAP, as consistently applied by the Company, to be reflected on a balance
sheet except for liabilities or obligations which were incurred in the
ordinary course of business.
3.8 Absence of Certain Changes. To the knowledge of the Company, since
September 30, 2003, the Company has conducted its business in the ordinary
course and there has not been any material adverse change in the business,
operations or financial condition of the Company taken as a whole except as a
result of general economic or industry-wide conditions. To date the Company
has not declared any dividends with respect to its capital stock.
3.9 Taxes.
(a) Except as set forth in Section 3.9 of the Company Disclosure
Schedule, the Company has (i) duly filed with the appropriate federal, state,
local and foreign taxing authorities all Tax Returns (as hereinafter defined)
required to be filed by or with respect to the Company other than those Tax
Returns the failure of which to file would not have a material adverse effect
on the business, operations or financial condition of the Company taken as a
whole, and such Tax Returns are true, correct and complete in all material
respects, and (ii) paid in full or have made adequate provision on their
consolidated balance sheet (in accordance with generally accepted accounting
principles) for all material Taxes (as hereinafter defined) shown to be due on
such tax returns. There are no material liens for Taxes upon the assets of
either the Company except for statutory liens for current taxes not yet due.
Except as set forth in Section 3.9 of the Company Disclosure Schedule, the
Company has not received any notice of deficiency or assessment from any
federal, state, local or foreign taxing authority with respect to liabilities
or Taxes of the Company which has not been fully paid or finally settled, and
any such deficiency or assessment shown on such the Company Disclosure
Schedule is either being contested in good faith through appropriate
proceedings or, in the Company's opinion, is immaterial.
(b) "Taxes" shall mean all taxes, charges, fees, levies,
penalties or other assessments imposed by any United States federal, state,
local, or foreign taxing authority, including, but not limited to income,
excise, property, sales, transfer, franchise, payroll, withholding, social
security or other taxes, including any interest, penalties or additions
attributable thereto.
(c) "Tax Return" shall mean any return, report, information
return or other document (including any related or supporting information)
with respect to Taxes.
3.10 Voting. The affirmative vote of the holders of a majority of the
outstanding shares of the Company Stock is the only vote of the holders of any
class or series of the Company capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
3.11 Litigation. Except as set forth in Section 3.11 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
it (a) which could reasonably be expected to result in a material adverse
effect on the business, operations or financial condition of the Company taken
as a whole, or (b) that in any manner calls into question the validity or
enforceability of this Agreement or any action taken or to be taken in
connection herewith. The Company is not a party or subject to the provisions
of any order, injunction, judgment or decree of any court or government agency
or instrumentality (other than government decrees of general applicability)
which could reasonably be expected to have a material adverse effect on its
businesses, operations and financial conditions, taken as a whole.
3.12 Intellectual Property.
(a) The Company owns or has a license to use all trademarks,
service marks, trade names, and copyrights used in or required for their
businesses as presently conducted, free from any liens or security interests.
No royalty payments, license fees, or other similar payments with respect to
any third party trademark, service xxxx, trade name or copyright is past due
except for any such payments, which are being contested in good faith.
(b) To the best of the Company's knowledge, (i) the Company has
not infringed upon and is not currently infringing upon any third party
copyright or trademark and (ii) the Company has not misappropriated or engaged
in the unauthorized use of any trade secret or similar confidential
information of a third party except for such infringements, misappropriations
and unauthorized use as would not, when taken together, be reasonably expected
to have a material adverse effect on the business, operations or financial
condition of the Company taken as a whole. Except as set forth in Section
3.12(b) of the Company Disclosure Schedule, there are no claims or proceedings
pending or, to the Company's knowledge, threatened in writing within the past
twelve months, against the Company asserting that the Company is infringing or
engaging in the unauthorized use of any intellectual property of any person or
entity.
3.13 Material Contracts; No Defaults. All of the Company's executory
Contracts have been entered into in the ordinary course of business and except
as described in Section 3.13 of the Company Disclosure Schedule and except as
could not reasonably be expected to have a material adverse effect on the
Company taken as a whole, the Company has not received a notice of breach or
termination with respect to any such Contract.
3.14 No Finders. The Company will not be liable directly or indirectly
to pay any brokerage fee, commission, finder's fee or financial advisory or
similar fee by reason of the transactions contemplated by this Agreement to
any person claiming such compensation by reason of any agreement or
relationship with the Company or any affiliate thereof or with the Company or
any of its shareholders or any affiliate thereof.
3.15 Employee Relations. The Company has complied in all material
respects with all applicable laws, rules and regulations that relate to
prices, wages, hours, harassment, access by disabled persons, discrimination
in employment and collective bargaining and neither of them is liable for (i)
any arrears of wages, except to the extent that such arrears are being
contested in good faith, or (ii) for any taxes or penalties for failure to
comply with any of the foregoing, except for such taxes or penalties as are
not reasonably expected, in the aggregate, to have a material adverse effect
on the business, operations or financial condition of the Company taken as a
whole.
3.16 Transactions With Affiliates. Section 3.16 of the Company
Disclosure Schedule hereto lists each material contract, agreement or
arrangement between the Company and any person who is or has ever been an
officer or director of the Company, or a person owning of record or known by
the Company to own beneficially 10% or more of the issued and outstanding
Company Common Stock (an "Affiliated Person"), and which either (i) is to be
performed in whole or in part after the date hereof or (ii) was entered into
within one year before the date hereof. Each such contract, agreement or
arrangement required to be so listed was entered into for a bona fide business
purpose and either (i) the amount paid or received, whether in cash, in
services or in kind, was, in the then reasonable business judgment of the
Company, no less favorable to the Company, than terms available from otherwise
unrelated parties in arm's-length transactions or (ii) a comparable
arrangement was not, in the then reasonable business judgment of the Company
available from a third party. Except as disclosed in Section 3.16 of the
Company Disclosure Schedule hereto or otherwise disclosed herein, no
Affiliated Person has, or has had during the preceding year, to the knowledge
of the Company, any interest, directly or indirectly, in any material
transaction with the Company.
3.17 Compliance with Securities Laws. Except as set forth in Section
3.17 of the Company Disclosure Schedule, all of the securities issued by the
Company within the three years prior to the date of this Agreement were issued
in transactions exempt from registration under the Securities Act of 1933, as
amended, and applicable state securities laws.
3.18 Disclosure. Without limiting any of the representations and
warranties contained herein, no representation or warranty of the Company
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements made not misleading, in light
of the circumstances under which they were made.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth on the Parent Disclosure Schedule, Parent and Merger
Sub represent and warrant to Company and Stockholders as follows:
4.1 Authority. The Parent and each of the Merger Subs have all
requisite corporate and other power and authority to enter into and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
the Parent and each Merger Sub have been duly authorized by all necessary
corporate action on the part of each of them. This Agreement has been duly and
validly executed and delivered by the Parent each Merger Sub, constitutes a
legal, valid and binding obligation of each such party and is enforceable
against each such party in accordance with its terms.
4.2 Organization of Parent. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Parent has full corporate power and authority to conduct its business as and
to the extent now conducted and to own, use and lease its Assets and
Properties. Parent has prior to the execution of this Agreement delivered to
Company true and complete copies of its charter documents as in effect on the
date hereof. Parent is not an "Issuing Corporation" within the meaning of NRS
78.3788.
4.3 Organization of Merger Sub. Merger Sub is a wholly owned
subsidiary of Parent, organized and validly existing under the laws of the
State of Nevada. Merger Sub has full power and authority to conduct its
business to the extent of its obligations hereunder. Parent will deliver true
and complete copies of Merger Sub's charter documents to the Company and
Stockholders prior to the Effective Date. Merger Sub is formed for the purpose
of participating in this transaction and prior to the effective date Merger
Sub will not enter into any agreements, contracts or understandings other than
with respect to the issuance of its capital stock or other similar ownership
units to Parent.
4.4 Capital Stock of Parent. The authorized capital stock of Parent
consists of 50,000,000 authorized shares, par value $.001 per share. The total
number of issued and outstanding shares of Parent Stock prior to the
completion of the Merger is 13,312,500. After the closing of the Merger, the
total number of issued and outstanding shares shall be 14,267,100 which number
shall include 954,600 shares of Parent Stock issued to the Shareholders of the
Company pursuant to this Agreement. Parent shall at all times make available
shares of common stock of the Parent sufficient to be issued upon exercise of
the Warrants. Except as set forth in Section 4.4 of the Parent Disclosure
Schedule, there are no subscriptions, options, warrants, equity securities, or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Parent is a party or by
which it is bound obligating Parent to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital
stock, or similar ownership interests of Parent or obligating Parent to grant,
extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement, except for the
issuance and delivery of those shares of its stock, contemplated to occur in
accordance with the terms and conditions hereunder. As of the date of this
Agreement, except as contemplated by this Agreement, there are no registration
rights and there is no voting trust, proxy, rights plan, anti-takeover plan or
other agreement or understanding to which Parent is a party or by which it is
bound with respect to any equity security of any class of Parent. The Parent
Stock is not the subject of any registration statement which was required to
be filed with the Securities and Exchange Commission or with any state's
securities commissioner.
4.5 Capital Stock of Merger Sub. The authorized capital stock or
ownership units of Merger Sub consists solely of 75,000,000 shares of common
stock, par value .001 per share. The total number of issued and outstanding
shares of common stock is one (1) share, which share is owned by the Parent.
Merger Sub does not have, nor has it ever had, any Subsidiaries. At the
Effective Time, there shall be no subscriptions, options, warrants, equity
securities, or similar ownership interests, calls, rights (including
preemptive rights), commitments, or agreements of any character to which
Parent or Merger Sub will be a party, or by which it will be bound obligating
Merger Sub to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchased, redeemed or to otherwise acquire, or cause the
repurchase, redemption, or acquisition of, any shares of capital stock of
Merger Sub or that will obligate Parent or Merger Sub to grant, extend,
accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement, except for
those commitments for the sale, exchange, and subsequent amalgamation of its
stock, as is contemplated to occur in accordance with the terms and conditions
hereunder. As of the date of this Agreement, except as contemplated by this
Agreement, there are no registration rights and there is no voting trust,
proxy, rights plan, anti-takeover plan or other agreement or understanding to
which Parent or Merger Sub is a party or by which it is bound with respect to
any equity security of any class or other similar ownership interest of Merger
Sub.
4.6 Subsidiaries. The Parent has three Subsidiaries, Internet
Development, Inc., (a Nevada Corporation) a wholly owned corporation, the
Merger Sub and New Connexions, Inc., (a Nevada Corporation). The Parent
currently holds a forty percent (40%) ownership of New Connexions and has the
first right of refusal to acquire up to one hundred percent (100%).
4.7 No Conflicts. The execution and delivery by Parent and Merger Sub
of this Agreement does not, and the performance of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or by-laws
(or other comparable corporate charter documents) of Parent or Merger Sub;
(b) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to Parent, Merger Sub or any of
their respective Assets and Properties; or conflict with or result in a
violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require Parent or Merger Sub to obtain
any consent, approval or action of, make any filing with or give any notice to
any Person as a result or under the terms of, (iv) result in or give to any
Person any right of termination, cancellation, acceleration or modification in
or with respect to, (v) result in or give to any Person any additional rights
or entitlement to increased, additional, accelerated or guaranteed payments
under, or (vi) result in the creation or imposition of any Lien upon Parent,
or any of its respective Assets and Properties pursuant to, any Contract or
License to which it is a party or by which any of its Assets and Properties is
bound except for any of the foregoing which, taken together, would not
reasonably be expected to have a material adverse effect on the business,
operations or financial condition of Parent or Merger Sub.
4.8 SEC Reports; Financial Statements. Parent has filed all forms,
reports and documents with the SEC required under the Securities Act and the
Exchange Act and each SEC Report filed by it (the "SEC Reports") complies with
the Securities Act and the Exchange Act. None of the SEC Reports contained,
when filed, any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
amended prior to the date hereof by a subsequently filed SEC Report. The
consolidated financial statements of Parent included in the SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC in respect
thereof and fairly presented, in conformity with United States generally
accepted accounting principles applied on a consistent basis during the
periods involved ("GAAP") (except as may be indicated in the notes thereto),
the consolidated financial position of Parent and its consolidated
subsidiaries, if any, in each case of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended (subject, in the case of unaudited interim financial statements, to the
absence of complete footnote disclosure and to normal year-end adjustments).
For purposes of this Agreement, "Parent Balance Sheet" means the consolidated
balance sheet of Parent as of December 31, 2002, as set forth in the Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 2002, and
"Parent Balance Sheet Date" means December 31, 2002. Since the Parent Balance
Sheet Date, there has not been any change, or any application or request for
any change, by the Parent or Merger Sub in accounting principles, methods or
policies for financial accounting or Tax purposes, other than as a result of
any changes under GAAP or other relevant accounting principles or changes
required by any applicable Tax rule or regulation.
4.9 Absence of Undisclosed Liabilities. To the knowledge of Parent,
except (i) as and to the extent reflected or disclosed in the Parent Financial
Statements and (ii) to the extent of reserves taken, neither Parent nor Merger
Sub has any material liabilities or obligations of a nature required by GAAP,
as consistently applied by Parent, to be reflected on a balance sheet except
for liabilities or obligations which were incurred in the ordinary course of
business.
4.10 Absence of Certain Changes. Except as set forth in Section 4.10 of
the Parent Disclosure Schedule, Parent and Merger Sub has conducted their
businesses in the ordinary course and there has not been any material adverse
change in the business, operations or financial condition of Parent or Merger
Sub as a whole, except as a result of general economic or industry-wide
conditions. Parent has never declared any type of dividends with respect to
its capital stock.
4.11 Taxes.
(a) Except as set forth in Section 4.11 of the Parent Disclosure
Schedule, Parent and Merger Sub have each (i) duly filed with the appropriate
federal, state, local and foreign taxing authorities all Tax Returns (as
hereinafter defined) required to be filed by or with respect to Parent and
Merger Sub other than those Tax Returns the failure of which to file would not
have a material adverse effect on the business, operations or financial
condition of Parent and Merger Sub taken as a whole, and such Tax Returns are
true, correct and complete in all material respects, and (ii) paid in full or
have made adequate provision on its balance sheet (in accordance with
generally accepted accounting principles) for all material Taxes (as
hereinafter defined) shown to be due on such tax returns. There are no
material liens for Taxes upon the assets of either Parent or Merger Sub except
for statutory liens for current taxes not yet due. Except as set forth in
Section 4.11 of the Parent Disclosure Schedule, neither Parent nor Merger Sub
has received any notice of deficiency or assessment from any federal, state,
local or foreign taxing authority with respect to liabilities or Taxes of
Parent or Merger Sub which has not been fully paid or finally settled, and any
such deficiency or assessment shown on such Schedule is being contested in
good faith through appropriate proceedings.
4.12 Litigation. Except as set forth in Section 4.12 of the Parent
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against it or
Merger Sub (a) which could reasonably be expected to result in a material
adverse effect on the business, operations or financial condition of Parent
and Merger Sub taken as a whole, or (b) that in any manner calls into question
the validity or enforceability of this Agreement or any action taken or to be
taken in connection herewith. Neither Parent nor Merger Sub is a party or
subject to the provisions of any order, injunction, judgment or decree of any
court or government agency or instrumentality (other than government decrees
of general applicability) which could reasonably be expected to have a
material adverse effect on their businesses, operations and financial
conditions, taken as a whole.
4.13 Intellectual Property.
(a) Parent owns or has a license to use all trademarks, service
marks, trade names, and copyrights used in or required for its business or the
business of Merger Sub as presently conducted, free from any liens or security
interests. No royalty payments, license fees, or other similar payments with
respect to any third party trademark, service xxxx, trade name, or copyright
is past due except for any such payments which are being contested in good
faith.
(b) To the best of Parent's knowledge, (i) neither Parent nor
Merger Sub has infringed upon and neither of them is currently infringing
upon, any third party copyright or trademark and (ii) none of them has
misappropriated or engaged in the unauthorized use of trade secret or similar
confidential information of any third party except for such infringements,
misappropriations and unauthorized use as would not, when taken together, be
reasonably expected to have a material adverse effect on the business,
operations or financial condition of Parent and Merger Sub taken as a whole.
Except as set forth in Section 4.13(b) of the Parent Disclosure Schedule,
there are no claims or proceedings pending or, to Parent's knowledge,
threatened in writing within the one year prior to the Closing Date, against
Parent or Merger Sub asserting that Parent or Merger Sub is infringing or
engaging in the unauthorized use of any intellectual property or any person or
entity.
4.14 Material Contracts; No Defaults. All of the Parents and Merger
Sub's executory Contracts have been entered into in the ordinary course of
business and except as described in Section 4.14 of the Parent Disclosure
Schedule and except as could not reasonably be expected to have a material
adverse effect on Parent and Merger Sub, taken as a whole, neither Parent or
Merger Sub has received a notice of breach or termination with respect to any
such Contract.
4.15 No Finders. Neither Parent nor the Merger Sub will be liable
directly or indirectly to pay any brokerage fee, commission, finder's fee or
financial advisory or similar fee by reason of the transactions contemplated
by this Agreement to any person claiming such compensation by reason of any
agreement or relationship with Parent or the Merger Sub or any affiliate
thereof or with Parent or the Merger Sub or any of their shareholders or any
affiliate thereof.
4.16 Securities Law Compliance. Provided that the Surviving Corporation
obtains the appropriate information from each of the holders of Company Stock
pursuant to a Letter of Transmittal in form attached hereto and in reliance
upon and subject to the accuracy of the information set forth therein, the
Parent Stock issuable upon conversion of the Company Stock pursuant to this
Agreement will be exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) of such Act or another exemption from
registration thereunder and will also be exempt from state law registration
requirements.
4.17 Employee Relations. Parent and the Merger Sub have complied in all
material respects with all applicable laws, rules and regulations that relate
to prices, wages, hours, harassment, access by disabled persons,
discrimination in employment and collective bargaining and neither of them is
liable for (i) any arrears of wages, except to the extent that such arrears
are currently be contested in good faith, or (ii) any taxes or penalties for
failure to comply with any of the foregoing, except for such taxes or
penalties as are not reasonably expected, in the aggregate, to have a material
adverse effect on the business, operations or financial condition of Parent or
the Merger Sub taken as a whole.
4.18 Compliance with Securities Laws. Except as set forth in Section
4.19 of the Parent Disclosure Schedule, all of the securities issued by Parent
within the three years prior to the date of this Agreement were issued in
transactions exempt from registration under the Securities Act of 1933, as
amended, and applicable state securities laws.
4.19 Disclosure. Without limiting any of the representations and
warranties contained herein, no representation or warranty of Parent contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made not misleading, in light of the
circumstances under which they were made.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER ENTITY
The obligation of Parent and Merger Sub to consummate the Merger is
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Parent in
its sole discretion):
5.1 Representations and Warranties. Each of the representations and
warranties made by Company in this Agreement (other than those made as of a
specified date earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such representation
or warranty was made on and as of the Closing Date, and any representation or
warranty made as of a specified date earlier than the Closing Date shall have
been true and correct in all material respects on and as of such earlier date.
5.2 Performance. The Company shall have performed and complied with,
in all material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by such Parties at or
before the Closing.
5.3 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or which could reasonably be expected to otherwise result in a
material diminution of the benefits of the transactions contemplated by this
Agreement to Parent, and there shall not be pending on the Closing Date any
Action or Proceeding in, before or by any Governmental or Regulatory Authority
which could reasonably be expected to result in the issuance of any such Order
or the enactment, promulgation or deemed applicability, the Company or the
transactions contemplated by this Agreement of any such Law.
5.4 Regulatory Consents and Approvals; Third Party Consents. All
consents (or in lieu thereof waivers) to the performance by the Company of its
obligations under this Agreement or to the consummation of the transactions
contemplated hereby as are required under any Contract to which Company is a
party or by which its Assets and Properties are bound (a) shall have been
obtained, (b) shall be in form and substance reasonably satisfactory, (c)
shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect, except where
the failure to obtain any such consent (or in lieu thereof waiver) could not
reasonably be expected, individually or in the aggregate with other such
failures, to materially adversely affect Parent or the Business or Condition
of the Company.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY
The obligation of the Company to consummate the Merger is subject to the
fulfillment, at or before the Closing, of each of the following conditions to
the satisfaction of the separate counsels of the Company and the Stockholders
(all or any of which may be waived in whole or in part by Company in its sole
discretion):
6.1 Representations and Warranties. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement (other than those
made as of a specified date earlier than the Closing Date) shall be true and
correct in all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date, and any
representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects on and
as of such earlier date.
6.2 Performance. Parent and Merger Sub shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by
Parent or Merger Sub, respectively, at or before the Closing. The Employment
Agreement shall have been executed and delivered by the Parent at Closing.
6.3 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit Parent and Merger Sub to perform their
obligations under this Agreement and to consummate the transactions
contemplated hereby (a) shall have been duly obtained, made or given, (b)
shall be in form and substance reasonably satisfactory, (c) shall not be
subject to the satisfaction of any condition that has not been satisfied or
waived and (d) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated by
this Agreement shall have occurred.
6.4 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or which could reasonably be expected to otherwise result in a
material diminution of the benefits of the transactions contemplated by this
Agreement to the Company, and there shall not be pending on the Closing Date
any Action or Proceeding in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Parent or
Merger Sub or the transactions contemplated by this Agreement of any such Law.
ARTICLE 7
COVENANTS
7.1 Indemnification. At the Closing, Parent and Merger Sub will each
execute and deliver an indemnification agreement in the form attached hereto
as Exhibit "B" ("Indemnification Agreement") in favor of the stockholders,
directors, and officers of the Company, with regard to any and all liabilities
and obligations of the Company for which they may be personally liable as set
forth in the Indemnification Agreement.
7.2 Conduct of Business Pending Completion of Merger. Prior to the
closing of the Merger, as contemplated by this Agreement, and except as
described hereafter at paragraph 11.2, Parent and the Company each agrees (i)
to conduct its business diligently and substantially in the same manner as
previously conducted, (ii) that it will not issue, sell, encumber or deliver,
or agree to issue, sell, encumber or deliver, any shares of any class of their
capital stock or any securities convertible into any securities in turn so
convertible, or any options, warrants, or other rights calling for the
issuance, sale or delivery of any such shares or convertible securities or
authorize or propose any change in its equity capitalization other than upon
the exercise of Company Options, (iii) that it will not issue any Equity
Equivalents, (iv) that it will not amend its articles of incorporation or
bylaws, except as contemplated by this Agreement and (v) that it will not take
any action that would or would reasonably be expected to prevent, impair or
materially delay its ability to consummate the transactions contemplated by
this Agreement. Parent and the Company will each use commercially reasonable
efforts to preserve intact its business organization and assets and to
maintain its existing relations with customer, employees and business
associates.
ARTICLE 8
TERMINATION OF REPRESENTATIONS AND WARRANTIES
8.1 Termination of Representations, Warranties. The respective
representations and warranties of Company, Parent and Merger Sub contained
herein, or in any certificates or other documents (including, without
limitation, the Employment Agreement delivered in connection herewith prior to
or at the Closing, shall expire on and shall not survive the Closing and the
Effective Time; provided, however, that the covenants set forth herein or in
the other documents (including, without limitation, the Employment Agreement)
delivered in connection herewith intended to be performed after the Closing
and the Effective Time shall continue in full force and effect in accordance
with their terms.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement
of Company, Merger Sub, and Parent;
(b) at any time before the Closing, by Company or Parent, (i) in
the event of a material breach hereof by the non-terminating party if such
non-terminating party fails to cure such breach within five (5) Business Days
following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under
this Agreement becomes impossible or impracticable with the use of
commercially reasonable efforts if the failure of such condition to be
satisfied is not caused by a breach hereof by the terminating party;
9.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 9.1, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of the Company,
Merger Sub, Stockholders, or Parent (or any of their respective officers,
directors, employees, agents or other representatives or Affiliates), except
as provided in the next succeeding sentence and except that the provisions
with respect to expenses in Section 12.3 will continue to apply following any
such termination. Notwithstanding any other provision in this Agreement to the
contrary, termination of this Agreement shall not relieve a party of liability
for any breach of this Agreement existing at the time of such termination, and
the Company or Parent may seek such remedies, including damages and fees of
attorneys, against the other with respect to any such breach as are provided
in this Agreement or as are otherwise available at Law or in equity.
ARTICLE 10
CERTAIN ADDITIONAL MATTERS
10.1 Management. Parent's Board of Directors shall take all such action
as may be necessary, including amending its Articles of Incorporation and
Bylaws, to cause the number of directors on the Board of Directors of the
Parent to be increased by one (1) as of the Effective Time and to cause to be
appointed to Board of Directors of the Parent as of the Effective Time one (1)
designee of the Company stockholders. Each such director shall serve in
accordance with the terms and conditions set forth in the amended Articles of
Incorporation and Bylaws of Parent.
ARTICLE 11
RESOLUTION OF CONTROVERSIES AND DISPUTES.
11.1 Scope. The Parties hereby agree that any and all claims (except
only for requests for injunctive or other equitable relief) whether existing
now, in the past or in the future, as to which the Parties or any of their
Subsidiaries, successors (including the succession resulting from the effect
of the Merger and this Agreement), or affiliates may be adversarial parties,
and whether arising out of this Agreement or from any other cause or action,
will first be submitted to a qualified mediator. If a claim has been submitted
to a qualified mediator and the Parties are unable to reach an agreeable
resolution of the claim within ninety days of the submission of the claim, the
Parties shall be free to pursue further legal action.
ARTICLE 12
MISCELLANEOUS.
12.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class
postage prepaid) to the Parties at the following addresses or facsimile
numbers:
If to Company, addressed to: Integrated Communications Systems, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
If to Parent and/or Merger Sub,
addressed to: IDI Global, Inc.
000 Xxxx 000 Xxxxx
Xxxx, Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section, be deemed given upon sending,
and (iii) if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is received
by any other Person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying such change
to the other party hereto.
12.2 Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the Parties with respect to the subject matter hereof,
and together with the Exhibits hereto contain the entire agreement between the
Parties with respect to the subject matter hereof.
12.3 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are
consummated, each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this Agreement and
the transactions contemplated hereby and thereby.
12.4 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.
12.5 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party
hereto.
12.6 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except for assignments and transfers by operation of Law.
Notwithstanding the preceding sentence, this Agreement is binding upon, inures
to the benefit of and is enforceable by the Parties hereto and their
respective successors and assigns. In addition, the covenants, obligations and
agreements made under this Agreement by the Parent shall inure to the benefit
of and be binding upon any successor corporation or acquirer that merges with
or acquires Parent, whether by way of a stock purchase, asset purchase,
merger, consolidation, reorganization, or similar business combination.
12.7 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
12.8 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
hereof, and (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
12.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Utah applicable to a contract
executed and performed in such State, without giving effect to the conflicts
of laws principles thereof.
12.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Signatures may be
exchanged by telecopy, with original signatures to follow. Each of the Parties
hereto agrees that it will be bound by its own telecopied signature and that
it accepts the telecopied signatures of the other Parties to this Agreement.
The original signature pages shall be forwarded to Parent or its counsel and
Parent or its counsel will provide all of the Parties hereto with a copy of
the entire Agreement.
12.11 No Negative Inference against Preparer. This Agreement is the
result of negotiations between the Parties, each of which is represented by
counsel of their own choosing. All Parties shall be deemed to have drawn this
Agreement and no negative inference or interpretation shall be made by a court
of competent jurisdiction, or by a mediator, against the party whose counsel
drafted this Agreement.
12.12 Third Parties. Any provision herein, to the contrary
notwithstanding, shall not be enforceable by any party other than a party to
this Agreement.
12.13 No Admission of Liability. Neither this Agreement nor the
negotiation, preparation, or submission hereof, shall be, or shall be deemed
or construed to be (i) an admission of (a) any liability by any of the
Parties, or (b) the validity of any claims; or (ii) the basis for any lawsuit
or mediation other than an action to enforce, or to seek damages, or other
remedy at law or equity for the breach of this Agreement.
[The Remainder of this Page Is Blank by Intention,
Signatures on following page]
In Witness Whereof, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first above
written.
PARENT: IDI Global, Inc.
/s/ Xxxxx X. Xxxxxxxx
By: _____________________________
Name: Xxxxx X. Xxxxxxxx
Title: CEO
MERGER SUB: Sports Media International, Inc.
/s/ Xxxxx X. Xxxxxxxx
By: ____________________________
Name: Xxxxx X. Xxxxxxxx
Title: Director
COMPANY: Integrated Communications Systems, Inc.
/s/ Xxxx Xxxxxxx
By: ______________________________
Name: Xxxx Xxxxxxx
Title: President
