AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FIRST SUNRISE, INC.
AND
PLATINUM EXECUTIVE SEARCH, INC.
Executed the 21st of July, 1999
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER by and between First Sunrise, Inc., a Delaware
corporation, ("FSI") and Platinum Executive Search, Inc., a New York
corporation ("PES").
WHEREAS, the respective Boards of Directors of FSI and PES, deem it advisable
for the mutual benefit of FSI and PES, and their respective shareholders, that
PES be merged into FSI (the "Merger"), and have approved this Agreement and
Plan of Merger (the "Agreement"); and
WHEREAS, the respective Boards of Directors of FSI and PES have unanimously
resolved to recommend to their respective shareholders acceptance of the
Merger contemplated herein.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for the purpose of
setting forth certain terms and conditions of the Merger, and the mode of
carrying the same into effect, PES and FSI hereby agree as follows:
ARTICLE 1
MERGER AND ORGANIZATION
SECTION 1.1 The Merger. As of the Effective Date (as hereinafter defined),
subject to the terms and conditions hereof, PES shall be merged with and into
FSI as soon as practicable through FSI's acquisition of 100% of PES's issued
and outstanding shares of common stock in exchange for shares of common stock
of FSI, the surviving entity (the "Surviving Entity"). Immediately after
consummation of the Merger and stock splits as described in Section 2.1
hereof, the Surviving Entity shall be and continue as a public entity, and
shall have issued and outstanding, 5,970,186 shares of common stock, 740,000
shares of preferred stock convertible into 616,667 shares of common stock at
the ratio of 1 share of preferred = 0.833333 shares of common, and options to
acquire 325,000 shares of common stock at the exercise price of $2.00 per
share:
(i) 5,555,475 shares of common stock and 740,000 shares of convertible
preferred stock to be held by former PES shareholders, in each case in
proportion to the amount that each of said shareholders previously held shares
of common stock or convertible preferred stock of PES, as the case may be, and
options to acquire 325,000 shares of additional common stock at the exercise
price of $2.00 per share to be held by the former option holders of PES, in
proportion to the amount of optioned shares that each such option holder
previously held (collectively representing 94% of the Surviving Entity on the
basis of the exercise of the options and the conversion of the preferred into
common, for a total of 5,555,475 + 325,000 + 616,667 or 6,497,142 shares of
common);
(ii) 196,648 (representing 2.84508% of the Surviving Entity) to be held by
the former public shareholders of FSI (who prior to the stock split held
100,000 such shares), in proportion to the amount that each of said
shareholders previously held such public shares of common stock of FSI;
(iii) 152,949 (representing 2.21284% of the Surviving Entity) to be held by
the former insiders of FSI (who prior to the stock split held 600,000 shares
of FSI stock), in the same proportion that each of said shareholders
previously held such shares of FSI stock; and
(iv) 65,114 (representing 0.94206% of the Surviving Entity) to be held by
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
FSI and PES are herein sometimes referred to as the "Constituent
Corporations." The Merger is to be done in such a manner as to be tax-free to
all parties involved.
SECTION 1.2. Effect of Merger. The parties agree to the following provisions
with respect to the Merger:
(a) Name of Surviving Corporation. After the Merger and on the Effective
Date (as defined in Section 1.2(e) hereof), the name of the Surviving Entity
shall become Global Sources Limited.
(b) Articles of Incorporation. The Articles of Incorporation of FSI as in
effect immediately prior to the Effective Date shall on the Effective Date be
amended and restated to read in a manner that is substantially similar to the
Certificate of Incorporation of PES (with revisions made to take into account
any differences between New York and Delaware law) immediately prior to the
Effective Date, except that the authorized common stock shall be increased to
50,000,000 shares, with a par value of $.001 per share.
(c) By-Laws. The By-Laws of FSI as in effect immediately prior to the
Effective Date shall be amended and restated on the Effective Date to text
that is substantially similar to the text of the By-laws of PES (with
revisions made to take into account any differences between New York and
Delaware law) immediately prior to the Effective Date.
(d) Corporate Organization. All of the issued and outstanding shares of
common, redeemable common and preferred stock of PES and options to acquire
PES stock shall be acquired by FSI. The Surviving Entity shall thenceforth be
responsible for all the liabilities and obligations of each of the Constituent
Corporations, with the effect set forth in the appropriate provisions of
Delaware law and the appropriate provisions of New York law.
(e) Filing of Articles of Merger and Amendment to Articles of Association.
If this Agreement is duly approved by each of the Constituent Corporations in
accordance with the appropriate provisions of Delaware law and the appropriate
provisions of New York law and the respective Articles or Certificate of
Incorporation and By-laws of the Constituent Corporations and not terminated
pursuant to Article 8 hereof, and approved by the shareholders of FSI pursuant
to Rule 419 under Regulation C of the Securities Act of 1933, as amended
("Rule 419"), as soon as practicable after all other conditions to the Merger
set forth in Article 6 hereof shall have been satisfied or waived, and after
FSI 's Post-Effective Amendment filed pursuant to Rule 419 has been declared
effective by the Securities and Exchange Commission and FSI 's shareholder
reconfirmation has been successfully completed and the closing of this
Agreement (the date upon which all of the foregoing conditions have been
fulfilled herein referred to as the "Effective Date") has taken place, the
Merger shall be consummated and Articles of Merger, to which this Agreement
shall be appended, shall be filed with the appropriate New York governmental
agency and an amendment to FSI 's Articles of Association shall be filed with
the Delaware Secretary of State. The Closing of this Agreement shall take
place at the offices of Xxxxxxxxx & Xxxxxxxxx, L.L.P., 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or at such other time, place or date as the parties may
mutually agree.
(f) Further Assurances. If at any time after the Effective Date, the
Surviving Entity shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary, desirable
or proper (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Entity, its right, title or interest in, to or under any of the
rights, properties or assets of the Constituent Corporations acquired or to be
acquired as a result of the Merger, or (b) otherwise to carry out the purposes
of this Agreement, the Constituent Corporations agree that the Surviving
Entity and its proper officers and directors shall be authorized to execute
and deliver, in the name and on behalf of the Constituent Corporations, all
such deeds, bills of sale, assignments and assurances and do, in the name and
on behalf of the Constituent Corporations, all such other acts and things
necessary, desirable or proper to best perfect or confirm its right, title or
interest in, to or under any of the rights, properties or assets of the
Constituent Corporations acquired or to be acquired as a result of the Merger
and otherwise to carry out the purposes of this Agreement.
(g) Upon consummation of the Merger, the current officers and directors of FSI
shall resign, and a minimum of three (3) directors shall be appointed to the
Surviving Entity, which directors shall nominate officers of the Surviving
Entity, subject to shareholder approval.
ARTICLE 2
THE MERGER
SECTION 2.1 Conversion of Shares in the Merger.
(a) Issuance of New Shares. On the Effective Date, and upon the acquisition
of 100% of all shares of common stock of PES, the 100,000 shares of FSI's
common stock purchased pursuant to FSI's initial public offering and held in
escrow pursuant to Rule 419 under Regulation C of the Securities Act of 1933,
as amended ("Rule 419), shall be forward split 1 : 1.96648 (becoming 196,648
shares), and the 600,000 shares of issued and outstanding FSI common stock in
the hands of insider shareholders of FSI or their designees of shall be
reverse split 1 : 0.3634383 (becoming 218,063 shares) (collectively, the
"Stock Split"), and FSI shall then issue 5,555,475 shares of its authorized
common stock and 740,000 shares of its convertible preferred stock to former
PES shareholders, in the same proportion said shareholders held shares of
common and convertible preferred stock of PES, and shall issue options to
acquire 325,000 shares of common to the former option holders of PES in the
same proportion said option holders held options to acquire PES stock.
Following the Stock Split, FSI shareholders shall hold 414,711 shares of FSI
common stock, 196,648 of which shall be held by purchasers of FSI's initial
public offering, and 218,063 of which shall be held by the inside shareholders
of FSI or their designees, including Xxxxxxxxx and Xxxxxxxxx, L.L.P. Thus,
after the Effective Date and the Stock Split, the Surviving Entity shall have
issued and outstanding 5,970,186 shares of common stock and 740,000 shares of
preferred stock convertible into 616,667 shares of common stock, and options
for the issuance of an additional 325,000 shares of common stock exercisable
at the issue price of $2.00 per share.
SECTION 2.2 Further Transfer of Stock. The former PES shareholders may
distribute their shares of the Surviving Entity as they determine in
accordance with any and all applicable state and federal securities laws, and
shall provide counsel to FSI with a notice setting forth the manner of
distribution at the time of closing for delivery to the Transfer Agent (as
hereafter defined).
SECTION 2.3 Release of Shares and Funds from Escrow. Pursuant to Rule 419,
certificates representing the shares of common stock purchased in FSI's
initial public offering declared effective by the United States Securities and
Exchange Commission on June 8, 1998, as well as the funds used to purchase
said shares, are being held in escrow pending consummation of the Merger (the
"Deposited Securities" and the "Deposited Funds," respectively). FSI has
eighteen (18) months from and after the date of effectiveness of FSI's initial
public offering in which to consummate the Merger. If the Merger is not
consummated within that time, the Deposited Securities and Deposited Funds
shall be returned to FSI and FSI shareholders, respectively. Pursuant to Rule
419, Deposited Securities shall be released to shareholders and Deposited
Funds released to FSI following effectiveness of a Post-Effective Amendment
and a reconfirmation offering pursuant to which FSI shareholders representing
a minimum of 80% of the offering proceeds of FSI 's initial public offering
($40,000) reconfirm their investments.
SECTION 2.4 Surrender of Certificates. (a) FSI has designated Transfer. Com,
as Transfer Agent (the "Transfer Agent") hereunder. Immediately following
effectiveness of the Post-Effective Amendment and shareholder reconfirmation
offering, the Transfer Agent shall have mailed and/or made available to each
FSI shareholder and each former PES shareholder a notice and letter of
transmittal advising such holder of the effectiveness of the Post-Effective
Amendment and shareholder reconfirmation, and the procedure for surrendering
PES stock to the Transfer Agent. PES shall immediately turn in PES common
stock certificates to the Transfer Agent. Upon the surrender to the Transfer
Agent of such certificates, together with a letter of transmittal, duly
executed and completed in accordance with the instructions thereon, and after
the Stock Split, the Transfer Agent shall promptly convert and issue 5,555,475
shares of authorized common stock, 740,000 shares of convertible preferred
stock, and options for the issuance of 325,000 shares of common stock
exercisable at $2.00 per share to former PES shareholders and option holders
in proportion to their respective holdings of the corresponding classes of PES
stock or options in exchange for 100% of the authorized and outstanding shares
of PES and options to acquire 325,000 shares of PES common stock. Until so
surrendered and exchanged, each certificate theretofore representing shares
shall represent in the case of Dissenter's Shares, the right to seek appraisal
pursuant to the laws of the state of incorporation of the Constituent
Corporation in which the holder owns stock (if such right has been perfected).
For purposes hereof, the term "Dissenter's Shares" shall mean all shares of
FSI common stock which shall constitute "dissenting shares" within the meaning
of the Delaware General Corporation Law.
(b) At the Effective Date, the Stock Split shall become effective, and each
holder of FSI public common stock issued before the Effective Date, i.e., the
100,000 shares held in escrow pursuant to Rule 419, shall surrender his/her
stock certificate to the Transfer Agent and the Transfer Agent shall issue
such holder 1.96648 shares of the Surviving Entity's common stock for each
share of FSI common stock held before the Merger and Stock Split.
(c) At the Effective Date, the Stock Split shall become effective, and each
holder of FSI common stock issued before the Effective Date and held by
insider shareholders of FSI or their designees, i.e., the 600,000 shares
issued and outstanding and not held in escrow pursuant to Rule 419, shall
surrender his/her stock certificate to the Transfer Agent and the Transfer
Agent shall issue such holder 0.3634383 shares of the Surviving Entity's
common stock for each share of FSI common stock held before the Merger and
Stock Split.
SECTION 2.5 Transfer Agent. Prior to the Offering, FSI shall have made such
arrangements to insure that an adequate number of its shares of common stock
have been deposited with the Transfer Agent as necessary in sufficient time to
permit prompt distribution against surrender of PES stock certificates as
provided hereunder.
ARTICLE 3
ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER
SECTION 3.1 Confidentiality; Inconsistent Activities. Unless and until this
Agreement has been terminated in accordance with its terms, and excluding any
actions taken in connection with PES's acquisition of Human Resource Firms (as
defined below), neither PES nor FSI will (i) solicit or encourage, directly or
indirectly, any inquiries or proposals to acquire any shares of capital stock
of PES or FSI or any significant portion of the total assets of either
Constituent Corporation or any subsidiary or division of either of the
Constituent Corporations (whether by merger, purchase of assets, tender offer
or other similar transaction); (ii) afford any third party which may be
considering the acquisition of any shares of capital stock of PES or FSI or
any significant portion of the total assets of either Constituent Corporation,
access to the properties, books or records of either Constituent Corporation
except as required by mandatory provisions of law; or (iii) enter into any
discussions or negotiations for, or enter into any agreement which provides
for, the sale of any shares of capital stock of PES or FSI or any significant
portion of the total assets of PES or FSI to a person other than in connection
with the transactions contemplated herein. For purposes of this Agreement,
"Human Resource Firms" shall include executive search firms, human resource
firms and other types of entities commonly associated therewith.
SECTION 3.2 Best Efforts. Subject to the terms and conditions hereof, each of
the parties hereto agrees to use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of Closing set forth herein.
SECTION 3.3 Conduct of Business by Each of the Constituent Corporations
Pending the Merger. PES and FSI covenant and agree that, prior to the
Effective Date, unless PES or FSI, respectively, shall otherwise agree in
writing and except as contemplated by this Agreement:
(a) the business of each of the Constituent Corporations shall be conducted
only in the ordinary and usual course and consistent with its past practice,
and neither PES nor FSI shall purchase or sell (or enter into any agreement to
so purchase or sell) any properties or assets or make any other changes in the
operations of PES or FSI, respectively, taken as a whole except for PES's
purchase of additional Human Resource Firms and the issuance of, agreement to
issue or grant of options to acquire any shares of PES, whether common,
redeemable common or convertible preferred, in connection therewith;
(b) Neither Constituent Corporation shall (i) amend its Articles of
Incorporation or By-Laws, (ii) change the number of authorized or outstanding
shares of its capital stock, except as set forth in Section 2 hereof, or (iii)
declare, set aside or pay any dividend or other distribution or payment in
cash, stock or property, except as provided in Section 3.13 below or as
elsewhere designated herein;
(c) Except in the ordinary course of business, neither Constituent
Corporation shall (i) issue, grant, sell or pledge or agree or propose to
issue, grant, sell or pledge any shares of, or rights of any kind to acquire
any shares of, its capital stock (ii) incur any indebtedness other than in the
ordinary course of business, (iii) acquire directly or indirectly by
redemption or otherwise any shares of its capital stock of any class or (iv)
enter into or modify any contact, agreement, commitment or arrangement with
respect to any of the foregoing, except as stated in Section 2.1 of this
Agreement and except for PES's issuing shares and options in transactions
involving the acquisition of Human Resource Firms, and except as set forth in
Schedule 3.3(c) attached hereto;
(d) Each Constituent Corporation shall use its best efforts to preserve
intact its business organization, to keep available the services of its
current officers and key employees, and to preserve the good will of those
having business relationships with it;
(e) Except in the ordinary course of business, neither PES nor FSI shall (i)
increase the compensation payable or to become payable by it to any of its
officers or directors, (except as part of the acquisition of stock or assets
of Human Resource Firms), (ii) make any payment or provision with respect to
any bonus, profit sharing, stock option, stock purchase, employee stock
ownership, pension, retirement, deferred compensation, employment or other
payment plan, agreement or arrangement for the benefit of its employees
(except as part of the acquisition of stock or assets of Human Resource
Firms), (iii) grant any stock options or stock appreciation rights or permit
the exercise of any stock appreciation right where the exercise of such right
is subject to its discretion (except as part of the acquisition of stock or
assets of Human Resource Firms), (iv) make any change in the compensation to
be received by any of its officers, or adopt, or amend to increase
compensation or benefits payable under, any collective bargaining, bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund or arrangement for the benefit of employees (except as part of the
acquisition of stock or assets of Human Resource Firms), (v) enter into any
agreement with respect to termination or severance pay, or any employment
agreement or other contract or arrangement with any officer or director or
employee of PES or FSI, respectively, with respect to the performance of
personal services that is not terminable without liability by it on thirty
days' notice or less (except as part of the acquisition of stock or assets of
Human Resource Firms), (vi) increase benefits payable under its current
severance or termination, pay agreements or policies or (vii) make any loan or
advance to, or enter into any written contract, lease or commitment with, any
of its officers or directors;
(f) Except in the ordinary course of business, neither PES nor FSI shall
assume, guarantee, endorse or otherwise become responsible for the obligations
of any other individual, firm or corporation or make any loans or advances to
any individual, firm or corporation, other than obligations and liabilities
assumed by PES in connection with its acquisition of Human Resource Firms;
(g) Except in the ordinary course of business, neither PES nor FSI shall make
any investment of a capital nature either by purchase of stock or securities,
contributions to capital, property transfers or otherwise, or by the purchase
of any property or assets of any other individual, firm or corporation, except
for PES's acquisition of Human Resource Firms;
(h) Neither PES nor FSI shall reduce its cash or short term investments or
their equivalent, other than to meet cash needs arising in the ordinary course
of business, consistent with past practices, or in performing its obligations
under this Agreement;
(i) Except in the ordinary course of business and/or in connection with PES'
acquisition of Human Resource Firms, neither PES nor FSI shall enter into an
agreement to do any of the things described in clauses (a), (b), (c), (e),
(f), (g) and (h); and
(j) Each Constituent Corporation shall comply with all Federal, state, local
and other governmental (domestic or foreign) laws, statutes, ordinances,
rules, regulations (including all applicable securities laws), orders, writs,
injunctions, decrees, awards or other requirements of any court or other
governmental or other authority applicable to each of them or their respective
assets or to the conduct of their respective businesses, and use their best
efforts to perform all obligations under all contracts, agreements, licenses,
permits and undertakings without default.
Notwithstanding subparagraph (c)(i) of this Section 3.3 or any other provision
of this Agreement to the contrary, various shareholders of PES hold stock
options to acquire 325,000 additional shares of stock in PES. Such option
rights shall survive the merger of PES into FSI and the parties hereto agree
that they shall become, upon the merger, options held by such persons to
acquire 325,000 shares of the common stock of the Surviving Entity at the
exercise price of $2.00 per share.
SECTION 3.4 Access and Information.
(a) PES shall afford to FSI and its accountants, counsel and other
representatives full access, during normal business hours throughout the
period prior to the Effective Date, to all of the properties, books,
contracts, commitments and records (including but not limited to tax returns)
of PES and, during such period, PES shall furnish promptly to FSI (i) a copy
of each report, schedule and other document filed or received by it pursuant
to the requirements of federal or state securities laws, and (ii) all other
information concerning the business, properties and personnel of PES that may
reasonably be requested by FSI. PES notes, however, that purchase agreements
and related documents for the acquisition of various Human Resource Firms are
still in preparation and negotiation, and its bylaws have not, as of the date
hereof, been amended to reflect certain changes therein previously approved by
the PES Board of Directors. As a result, such documents will not be available
in final form immediately following the execution of this Agreement. However,
PES will make such contracts, documents or other instruments available for
review by FSI as and when they become finalized (but in any event, in the case
of its bylaws, within two weeks following the date of execution of this
Agreement. In the event of the termination of this Agreement, FSI will, and
will cause its representatives to, deliver to PES all documents, work papers
and other material, and all copies thereof, obtained by it or on its behalf
from PES as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof, and will hold in confidence all
confidential information, and will not use any such confidential information,
until such time as such information is otherwise publicly available or as it
is advised by counsel that any such information or document is required by law
to be disclosed. If this Agreement is terminated, FSI will deliver to PES all
documents so obtained by it or, if PES requests or gives its prior written
consent to FSI's request, FSI will destroy all documents in the possession or
under the control of FSI. Any such destruction pursuant to the foregoing must
be confirmed by FSI in writing to PES, such confirmation to include a list of
the destroyed materials.
(b) FSI shall afford to PES and its accountants, counsel and other
representatives full access, during normal business hours throughout the
period prior to the Effective Date, to all of the properties, books,
contracts, commitments and records (including but not limited to tax returns)
of FSI and, during such period, FSI shall furnish promptly to PES (i) a copy
of each report, schedule and other document filed or received by it pursuant
to the requirements of federal or state securities laws, and (ii) all other
information concerning the business, properties and personnel of FSI that may
reasonably be requested. In the event of the termination of this Agreement,
PES will, and will cause its representatives to, deliver to FSI all documents,
work papers and other material, and all copies thereof, obtained by it or on
its behalf from FSI as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution hereof, and will hold in
confidence all confidential information, and will not use any such
confidential information, until such time as such information is otherwise
publicly available or as it is advised by counsel that any such information or
document is required by law to be disclosed. If this Agreement is terminated,
PES will deliver to FSI all documents so obtained by it or, if FSI requests or
gives its prior written consent to PES' request, PES will destroy all
documents in its possession or under the control of PES. Any such destruction
pursuant to the foregoing must be confirmed by PES in writing to FSI, such
confirmation must include a list of the destroyed materials.
SECTION 3.5 Notice of Actions and Proceedings. PES shall promptly notify
FSI, and FSI shall promptly notify PES of any claims, actions, proceedings or
investigations commenced or, to the best of its knowledge, threatened,
involving or affecting PES or FSI or any of their property or assets, or, to
the best of its knowledge, against any employee, consultant, director, officer
or shareholder, in his, her or its capacity as such, of PES or FSI which, if
pending on the date hereof, would have been required to have been disclosed in
writing pursuant to Section 4.4 hereof or which relates to the consummation of
the Merger or the transactions contemplated hereby.
SECTION 3.6 Notification of Certain Other Matters. PES shall give prompt
notice to FSI, and FSI shall give prompt notice to PES of:
(a) any notice of, or other communication relating to, a default or event
which, with notice or lapse of time or both, would become a default, received
by PES or FSI subsequent to the date of this Agreement and prior to the
Effective Date, under any agreement, indenture or instrument material to the
financial condition, properties, business or results of operations of PES or
FSI taken as a whole to which PES or FSI is a party or is subject;
(b) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; and
(c) any material adverse change in the financial condition, properties,
businesses or results or operations of PES or FSI, or the occurrence of an
event which, so far as reasonably can be foreseen at the time of its
occurrence, would result in any such change.
SECTION 3.7 Shareholder Meeting of PES. PES shall, at a meeting of its
shareholders duly called by the Board of Directors of PES, to be held as soon
as practicable following execution of this Agreement, present the following
proposal for the authorization and approval of the shareholders of PES and
recommend their adoption by the shareholders:
(a) ratification of this Agreement and authorization of the consummation of
the Merger contemplated herein.
SECTION 3.8 Filing of Post-Effective Amendment. Upon signing this Merger
Agreement and obtaining shareholder approval pursuant to a special meeting of
shareholders, FSI shall promptly file with the Securities and Exchange
Commission a Post-Effective Amendment reflecting the Merger as required by
Rule 419.
SECTION 3.9 Reconfirmation Offering. Within five (5) business days of
effectiveness of the Post-Effective Amendment, FSI shall issue a
reconfirmation offering to its shareholders. Pursuant to Rule 419, the Merger
will be consummated only if a minimum number of investors representing 80% of
the maximum offering proceeds of FSI 's initial public offering ($40,000)
elect to reconfirm their investments.
SECTION 3.10 Other Agreements of FSI. FSI shall file with the Securities and
Exchange Commission any appropriate statements or requirements within the
Securities Act of 1933 and the Securities Exchange Act of 1934, as amended,
with respect to the Merger, obtain any consents, amendments to or waivers
under the terms of any of FSI 's arrangements required by the transactions
contemplated by this Agreement, and defend any lawsuits or other legal
proceedings, whether judicial or administrative and whether brought
derivatively or on behalf of third parties (including governmental agencies or
officials), challenging this Agreement, or the consummation of the
transactions contemplated hereby (provided that the maximum amount that FSI
shall be required to spend on such lawsuits or proceedings shall be $5,000 in
the aggregate).
SECTION 3.11 FSI Shareholder Consent. FSI shall obtain written consent of
two-thirds of its shareholders to take the following actions:
(a) ratification of this Agreement and authorization of the consummation of
the Merger contemplated herein;
(b) ratification or approval of the amendment of FSI's articles of
incorporation as provided in Section 3.13 hereof and filing of an amendment
thereto in the manner required by Delaware law effecting such changes prior to
the Effective Date of the Merger contemplated herein;
(c) the differential reverse and forward stock splits of FSI's common stock
to take place on the Effective Date, as described in Section 2.1 hereof, but
prior to issuing 5,55,475 shares of common stock and 740,000 shares of
convertible preferred stock to the shareholders of PES and options to acquire
325,000 shares of common stock at the exercise price of $2.00 per share to the
option holders of PES;
(d) issuance of 5,555,475 shares of common stock and 740,000 shares of
convertible preferred stock to the shareholders of PES and options to acquire
325,000 shares of common stock at the exercise price of $2.00 per share to the
option holders of PES after FSI's Stock Split; and
(e) the tender of resignations of the directors of FSI, whose resignations
are contingent on the consummation of the Merger, and which shall occur on the
Effective Date.
SECTION 3.12 Competing Transactions. Neither Constituent Corporation shall
take any action, directly or indirectly, to negotiate, cause, promote,
authorize or agree to any transactions competing or interfering with any of
the transactions contemplated by this Agreement.
SECTION 3.13 Amendment of FSI's Articles of Incorporation. Prior to the
Effective Date, the Articles of Incorporation and, if necessary, the relevant
provisions of FSI's By-Laws, shall be amended to change the capitalization of
FSI by creating a class of 740,000 shares of preferred stock of FSI, having a
par value of $.001 per share and convertible into common stock of FSI at the
ratio of 1 share of preferred to 0.833333 shares of common, and having other
characteristics identical to those of PES convertible preferred.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FSI
FSI represents and warrants to, and agrees with PES as follows:
SECTION 4.1 Organization and Good Standing. FSI is a duly incorporated and
validly existing corporation in good standing under the laws of the state of
its incorporation, with all requisite power and authority (corporate and
other) to own and use its properties and conduct its business, and is duly
qualified and in good standing as a foreign corporation authorized to do
business under the laws of each jurisdiction where such qualification is
required.
SECTION 4.2 Authorization; Binding Agreement. FSI has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to carry out the transactions contemplated hereby.
This Agreement has been duly and validly authorized, executed and delivered by
FSI, and subject to any requisite approval of the Merger by the shareholders
of FSI, including a shareholder reconfirmation pursuant to Rule 419,
constitutes a valid and binding agreement of FSI in accordance with its terms.
SECTION 4.3 Capitalization. As of the date hereof, the authorized capital
stock of FSI consists of 20,000,000 shares of common stock, par value $.001
per share. Between April 28, 1997 and August 15, 1997 FSI issued 600,000
shares of common stock to eight (8) inside shareholders. FSI's public
offering, whereby 100,000 shares of common stock were sold at $.50 per share,
closed on December 1, 1998. As of the date hereof, 700,000 shares of common
stock are outstanding, 100,000 of which are currently held in escrow. All of
the outstanding non-escrowed shares of capital stock of FSI have been duly
authorized and validly issued and are fully paid and nonassessable. FSI is
not aware of any voting trusts, voting agreements or similar understandings
applicable to the Shares. FSI does not have any outstanding options,
warrants, subscriptions or other rights, agreements or commitments, which
either; (a) obligates FSI to issue, sell or transfer any shares of the capital
stock of FSI or (b) restricts the transfer of or otherwise relates to the
shares of its common stock, except for the 100,000 shares of common stock
currently held in escrow pending consummation of a business combination
pursuant to Rule 419. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to FSI.
SECTION 4.4 Litigation. Except as may be disclosed in the SEC Filings (as
defined in Section 4.5 hereof), or to PES in writing on or prior to the date
hereof, as of the date hereof there are no claims, actions, proceedings, or
investigations pending or, to the best knowledge of FSI, threatened against
FSI or to the best of FSI knowledge, pending or threatened against any
employee, consultant, director, officer or shareholder, in his, her or its
capacity as such, before any court or governmental or regulatory authority or
body which, if decided adversely, could materially and adversely affect the
financial condition, business, prospects or operations of FSI. As of the date
hereof, neither FSI nor any of its property is subject to any order, judgment,
injunction or decree.
SECTION 4.5 Financial Statements and Reports. FSI has provided PES with true
and complete copies of (a) FSI's most recent audit, (b) copies of FSI 's
Registration Statement on Form SB-2 and Prospectus which was declared
effective by the Securities and Exchange Commission on June 8, 1998, (c) all
other reports, statements and registration statements filed by it with the
Securities and Exchange Commission since June 8, 1998. The reports, statements
and registration statements referred to in the immediately preceding sentence
including any that are filed subsequent to the date hereof and prior to the
effective date are referred to in the Agreement as the "SEC Filings." As of
their respective dates, the SEC Filings did not contain any untrue statement
of a material fact or omit to state any 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. The financial
statements of FSI included in the SEC Filings were prepared by an independent
certified public accountant in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise noted in such
statements) and present fairly the financial position, results of operations
and changes in financial position of FSI as of the dates and for the periods
indicated subject, in the case of unaudited interim financial statements, to
normal year-end adjustments and any other adjustments described therein. On
the Effective Date, FSI will have approximately $45,000, consisting of the
proceeds from FSI 's initial public offering, currently held in escrow. FSI
has no liabilities (including, without limitation, unasserted claims, matured
or unmatured, absolute, contingent or otherwise, except as otherwise set forth
in this Agreement, that, in accordance with FSI's prior practice are required
to be reflected and are not reflected or are in excess of the amounts
reflected in the Financial Statements. The Financial Statements reflect all
necessary adjustments and reserves for losses and contingencies. Since
December 31, 1998, FSI has not suffered any material adverse change in its
business, operations, financial condition or prospects.
SECTION 4.6 Absence of Certain Changes or Events. Except as set forth in the
SEC Filings, or as disclosed to PES in writing, (a) there has not been any
change or any development involving a prospective change, which has affected
or may affect materially and adversely the business, assets or prospects or
the financial position or the results of operations of it and its
subsidiaries taken as whole; and (b) FSI has not incurred any indebtedness for
money borrowed, or purchased or sold any material amount of assets, other than
in the ordinary course of business, or entered into any other transaction
other than in the ordinary course of business.
SECTION 4.7 Absence of Breach. Except as may be disclosed to PES in writing
on or prior to the date hereof, the execution, delivery and performance by FSI
of this Agreement, and the performance by FSI of its obligations hereunder,
will not:
(a) subject to the appropriate approval by FSI 's shareholders, conflict with
or result in a breach of any of the provisions of its Articles of
Incorporation or By-Laws;
(b) subject to obtaining the governmental and other consents referred to in
Section 4.8 hereof, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect, which, singly or in the aggregate, would have a material adverse
effect on FSI; or
(c) conflict in any respect with or result in a breach of or default under any
indenture, loan or credit agreement relating to money borrowed or conflict in
any respect with or result in a breach of or default under any other
indenture, mortgage, lien, lease, agreement, contract or instrument to which
FSI is a party or by which it or any of its properties may be affected or
bound, which, singly or in the aggregate, would have a material adverse effect
on FSI.
SECTION 4.8 Governmental and Other Consents, etc. Subject to the requisite
shareholder approval and any required filings with the Securities and Exchange
Commission, no consent, waiver, approval, license or authorization of or
designation, declaration or filing with any governmental agency or authority
or other public persons or entities in the United States on the part of FSI is
required in connection with the execution or delivery by FSI of this Agreement
or the consummation by the Company of the transactions contemplated hereby
other than (i) filings in the State of Delaware in accordance with state law
thereof and in the State of New York in accordance with the state law thereof,
(ii) filings under state securities "Blue Sky" or anti-takeover laws and (iii)
filings with applicable national securities exchange.
SECTION 4.9 Benefits Plans. Except as disclosed in the SEC Filings or as
disclosed in writing to PES before the date hereof, FSI does not have any
employment agreement with any executive officer of FSI, any employee, former
employee or consultant or any incentive compensation, deferred compensation,
profit sharing, stock option, stock bonus, stock purchase, savings,
consultant, retirement, pension or other "fringe benefit" plan or arrangement
with or for the benefit of any officer, employee, former employee or
consultant.
SECTION 4.10 Employment Contracts. Except as disclosed in the SEC Filings or
as disclosed in writing to PES on or prior to the date hereof, FSI is not a
party to any collective bargaining agreement or any other agreement with
employees of FSI or any of the subsidiaries as a group.
SECTION 4.11 ERISA. FSI has no employee benefit plans, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). No employee benefit plan of an ERISA Affiliate (as hereinafter
defined) is covered by Title IV of ERISA. No prohibited transaction (as
defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code")) or breach of a fiduciary duty under ERISA
has occurred with respect to any plan of an ERISA Affiliate. No action, suit
or proceeding, hearing, or investigation of the assets of any plan of an ERISA
Affiliate is pending or threatened. None of the directors or officers or
employees of FSI has any knowledge of any basis for any such action, suit,
proceeding, hearing or investigation. There has been no waived or unwaived
"accumulated funding deficiency" within the meaning of Section 302(a)(2) of
ERISA with respect to any plan of an ERISA Affiliate. "ERISA Affiliate" shall
mean an organization (whether or not incorporated) which is under common
control, or a member of an affiliated service group, with FSI and, with FSI,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code.
SECTION 4.12 Transactions With Management. Except as disclosed in the SEC
Filings or to PES in writing on or before the date hereof, FSI is not now a
party to any material contract, lease, loan or commitment with or to any
officer or director, or person owning more than 5% of the outstanding common
stock of FSI or any subsidiary of FSI or any affiliate or associate of such
officer, director or person.
SECTION 4.13 Tax Returns and Payments. All tax returns, federal, state,
local, foreign and other, (including all federal tax returns and reports for
each fiscal year of FSI through the fiscal year ended December 31, 1998)
required to be filed by and/or on behalf of FSI in respect of any taxes
(including all foreign, federal, state, county and local income, ad valorem,
excise, sales, use, transfer and other taxes and assessments) have been filed
or will be filed by the Effective Date, and all taxes due and payable thereon,
or otherwise due and payable by FSI, have been paid or will be filed and or
paid by the Effective Date. There are no deficiency assessments against FSI
with respect to any foreign, federal, state, local or other taxes. There are
no outstanding agreements or waivers extending the period of limitation
applicable for assessment or collection for any federal, state, local or
foreign tax, or for the filing of any tax return, in respect of FSI for any
period. Neither the federal tax returns nor any state, county, local or
foreign tax returns of FSI have in the past been examined by the Internal
Revenue Service or any other taxing authority. Copies of all federal, state,
local and foreign tax returns or reports of FSI filed since 1994 and prior to
the date hereof have heretofore been made available to PES. All tax returns
filed by or on behalf of FSI are true, correct and complete in all material
respects. All taxes that FSI is or was required to withhold or collect
(including payroll taxes) have been duly withheld, or collected, and paid to
the proper governmental authority or will have been paid to the proper
governmental authority by the Effective Date.
SECTION 4.14 Contracts. Except for this Agreement and any contracts and
agreements related hereto, and any Immaterial Contracts (as hereafter
defined), FSI is not a party to or bound by any agreements, contracts, notes,
mortgages, deeds of trust, indentures, property and equipment leases and
licenses (the "Contracts"). An "Immaterial Contract" is any contract or
agreement, other than a subscription, option or other agreement affecting the
stock ownership in FSI or the Surviving Entity, that (i) prior to the
Effective Date does or will not have any material adverse affect on the assets
or liabilities or business of FSI, and (ii) on or after the Effective Date
will have no material adverse affect on the assets, liabilities or business of
the Surviving Entity.
SECTION 4.15 Accounts, Powers of Attorney. There are no persons holding a
power of attorney on behalf of FSI. Schedule 4.15 lists the names and
addresses of each bank or other financial institution in which FSI has an
account, deposit or safe-deposit box, including the number of each such
account, deposit and safe-deposit box.
SECTION 4.16 Insurance. There are no insurance policies maintained by or on
behalf of FSI in effect on the Effective Date.
SECTION 4.17 No Subsidiaries or Joint Ventures. FSI does not own, directly
or indirectly, beneficially or of record, or have any obligation to acquire,
any stock of, or other equity or ownership interest in, any person. FSI is
not a party to and does not own any interest in any joint venture.
SECTION 4.18 Minute Books. All minute books of FSI have been or will be made
available to PES for review.
SECTION 4.19 Absence of Certain Changes, Etc. FSI has not entered into any
transactions or contracts, or amended any contracts, which might have a
material adverse effect on the financial condition of FSI. FSI has not
incurred any indebtedness for borrowed funds or entered into material
capitalized lease obligations. FSI has not cancelled any claim or right of
material value on sold, leased, transferred, suffered any lien to arise upon,
or otherwise disposed of any assets. FSI has not paid any dividend or
distributed any property in respect of its corporate stock.
SECTION 4.20 Rule 419 under Regulation C of the Securities Act of 1933. FSI
has fully complied in its organization and operations with Rule 419 under
Regulation C of the Securities Act of 1933.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PES
PES, represents and warrants to, and agrees with FSI as follows:
SECTION 5.1 Organization and Good Standing. PES is a duly incorporated and
validly existing corporation in good standing under the laws of the state of
its incorporation, with all requisite power and authority (corporate and
other) to own its properties and conduct its businesses, and is duly qualified
and in good standing as a foreign corporation authorized to do business under
the laws of each jurisdiction where such qualification is requested.
SECTION 5.2 Authorization; Binding Agreement. PES has the requisite
corporate power and authority to execute and deliver this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by PES
and, subject to requisite approval of the Merger by the shareholders of PES in
accordance with New York law, constitutes a valid and binding agreement of PES
in accordance with its terms.
SECTION 5.3 Absence of Breach. The execution, delivery and performance by
PES of this Agreement, and the performance by PES of its obligations
hereunder, do not (i) conflict with or result in a breach of any of the
provisions of its articles of incorporation or by-laws, (ii) subject to
obtaining the governmental and other consents referred to in Section 5.4
hereof, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect,
which, singly or in the aggregate, would have a material adverse effect on
PES, (iii) conflict in any respect with or result in a breach of or default
under any indenture, loan or credit agreement (appropriate waivers having been
obtained) or any other agreement or instrument to which PES is a party or by
which PES properties may be affected or bound, which, singly or in the
aggregate, would have a material adverse effect on PES.
SECTION 5.4 Governmental and Other Consents, etc. Subject to the requisite
Board of Directors approval, no material consent, approval or authorization of
or designation, declaration or filing with any governmental agency or
authority or other public persons or entities in the United States on the part
of PES is required in connection with the execution delivery by PES of this
Agreement or the consummation by PES of the transaction contemplated hereby
other than (i) filings in the state of Delaware in accordance with the laws of
that state and in [the State of New York] in accordance with the laws of that
state, (ii) filings under state securities "Blue Sky" or anti-takeover laws,
and (iii) filings with the Securities and Exchange Commission and any
applicable national securities exchange.
SECTION 5.5. Financial Statements. PES shall provide FSI with certified
consolidated financial statements (including the notes thereto) which have
been prepared by an independent certified public accountant in accordance with
generally accepted accounting principles (as in effect from time to time)
applied on a consistent basis and which present fairly the consolidated
financial position, results of operations and changes in financial position of
PES.
SECTION 5.6. Capitalization. As of the Effective Date, PES will have
acquired Human Resource Firms which, in the aggregate, have a minimum of
$1,000,000.00 in capital value.
SECTION 5.7 Litigation. Except as may be disclosed to FSI in writing on or
prior to the date hereof, as of the date hereof there are no claims, actions,
proceedings, or investigations pending or, to the best knowledge of PES,
threatened against PES or to the best of PES knowledge, pending or threatened
against any employee, consultant, director, officer or shareholder, in his,
her or its capacity as such, before any court or governmental or regulatory
authority or body which, if decided adversely, could materially and adversely
affect the financial condition, business, prospects or operations of PES. As
of the date hereof, neither PES nor any of its property is subject to any
order, judgment, injunction or decree, which materially and adversely affects
the financial condition, business, prospects or operations of PES.
SECTION 5.8 Absence of Certain Changes or Events. Except as disclosed to FSI
in writing, (a) there has not been any change or any present development
involving a prospective change, which has affected or may affect materially
and adversely the business, assets or prospects or the financial position or
the results of operations of PES and its subsidiaries taken as whole; and (b)
PES has not incurred any indebtedness for money borrowed, or purchased or sold
any material amount of assets, other than in the ordinary course of business,
or entered into any other transaction other than in the ordinary course of
business.
SECTION 5.9 Tax Returns and Payments. All tax returns, federal, state, local,
foreign and other, (including all federal tax returns and reports for each
fiscal year of PES through the fiscal year ended December 31, 1998) required
to be filed by and/or on behalf of PES in respect of any taxes (including all
foreign, federal, state, county and local income, ad valorem, excise, sales,
use, transfer and other taxes and assessments) have been filed or will be
filed by the Effective Date, and all taxes due and payable thereon, or
otherwise due and payable by PES, have been paid or will be filed and or paid
by the Effective Date. There are no deficiency assessments against PES with
respect to any foreign, federal, state, local or other taxes. There are no
outstanding agreements or waivers extending the period of limitation
applicable for assessment or collection for any federal, state, local or
foreign tax, or for the filing of any tax return, in respect of PES for any
period. Neither the federal tax returns nor any state, county, local or
foreign tax returns of PES have in the past been examined by the Internal
Revenue Service or any other taxing authority. Copies of all federal, state,
local and foreign tax returns or reports of PES filed since its formation and
prior to the date hereof have heretofore been made available to FSI. All tax
returns filed by or on behalf of FSI are true, correct and complete in all
material respects. All taxes that PES is or was required to withhold or
collect (including payroll taxes) have been duly withheld, or collected, and
paid to the proper governmental authority or will have been paid to the proper
governmental authority by the Effective Date.
SECTION 5.10 Accounts, Powers of Attorney. There are no persons
holding a power of attorney on behalf of PES. Schedule 5.10 lists the names
and addresses of each bank or other financial institution in which PES has an
account, deposit or safe-deposit box, including the number of each such
account, deposit and safe-deposit box.
SECTION 5.11 Minute Books. All minute books of PES have been or will be
made available to FSI for review.
ARTICLE 6
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) this Agreement and the transactions contemplated hereby having been
approved and adopted at or prior to the Effective Date by the requisite vote
of the shareholders of each company as required by applicable law; and
(b) no preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States or any
foreign jurisdiction preventing the consummation of the Merger shall be in
effect.
SECTION 6.2 Conditions to Obligation of FSI to Effect the Merger. The
obligation of FSI to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Date of the following conditions any one or more of
which (except Section 6.2(h) and (i)) may be waived by FSI:
(a) PES shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the
Effective Date including those specified in Section 5.5 herein;
(b) PES shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the
Effective Date, including the surrender of 100% of its issued and outstanding
stock and options to FSI upon FSI 's issuance of 5,555,475 shares of common
stock, 740,000 shares of convertible preferred stock and options to acquire
325,000 shares of common stock at the exercise price of $2.00 per share to the
shareholders and option holders of PES after FSI's Stock Split;
(c) the representations and warranties of PES set forth in this Agreement
shall be true and correct in all material respects on and as of the Effective
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
(d) PES shall have delivered a certificate of its President or its Chairman
of the Board to the effect set forth in paragraphs (a), (b) and (c) of this
Section 6.2;
(e) PES shall have delivered to FSI copies of resolutions duly adopted by its
Board of Directors approving the execution and delivery of this Agreement,
such resolutions being certified by the Secretary;
(f) No action or preceding before any court or governmental or regulatory
authority or body, United States, federal or state or foreign, shall have been
instituted (and be pending) or threatened by any government or governmental
authority, which seeks to prevent or delay the consummation of the Merger or
which challenges any of the terms or provisions of this Agreement;
(g) No order issued by any United States federal or state or foreign
governmental or regulatory authority or body of by any court of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal or state or foreign governmental
authority which prevents the consummation of the Merger shall be in effect;
(h) PES acknowledges that the Post-Effective Amendment filed with the
Securities and Exchange Commission after this Agreement is signed must be
declared effective by the Securities and Exchange Commission and the
shareholder reconfirmation offering contained therein shall have been approved
by investors representing a minimum of 80% of the proceeds of FSI 's initial
public offering, i.e., $40,000;
(i) The aggregate fair market value of the companies acquired by PES shall be
at least $1,000,000.
(j) FSI shall have received an opinion dated the effective date of the Merger
by Xxxxxx & Xxxxx, counsel to PES, satisfactory to FSI, in substantially the
following form:
i) PES is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York and has the corporate power
to own all of its properties and assets and carry on its business in all
material respects as it is now being conducted, and is qualified to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification;
ii) The execution and delivery by PES of this Agreement and the consummation
of the transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in a breach of any term or
provision of PES's certificate of incorporation or by-laws or constitute a
default or to the best of its knowledge give rise to a right of termination,
cancellation or acceleration under any material mortgage, indenture, deed of
trust, license agreement, or other obligation or violate any court order,
writ, injunction or decree applicable to PES, or its properties or assets;
iii) This Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal and binding obligation of PES, except as
limited by bankruptcy and insolvency laws and by others laws affecting the
rights of creditors generally; and
iv) There are no actions, suits or proceedings pending, or to the best
knowledge of such counsel without having conducted any independent
investigation, threatened by or against PES or affecting PES or its
properties, at law or in equity, before any court or any other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any kind.
SECTION 6.3 Conditions to the Obligation of PES to Effect the Merger. The
obligation of PES to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Date of the following conditions, any one or more of
which may be waived by PES:
(a) The representations and warranties of FSI set forth in this Agreement
shall be true and correct in all material respects on and as of the Effective
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
(b) Except to the extent such consents are not required at the Effective
Date, FSI shall have received the consents or exemptions, or made the filings,
as the case may be, referred to in Section 5.4;
(c) FSI shall have delivered a certificate of its President to the effect set
forth in paragraphs (a) and (b) of this Section 6.3;
(d) FSI shall have delivered to PES copies of resolutions duly adopted by
the Board of Directors of the Company approving the execution and delivery of
this Agreement, such resolutions being certified by the Secretary of the
Company;
(e) No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
instituted (and be pending or threatened) by any government or governmental
authority, which seeks to prevent or delay the consummation of the Merger or
which challenges any of the terms or provisions of this Agreement;
(f) No order issued by any United States federal or state or foreign
governmental or regulatory authority or body, or by any court of competent
jurisdiction nor any statute, rule, regulation, or executive order promulgated
or enacted by any United States, federal, or state or foreign government or
governmental authority, which prevented the consummation of the Merger or
materially and adversely affects the business, financial condition, or
operations of FSI shall be in effect;
(g) The shareholders of FSI upon the Effective Date of the Merger shall have
duly approved the amendment of FSI's articles of incorporation as required by
Section 3.13, the Merger, the Stock Split, and the issuance of 5,555,475
shares of common stock, 740,000 shares of convertible preferred stock and
options to acquire 325,000 shares of common stock at the exercise price of
$2.00 per share to the shareholders and option holders of PES after the Stock
Split, pursuant to a reconfirmation offering in which shareholders
representing a minimum of $40,000 of the proceeds from FSI 's initial public
offering elect to reconfirm their investment, and the amendment to FSI's
articles of incorporation required by Section 3.13 hereof shall have been duly
filed;
(h) PES shall have received an opinion of its tax counsel, advisor or
accountant that the Merger to be consummated by the terms of this Agreement
qualifies as a tax-free reorganization as defined under the Internal Revenue
Code of 1986, as amended.
(i) PES shall have received an opinion dated the effective date of this
Merger by Xxxxxxxxx & Xxxxxxxxx, 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx 00000, counsel to FSI, satisfactory to PES, in substantially the
following form:
i) FSI is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
to own all of its properties and assets and carry on its business in all
material respects as it is now being conducted, and is qualified to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification;
ii) The execution and delivery by FSI of this Agreement and the consummation
of the transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in a breach of any term or
provision of FSI's certificate of incorporation or by-laws or constitute a
default or give rise to a right of termination, cancellation or acceleration
under any material mortgage, indenture, deed of trust, license agreement, or
other obligation or violate any court order, writ, injunction or decree
applicable to FSI, or its properties or assets;
iii) The authorized capitalization of FSI consists of 20,000,000 shares of
common stock, and 740,000 shares of preferred stock convertible into 616,667
shares of common stock, each with a par value $.001 per share. As of the date
of this Agreement, there are 700,000 shares of common stock issued and
outstanding, including the 100,000 shares being held in escrow pending
consummation of the Merger, as per Rule 419. As of the Effective Date, after
the Stock Split and subsequent issuance of 5,555,475 shares of common stock,
740,000 shares of convertible preferred stock and options to acquire 325,000
shares of common stock at the exercise price of $2.00 per share to the
shareholders and option holders of PES, there will be 5,970,186 shares of
common stock, 740,000 shares of convertible preferred stock and options to
acquire 325,000 shares of common stock at the exercise price of $2.00 per
share outstanding;
iv) This Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal and binding obligation of FSI, except as
limited by bankruptcy and insolvency laws and by others laws affecting the
rights of creditors generally; and
v) There are no actions, suits or proceedings pending, or to the best
knowledge of such counsel without having conducted any independent
investigation, threatened by or against FSI or affecting FSI or its
properties, at law or in equity, before any court or any other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any kind.
vi) FSI has made or will make all filings that it is required to make with
the Securities Exchange Commission under the Securities Act of 1933 and the
Exchange Act of 1934 and all of such filings were true, complete and accurate.
vii) FSI's initial public offering complied with the special registration
procedures for offerings by "blank check companies" as set forth in Rule 419
under Regulation C of the Securities Act of 1933.
viii) The escrow account required to be maintained under Rule 419 under
Regulation C of the Securities Act of 1933 meets the requirements of such rule
and has been maintained in compliance with the requirements set forth in such
rule.
(i) Deliberately Left Blank;
(j) FSI shall have net cash, including the Deposited Funds, of $45,000 on
the Effective Date;.
(k) On the Effective Date, the Deposited Funds held in escrow from FSI 's
initial public offering shall be released to FSI. FSI shall then immediately
deposit such funds, plus any additional funds held by FSI, into a trust
account with Xxxxxxxxx & Xxxxxxxxx, L.L.P. to be disbursed to the Surviving
Entity; and
(l) FSI shall have delivered to PES resignations of all of its current
officers and directors.
SECTION 6.4 Waiver of Condition; Right to Proceed. Unless stated otherwise
herein, if any of the conditions to the obligations of PES and FSI specified
in Sections 6.2 and 6.3 hereof have not been satisfied (excluding Sections
6.2(g), (h) and (i)), PES or FSI, as the case may be, in addition to any other
rights which may be available to them or it, shall have the right to waive
such conditions and to proceed with the Merger (subject to satisfaction of the
other conditions contained herein, unless also waived).
ARTICLE 7
RULE 419 REQUIREMENTS
SECTION 7.1 Merger Criteria. Pursuant to Rule 419 under Regulation C of the
Securities Act of 1933, as amended ("Rule 419"), the fair market value of PES
must represent at least 80% of the maximum offering proceeds of FSI 's initial
public offering, i.e., PES's fair market value must be at least $40,000 (80% x
$50,000). If the fair market value of PES is determined by FSI to be less
than $40,000, this Agreement shall terminate immediately.
SECTION 7.2 Post-Effective Amendment. Once the Merger Agreement has been
executed, FSI shall update its registration statement with a Post-Effective
Amendment. The Post-Effective Amendment shall contain updated information
concerning FSI and information about PES and its business, including audited
financial statements; and the results of FSI 's initial public offering. The
Post-Effective Amendment shall also include the terms of the reconfirmation
offer mandated by Rule 419. The reconfirmation offer shall include certain
prescribed conditions which must be satisfied before Deposited Securities can
be released from escrow. If the Post-Effective Amendment is not declared
effective by the Securities and Exchange Commission and/or the reconfirmation
offering is not complete within 18 months of the date of effectiveness of FSI
's initial public offering (i.e., by December 8, 1999), this Agreement shall
terminate automatically.
SECTION 7.3 Reconfirmation Offering. The reconfirmation offer must commence
after the effective date of the Post-Effective Amendment. Pursuant to Rule
419, the terms of the reconfirmation offer shall include the following
conditions:
(a) The prospectus contained in the Post-Effective Amendment will be sent to
each investor whose securities are held in the Escrow Account within 5
business days after the effective date of the Post-Effective Amendment;
(b) Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the Post-Effective Amendment to notify FSI in
writing that the investor elects to remain an investor;
(c) If FSI does not receive written notification from an investor within 20
business days following the effective date of the Post-Effective Amendment,
the pro rata portion of the Deposited Funds (and any related interest or
dividends) held in escrow on such investor's behalf will be returned to the
investor within 5 business days by first class mail or other equally prompt
means;
(d) The Merger will be consummated only if a minimum number of investors
representing 80% of the maximum offering proceeds ($40,000) elect to reconfirm
their investment; and
(e) If the Merger has not been consummated by December 8, 1999 (18 months
from the date of the prospectus), the Deposited Funds held in escrow shall be
returned to all investors on a pro rata basis within 5 business days by first
class mail or other equally prompt means, and this Agreement shall be declared
null and void.
SECTION 7.4 Release of Deposited Funds and Deposited Securities. The
Deposited Funds and Deposited Securities may be released to FSI and the
investors in FSI 's initial public offering, respectively, after:
(a) The Escrow Agent has received a signed representation from FSI and any
other evidence acceptable by the Escrow Agent that:
(i) FSI has executed an agreement for the Merger of a business for which the
par value of the business represents at least 80% of the maximum offering
proceeds and has filed the required Post-Effective Amendment; and
(ii) The Post-Effective Amendment has been declared effective, the mandated
reconfirmation offer having the conditions prescribed by Rule 419 has been
completed, and FSI has satisfied all of the prescribed conditions of the
reconfirmation offer.
(b) The Merger of a business with the fair value of at least 80% of the
maximum proceeds is consummated.
ARTICLE 8
TERMINATION
SECTION 8.1 Board Action. This Agreement may be terminated at any time by
mutual consent of the Boards of Directors of FSI and PES.
SECTION 8.2 Certain Dates. In the event that FSI shall not have received
certified financial statements from PES and/or this Agreement is not executed
by both parties by July 19, 1999, or FSI has not received executed purchase
agreements and other reasonable proof of PES' acquisition (or agreements to
acquire) Human Resource Firms with collective minimum annual revenues of at
least $1 million by August 30, 1999, this Agreement may be terminated by
either party upon written notice, whether before or after approval of the
Merger thereof by the holders of the requisite number of shares of FSI. This
Agreement shall terminate automatically if the Merger has not been consummated
by December 8, 1999, eighteen (18) months from the effective date of FSI 's
initial public offering, which consummation includes a declaration of
effectiveness by the Securities and Exchange Commission of FSI's
Post-Effective Amendment and successful completion of a shareholder
reconfirmation offering, pursuant to which shareholders representing less than
80% of the proceeds from FSI 's initial public offering vote to reconfirm
their investments.
SECTION 8.3 Audited Financial Statements. In the event that PES's audited
financial statements are materially and adversely inconsistent with the PES
unaudited financial statements annexed hereto and incorporated herein by
reference, FSI shall have the right to unilaterally terminate this Agreement
by the Board of Directors of FSI notifying PES and its counsel, Xxxxxx &
Xxxxx, of such termination. Such notice shall be sent to PES and its United
States counsel prior to the Effective Date.
SECTION 8.4 Effect of Termination. In the event of the termination of this
Agreement, this Agreement shall thereafter become void and have no effect and
no party hereto shall have any liability to any other party hereto or its
shareholders or directors or officers in respect thereof, except for the
obligations of the parties hereto in Section 9.2 hereof and the last sentences
of paragraphs (a) and (b) of Section 3.4 hereof (providing for the return or
destruction of documents) .
ARTICLE 9
GENERAL AGREEMENTS
SECTION 9.1 Cooperation. Each of the parties hereto shall cooperate with the
other in every reasonable manner in carrying out the transactions contemplated
herein, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel for either party hereto.
SECTION 9.2 Funds. Each party shall incur all its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby.
After the consummation of the Merger, all expenses will be incurred by the
Surviving Entity.
SECTION 9.3 Survival of Representations and Warranties. All representations
and warranties in this Agreement or in any instrument or certificate delivered
pursuant to this Agreement delivered on or prior to the Effective Date shall
survive the consummation of the Merger.
SECTION 9.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telex or telegram or mailed by registered or
certified mail, postage prepaid, as follows:
(a) If to FSI, to:
Eng-Chye Low
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
Xxxx Xxxxxxxxx, Esq.
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
00 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
(b) If to PES, to:
Xxxx X. Xxxxxxx
Platinum Executive Search, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
(000) 000-0000 (fax)
With a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Fax (000) 000-0000
The date of any such notice shall be the date hand delivered or otherwise
transmitted or mailed.
SECTION 9.5 Amendment. This Agreement (including the documents and
instruments referred to herein or therein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof, (b) is not intended to confer upon any other person any rights or
remedies hereunder, and (c) shall not be assigned by operation of law or
otherwise. This Agreement may be amended or modified in whole or in part to
the extent permitted by New York law at any time, by an agreement in writing
executed in the same manner as this Agreement after authorization to do so by
the Board of Directors of PES and FSI.
SECTION 9.6 Waiver. At any time prior to the Effective Date, 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
representation 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 is set forth in an instrument in
writing signed on behalf of such party.
SECTION 9.7 Brokers. PES and FSI represent and warrant that no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger, except as stated herein or
elsewhere in writing.
SECTION 9.8 Publicity. So long as this Agreement is in effect, the parties
hereto shall not issue or cause the publication of any press release or other
announcement with respect to the Merger or this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld or
delayed where such release or announcement is required by applicable law.
SECTION 9.9 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.
SECTION 9.10 Successors and Assigns. This Agreement shall be binding upon
and insure to the benefit of and enforceable by the respective successors and
assigns of the parties hereto.
SECTION 9.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 9.12 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
SECTION 9.13 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach hereof, shall finally be settled by
arbitration in the State of New York in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION 9.14 Adjustment of Stock Splits. The parties hereto recognize that
by virtue of PES' negotiation for the acquisition of Human Resource Firms, the
number of shares of common and convertible preferred stock of PES actually
issued and outstanding immediately prior to the Merger may vary from the
numbers used in this Agreement, and intend that all numbers of shareholdings
and option rights in the Surviving Entity shall be appropriately adjusted
based on any such changes in PES holdings, in the following manner: The
shareholding split between former PES and former FSI shareholders shall be 94%
and 6% respectively, calculated on the basis of assuming the full conversion
of the convertible preferred into common and the complete exercise of options
to acquire common, and the respective percentage holdings of the former FSI
shareholders or their designees shall be as follows: 2.84508% for the public
shareholders; 2.21284% for the insiders, and 0.94206% for Xxxxxxxxx &
Xxxxxxxxx. Notwithstanding the foregoing, in no event shall the number of
shares of PES common or convertible preferred decrease by more than 10 percent
of 5,555,475 and 740,000, respectively (not collectively, but for each of the
common and the preferred separately), without the prior written consent of
FSI.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
COUNTERPART SIGNATURE PAGE TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FIRST SUNRISE INC.
AND
PLATINUM EXECUTIVE SEARCH, INC.
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers on the 21st day of July, 1999.
FIRST SUNRISE, INC.
By:
President
PLATINUM EXECUTIVE SEARCH, INC.
By: ____
Name: Xxxx Xxxxxxx
Title: President
By: ___________________
Name: Xxxxx X. Xxxxxx
Title: Chairman
SCHEDULE 3.3(c)
Permitted exceptions to prohibitions against issuing, granting, selling or
pledging or agreeing or proposing to issue, grant, sell or pledge any shares
of, or rights of any kind to acquire any shares of, a Constituent Entity's
capital stock (ii) incurring any indebtedness other than in the ordinary
course of business, (iii) acquiring directly or indirectly by redemption or
otherwise any shares of a Constituent Entity's capital stock of any class or
(iv) entering into or modify any contact, agreement, commitment or arrangement
with respect to any of the foregoing.
Permitted Exceptions for PES:
NONE
Permitted Exceptions for FSI:
NONE
SCHEDULE 4.15
List of names and addresses of each bank or other financial institution in
which FSI has an account, deposit or safe-deposit box, including the number of
each such account, deposit and safe-deposit box.
Account Name & Address Account or Box Number
SCHEDULE 5.10
List of names and addresses of each bank or other financial institution in
which PES has an account, deposit or safe-deposit box, including the number of
each such account, deposit and safe-deposit box.
Account Name & Address Account or Box Number
