EXHIBIT 2.1
STOCK EXCHANGE AGREEMENT WITH MICRONETICS, INC.
STOCK EXCHANGE AGREEMENT
THIS AGREEMENT is made this 20th day of June, 1998, by and between MICRONETICS
INC., a Utah corporation ("MKRO"), PRAXIS PHARMACEUTICALS INC., a Nevada
corporation ("PPI"), the shareholders of MKRO who are listed on Schedule A
attached hereto ("MKRO SHAREHOLDERS"), and the shareholders of PPI who are
listed on Schedule B attached hereto ("PPI SHAREHOLDERS").
WITNESSETH:
WHEREAS, the total authorized capital stock of PPI consists of 50,000,000 shares
of common stock, each with par value $0.001 par value, of which 5,000,000 shares
are issued and outstanding (the "PPI Shares"), and 1,000,000 shares of preferred
stock, each with $0.01 par value, of which none is issued and outstanding; and
WHEREAS, the total authorized capital stock of MKRO consists of 50,000,000
shares of $0.001 par value Common Stock of which 14,125,500 shares are issued
and outstanding; and
WHEREAS, MKRO desires to acquire all of the issued and outstanding capital stock
of PPI, or 5,000,000 shares of Common Stock ("PPI Shares") for 5,000,000
post-split shares of common stock of MKRO; and
WHEREAS, in reliance on and subject to the terms and conditions,
representations, warranties, covenants and agreements herein contained, PPI
desires to sell the PPI Shares to MKRO, and MKRO desires to purchase the PPI
Shares in a stock for stock exchange.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE
Section 1.1 AGREEMENT TO PURCHASE AND EXCHANGE. In reliance on and subject to
the terms, conditions, representations, warranties, covenants and agreements
herein contained, PPI shall assign, transfer and convey unto MKRO, and MKRO
shall purchase all of the PPI Shares for 5,000,000 post-split shares of MKRO in
a tax free reorganization.
Section 1.2 PURCHASE PRICE. The aggregate purchase price for the PPI Shares (the
"Purchase Price") shall be 5,000,000 post-split MKRO shares.
Section 1.3 CLOSING. The closing of the transaction contemplated in this
Agreement (the "Closing") shall take place at the offices of Xxxx Xxxx Xxxxx of
Xxxxx Xxxxxxxxx Xxx & Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, on June 22, 1998, or at such other date, time or place as
shall be mutually acceptable to the parties (the "Closing Date").
Section 1.4 TRANSACTIONS AND DOCUMENTS AT AND AFTER CLOSING.
(a) At the Closing, PPI shall deliver to MKRO certificates representing
5,000,000 shares of PPI, duly endorsed for transfer.
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(b) At the Closing, MKRO shall deliver to PPI the shares of MKRO common stock
representing the Purchase Price for the PPI Shares, as set forth hereinabove,
and bearing an appropriate legend restricting transfer except as permitted under
Rule 144 of the Securities Act of 1933, as amended.
(c) From time to time and at any time, at MKRO's request, whether on or after
the Closing Date, and without further consideration, PPI shall, at its own
expense except as otherwise provided in this Agreement, execute and deliver such
further documents and instruments of conveyance and transfer and shall take such
further actions as may be necessary or convenient, in the reasonable opinion of
MKRO, to transfer and convey to MKRO, all of its right, title and interest in
and to the PPI Shares, free and clear of any lien or adverse claim.
(d) From time to time and at any time, at PPI's request, whether on or after the
Closing Date, and without further consideration, MKRO shall, at its own expense
except as otherwise provided in this Agreement, execute and deliver such further
documents and instruments of conveyance and transfer and shall take such further
actions as may be necessary or convenient, in the reasonable opinion of PPI, to
transfer and convey to PPI, all of its right, title and interest in and to the
MKRO Shares, free and clear of any lien or adverse claim.
2. ADDITIONAL AGREEMENTS.
Section 2.1 MKRO'S ACCESS AND INSPECTION. PPI has allowed and shall allow MKRO
and its authorized representatives full access during normal business hours from
and after the date hereof and prior to the Closing Date to all of PPI's
properties, books, contracts, commitments and records for the purpose of making
such investigation as MKRO may desire, and PPI shall furnish MKRO such
information concerning PPI's affairs as MKRO may request. PPI has caused and
shall cause PPI's personnel to assist MKRO in making such investigation and
shall cause the counsel, accountants, engineers and other non-employee
representatives of PPI to be reasonably available to MKRO for such purposes.
Section 2.2 PPI'S ACCESS AND INSPECTION. MKRO shall allow PPI and its authorized
representatives access during normal business hours from and after the date
hereof and prior to the Closing Date to such of MKRO's properties, books,
contracts, commitments and records as PPI may reasonably request for the purpose
of determinng the financial condition of MKRO, MKRO shall cause MKRO's personnel
to assist PPI in making such investigation and shall cause the counsel,
accountants, engineers and other non-employee representatives of MKRO to be
reasonably available to PPI for such purposes.
Section 2.3 COOPERATION. The parties shall cooperate fully with each other and
with their representatives, counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and will use their best efforts to consummate the transactions
contemplated hereby and fulfil their obligations hereunder.
Section 2.4 EXPENSES. All of the expenses incurred by MKRO in connection with
the authorization, preparation, execution and performance of this Agreement by
MKRO, including without limitation all fees and expenses of agents,
representatives, counsel and accountants for MKRO, shall be paid by MKRO and/or
its representatives. All expenses incurred by PPI in connection with the
authorization, preparation, execution and performance of this Agreement,
including without limitation all fees and expenses of agents, representatives,
counsel and accountants, shall be paid by PPI.
Section 2.5 BROKERS. Each party hereto jointly and severally represents and
warrants that no broker or finder has acted on its behalf in connection with
this Agreement or the transactions contemplated herein other than Type
Investments Holdings Ltd., Aspen Ridge Corporation and Satisfaction Trust, and
each party shall indemnify the other and save it harmless from any claim or
demand for commission or other
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compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 2.6 MKRO SALE OF SUBSIDIARIES. Prior to the Closing, MKRO shall sell its
two subsidiaries, Information Management Systems Inc. and Telesolutions Inc., to
a private company owned or controlled by Xxxx Xxxx in exchange for cancellation
of 4,445,000 shares of MKRO Common Stock in the name of Xxxx Xxxx.
Section 2.7 REVERSE SPLIT. Prior to Closing, the Board of Directors of MKRO and
the requisite number of shareholders shall approve and effect a 1-to-118.45
reverse split of the Common Stock of MKRO.
3. REPRESENTATIONS AND WARRANTIES OF PPI.
PPI represents, covenants and warrants to MKRO as follows:
Section 3.1 CORPORATE EXISTENCE/STANDING/AUTHORITY. PPI is a corporation duly
organized, validly existing and in good standing under the laws of Nevada and
has the corporate power and authority to own, operate and lease its respective
properties, to carry on its business as now being conducted, and to enter into
this Agreement and to carry out the transactions contemplated hereby. PPI is
duly qualified to do business and is in good standing in each jurisdiction where
the failure to qualify would have a material adverse affect on it. PPI has
delivered to MKRO or its counsel true and correct copies of the articles of
incorporation and by-laws of PPI, together with any amendments thereto.
Section 3.2 SHARES OF STOCK. All issued and outstanding shares of capital stock
of PPI have been duly authorized and validly issued and are fully paid and
nonassessable. There is no subscription, option, warrant, call, right, contract,
commitment, understanding or arrangement relating to the issuance, sale or
transfer by PPI of any shares of its capital stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Section 3.3 AUTHORITY. PPI has the full right and authority to enter into and
fully perform this Agreement and all other agreements and documents to be
delivered to MKRO in connection herewith. All actions required to be taken by
PPI to authorize the execution, delivery and performance of this Agreement and
all other agreements and documents to be delivered in connection herewith have
been or will by the Closing Date be properly taken. This Agreement constitutes
the valid and binding obligation of PPI. Neither the execution and delivery of
this Agreement and all other agreements and documents executed in connection
herewith nor the consummation of the transactions contemplated hereby nor the
performance of this Agreement and all other agreements and documents executed in
connection herewith will (1) conflict with or result in a breach of any
provision of the certificate of incorporation or by-laws of PPI, (2) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance or the payment of
money required by, or result in the creation of any lien, security interest,
charge or encumbrance upon any of PPI's properties under any of the terms,
conditions or provisions of any loan agreement, note, bond, mortgage, indenture,
lease, agreement or other instrument or commitment to which PPI is a party, or
by which PPI or its properties may be bound or affected or (3) violate any
order, writ, injunction, decree, judgment, or ruling of any court or
governmental authority specifically applicable to PPI or any of its properties.
Section 3.4 NO VIOLATION. Except as set forth on Schedule 3.4, to the best
knowledge of PPI, PPI has complied with all rules, regulations, codes and laws
affecting its business and operations and is not in default under, or in
violation of, any provision of any federal, state or local rule, regulation,
code or law nor has PPI been given notice of any such default or violation.
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Section 3.5 LICENSES AND RIGHTS. PPI possesses all franchises, easements,
licenses, permits and other authorizations from governmental or regulatory
authorities and from all other persons or entities that are necessary to permit
it to engage in its business as presently conducted in and at all locations and
places where it is presently operating. Such franchises, licenses, permits and
other authorizations are set forth on Schedule 3.5.
Section 3.6 CONSENTS. Except as set forth on Schedule 3.6 hereto, no approval or
consent of any person, firm or other entity or body is required to be obtained
by PPI for the authorization of this Agreement or the consummation by PPI of the
transactions contemplated hereby.
Section 3.7 NO DEFAULTS. Except as set forth on Schedule 3.7, to the best
knowledge of PPI, no default (or event which with the passage of time or the
giving of notice or both would become a default) exists or is alleged to exist
with respect to the performance of any obligation of PPI under the terms of any
indenture, license, mortgage, deed of trust, lease, note, guaranty or other
contract or instrument, including, but not limited to, any contract set forth on
Schedule 3.17, to which PPI is a party or to which its assets are subject, or by
which it is otherwise bound, and no such default or event exists or is alleged
to exist with respect to the performance of any obligation of any other party
thereto.
Section 3.8 FINANCIAL STATEMENTS. MKRO has been or will be furnished with the
proforma financial statements (the "Financial Statements"). The Financial
Statements were prepared in accordance with generally accepted accounting
principles and present fairly and accurately the information set forth therein.
Section 3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 3.9
hereto, since December 31, 1997, PPI has actively conducted its business in the
ordinary and regular course. Since that date, there has not been any material
adverse change in condition (financial or otherwise), results of operations,
assets, liabilities, properties, business or prospects of PPI nor is any event
threatened which would cause such an adverse change, nor has there occurred any
event or governmental regulation or order restricting the business of PPI.
Section 3.10 FACILITIES AND EQUIPMENT. The personal property owned or leased by
PPI at its facility for the operation of, or used in, its business is in its
possession or under its control and is adequate for the operation of such
business as presently conducted.
Section 3.11 TITLE TO ASSETS. Except as set forth on Schedule 3.11 or in the
Financial Statements, PPI has good, valid and marketable title to all of its
real property and leasehold estates and good and valid title to all of its other
assets (tangible and intangible), including, but not limited to, all leasehold
improvements and equipment and all other properties and assets reflected or
required to be reflected in the Financial Statements and all properties and
assets purchased or leased by it since the dates of such Financial Statements
(except for properties and assets so reflected or required to be reflected which
have been sold or otherwise disposed of in the ordinary course of business),
subject to no liens, pledges, encumbrances, mortgages, security interests,
charges or other similar restrictions of any nature whatsoever. Except as set
forth on Schedule 3.11, PPI enjoys peaceful and quiet possession of its
properties and assets pursuant to or by all of the deeds, bills of sale, leases,
licenses and other agreements under which it is operating its business.
Section 3.12 ABSENCE OF UNDISCLOSED LIABILITIES. PPI does not have any material
liabilities or obligations, either accrued or unaccrued, fixed or contingent,
which have not been reflected in the Financial Statements or set forth on
Schedule 3.12 hereof.
Section 3.13 LITIGATION. Schedule 3.13 hereof sets forth a list of all
administrative or judicial proceedings to which PPI is a party. Except as set
forth on Schedule 3.13, there is no action, suit, claim, demand, arbitration or
other proceeding, administrative or judicial, pending or, to the best knowledge
of PPI,
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threatened against or relating to PPI which, if adversely determined or
resolved, would materially and adversely affect the financial condition, results
of operations, business or prospects of PPI.
Section 3.14 PATENTS AND TRADEMARKS.
(a) Except as set forth on Schedule 3.14(a), PPI does not own, or operate under,
any patent, trademark or service xxxx or any applications therefor. All trade
names (including those whose use is limited to one or more states of the United
States) owned or used by PPI are listed on Schedule 3.14 hereof and, to the
extent indicated therein, have been duly registered with the states of the
United States or the corresponding offices of other countries. Except as set
forth on Schedule 3.14, PPI is the sole and exclusive owner of, or has the sole
and exclusive power with respect to, or has the sole and exclusive right to use,
the trade names specified on Schedule 3.14.
(b) Except as set forth on Schedule 3.14(b) hereof, PPI has not ever been
charged with infringement or violation of any adversely held trademark, trade
name or copyright.
(c) Except as set forth on Schedules 3.14(a) and 3.14(b), there are no claims or
demands of any other person, firm or corporation pertaining to the trade names,
copyright registrations or pending copyright registration applications, as the
case may be, listed on such schedules, and no proceedings have been instituted
which challenge the right of PPI in respect thereof.
Section 3.15 EMPLOYEE BENEFITS.
(a) Schedule 3.15 hereof contains a list of (i) each pension, profit sharing,
bonus, deferred compensation, or other retirement plan or arrangement for the
benefit of any employee or group of employees of PPI or any independent
contractors or group of independent contractor of PPI, (ii) each medical,
health, disability, insurance or other plan or arrangement of PPI, and (iii)
each employee stock option plan or other plan providing for the purchase of
shares of capital stock of PPI. All of such plans and arrangements of PPI are
referred to herein as the "employee benefit plans".
(b) The amounts reflected in the Financial Statements as liabilities or
contingent liabilities with respect to employee benefit plans have been
calculated in accordance and compliance with applicable law, including
accounting principles relating thereto.
(c) All of the employee benefit plans maintained by PPI (and each funding medium
which may be attendant thereto) are in compliance with applicable law and all
reporting and disclosure requirements under applicable laws and regulations, and
have been administered and operated in accordance with their respective
provisions and applicable law. There are no actions, suits or claims (other than
routine claims for benefits) pending with respect to the employee benefit plans.
(d) PPI has filed, published and disseminated all reports, documents, statements
and communications which are required to be filed, published or disseminated
under applicable law and the rules and regulations promulgated thereunder
relating to, and have timely made all modifications and amendments to, the
employee benefit plans.
Section 3.16 TAXES AND TAX RETURNS. PPI has duly filed all income, franchise and
other tax returns and reports required to be filed by it and has duly paid or
made provision for the payment of all taxes (including any interest or
penalties) which are due and payable pursuant to such returns. PPI has withheld
proper and accurate amounts from their employees' compensation in substantial
compliance with all withholding and similar provisions of applicable law. There
are and will hereafter be no tax deficiencies (including penalties and interest)
of any kind assessed against PPI with respect to any period ending on or before
the Closing Date.
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Section 3.17 CONTRACTS. PPI has heretofore furnished to MKRO or its counsel true
and complete copies of each document, and a written description of each oral
contact, set forth on Schedule 3.17 hereof. Schedule 3.17 is a true and complete
list of all contracts, understandings, commitments, arrangements and agreements
of the following types, including all amendments thereto which PPI is a party:
(a) Contracts relating to equipment purchases, or series of similar equipment
purchases from the same supplier, involving an expenditure of, or if in a
series, expenditures in the aggregate of, more than twenty-five thousand dollars
($25,000);
(b) Bonus, incentive, pension, profit-sharing, hospitalization, insurance,
deferred compensation, retirement, stock option or stock purchase plans or
similar plans providing employee benefits;
(c) Factoring, loan, note, financing or similar contracts with any lenders or
guarantees of undertakings to answer for the debts or defaults of another, or
any contracts encumbering title to any properties, involving in each case, or if
in a series involving the same lender, guarantor or property, as the case may
be, in the aggregate, at least twenty-five thousand dollars ($25,000);
(d) contracts for the acquisition or disposition of a business or substantially
all of the property, assets or capital stock or other securities of a business
or company under which there are continuing or unperformed obligations on the
part of any of the parties hereto, which contracts in each case involve at least
twenty-five thousand dollars($25,000);
(e) Conditional sales contracts, leases of personal property or contracts for
the purchase or sale of real or personal property, involving in each case at
least twenty-five thousand dollars ($25,000);
(f) Management or consulting contracts involving in each case, or with respect
to any individual in the aggregate, at least twenty-five thousand dollars
($25,000);
(g) contracts for the furnishing of services or products to or by PPI, involving
an expenditure in each case of at least twenty-five thousand dollars ($25,000);
(h) Royalty or licensing contracts or contracts requiring similar payments to
unrelated parties individually, or with respect to any unrelated party in the
aggregate, involving or which reasonably may in the future involve an amount in
excess of twenty-five thousand dollars ($25,000) annually;
(i) All employment agreements between PPI and any of its employees; and
(j) All agreements, contracts and commitments not listed on any other schedule
hereto which individually involve the payment of twenty-five thousand dollars
($25,000) or more.
Except as set forth on Schedule 3.17, all such contracts, understandings,
commitments, arrangements and agreements are in full force and effect.
Section 3.18 COLLECTIVE BARGAINING AGREEMENTS. Schedule 3.18 hereof is a list of
all collective bargaining agreements with any labor organization to which PPI is
a party. The relations of PPI with its employees are good and there are no
impending labor difficulties.
Section 3.19 INSURANCE. PPI is insured by insurers unaffiliated with PPI or PPI
with respect to its properties and the conduct of its business in such amounts
and against such risks as are generally and prudently maintained for comparable
businesses and consistent with its past practice.
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Section 3.20 REAL PROPERTY.
(a) Schedule 3.20 hereof sets forth a true and complete list of (i) all real
property owned by PPI and (ii) all real property leases to which PPI is a party.
PPI has heretofore furnished to MKRO or its counsel true and complete copies of
each written contract and a written description of each oral contract relating
to the list set forth on Schedule 3.20.
(b) With respect to the leases described on Schedule 3.20, except as set forth
on Schedule 3.20:
(i) All such leases are in writing and duly executed, and, where
required, witnessed, acknowledged and recorded to make them valid and binding
and in full force and effect for the full term thereof, and none have been
modified;
(ii) The rental set forth in each such lease is the actual rental being
paid, and there are no separate agreements or understandings with respect to the
same not set forth in Schedule 3.20;
(iii) The lessee under each such lease has the full right to exercise
any renewal option contained therein and upon due exercise will be entitled to
enjoy the use of the premises for the full term of such renewal option;
(iv) Upon performance by the lessee of the terms of each such lease,
the lessee has the full right to enjoy the use of the premises demised
thereunder for the full term thereof; and
(v) Except as set forth on Schedule 3.20, all security deposits
required by such leases have been made and no forfeiture with respect thereto
claimed, in whole or in part, by any of the lessors.
Section 3.21 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties made by PPI under this Agreement or in any certificate, schedule or
other document furnished or to be furnished to MKRO or its counsel pursuant
hereto, or in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements of fact
contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF MKRO
MKRO represents, covenants and warrants to PPI as follows:
Section 4.1 CORPORATE EXISTENCE/STANDING/AUTHORITY. MKRO is a corporation duly
organized, validly existing and in good standing under the laws of Utah and has
the corporate power and authority to own, operate and lease its respective
properties, to carry on its business as now being conducted, and to enter into
this Agreement and to carry out the transactions contemplated hereby. MKRO is
duly qualified to do business and is in good standing in each jurisdiction where
the failure to qualify would have a material adverse affect on it. MKRO has
delivered to PPI or its counsel true and correct copies of the articles of
incorporation and by-laws of MKRO, together with any amendments thereto.
Section 4.2 SHARES OF STOCK. MKRO has authorized 50,000,000 shares of common
stock of which there are presently issued and outstanding 18,000,000 shares of
common stock. None of the shares of preferred stock are issued and outstanding.
All issued and outstanding shares of capital stock of MKRO have been duly
authorized and validly issued and are fully paid and nonassessable. There is no
subscription, option, warrant, call, right, contract, commitment, understanding
or arrangement relating to the issuance, sale or transfer by MKRO of any shares
of its capital stock, including any right of conversion or exchange under any
outstanding security or other instrument. There is on file with the NASD a
current, accurate and complete 15-c2(11) for MKRO and MKRO is currently trading
on the Bulletin Board under the Symbol "MKRO."
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Section 4.3 AUTHORITY. MKRO has the full right and authority to enter into and
fully perform this Agreement and all other agreements and documents to be
delivered to PPI in connection herewith. All actions required to be taken by
MKRO to authorize the execution, delivery and performance of this Agreement and
all other agreements and documents to be delivered in connection herewith have
been or will by the Closing Date be properly taken. This Agreement constitutes
the valid and binding obligation of MKRO. Neither the execution and delivery of
this Agreement and all other agreements and documents executed in connection
herewith nor the consummation of the transactions contemplated hereby nor the
performance of this Agreement and all other agreements and documents executed in
connection herewith will (1) conflict with or result in a breach of any
provision of the certificate of incorporation or by-laws of MKRO, (2) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance or the payment of
money required by, or result in the creation of any lien, security interest,
charge or encumbrance upon any of MKRO's properties under any of the terms,
conditions or provisions of any loan agreement, note, bond, mortgage, indenture,
lease, agreement or other instrument or commitment to which MKRO is a party, or
by which MKRO or its properties may be bound or affected or (3) violate any
order, writ, injunction, decree, judgment, or ruling of any court or
governmental authority specifically applicable to MKRO or any of its properties.
Section 4.4 NO VIOLATION. Except as set forth on Schedule 4.4, to the best
knowledge of MKRO, MKRO has complied with all rules, regulations, codes and laws
affecting its business and operations and is not in default under, or in
violation of, any provision of any federal, state or local rule, regulation,
code or law nor has MKRO been given notice of any such default or violation.
Section 4.5 LICENSES AND RIGHTS. MKRO possesses all franchises, easements,
licenses, permits and other authorizations from governmental or regulatory
authorities and from all other persons or entities that are necessary to permit
it to engage in its business as presently conducted in and at all locations and
places where it is presently operating. Such franchises, licenses, permits and
other authorizations are set forth on Schedule 4.5.
Section 4.6 CONSENTS. Except as set forth on Schedule 4.6 hereto, no approval or
consent of any person, firm or other entity or body is required to be obtained
by MKRO for the authorization of this Agreement or the consummation by MKRO of
the transactions contemplated hereby.
Section 4.7 NO DEFAULTS. Except as set forth on Schedule 4.7, to the best
knowledge of MKRO, no default (or event which with the passage of time or the
giving of notice or both would become a default) exists or is alleged to exist
with respect to the performance of any obligation of MKRO under the terms of any
indenture, license, mortgage, deed of trust, lease, note, guaranty or other
contract or instrument, including, but not limited to, any contract set forth on
Schedule 4.17, to which MKRO is a party or to which its assets are subject, or
by which it is otherwise bound, and no such default or event exists or is
alleged to exist with respect to the performance of any obligation of any other
party thereto.
Section 4.8 FINANCIAL STATEMENTS. PPI has been or will be furnished with
statement of liabilities of MKRO for the period ended April 30, 1998, and its
statements of earnings for the fiscal year then ended (the "Financial
Statements") as set forth on Schedule 4.8 attached hereto. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods and as of their date
of issuance were or will be true, correct and complete in all material respects
and present fairly and accurately the information set forth therein.
Section 4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 4.9
hereto, since December 31, 1997, MKRO has actively conducted its business in the
ordinary and regular course. Since that date, there has not been any material
adverse change in the condition (financial or otherwise), results of
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operations, assets, liabilities, properties, business or prospects of MKRO nor
is any event threatened which would cause such an adverse change, nor has there
occurred any event or governmental regulation or order restricting the business
of MKRO.
Section 4.10 FACILITIES AND EQUIPMENT. The personal property owned or leased by
MKRO at its facility for the operation of, or used in, its business is in its
possession or under its control and is adequate for the operation of such
business as presently conducted.
Section 4.11 TITLE TO ASSETS. Except as set forth in Schedule 4.11 or in the
Financial Statements, MKRO has good, valid and marketable title to all of its
real property and leasehold estates and good and valid title to all of its other
assets (tangible and intangible), including, but not limited to, all leasehold
improvements and equipment and all other properties and assets reflected or
required to be reflected in the Financial Statements and all properties and
assets purchased or leased by it since the dates of such Financial Statements
(except for properties and assets so reflected or required to be reflected which
have been sold or otherwise disposed of in the ordinary course of business),
subject to no liens, pledges, encumbrances, mortgages, security interests,
charges or other similar restrictions of any nature whatsoever. Except as set
forth on Schedule 4.11, MKRO enjoys peaceful and quiet possession of its
properties and assets pursuant to or by all of the deeds, bills of sale, leases,
licenses and other agreements under which it is operating its business.
Section 4.12 ABSENCE OF UNDISCLOSED LIABILITIES. MKRO does not have any material
liabilities or obligations, either accrued or unaccrued, fixed or contingent,
which have not been reflected in the Financial Statements or set forth on
Schedule 4.12 hereof, or which exceed in the aggregate $25,000.
Section 4.13 LITIGATION. Schedule 4.13 hereof sets forth a list of all
administrative or judicial proceedings to which MKRO is a party. Except as set
forth on Schedule 4.13, there is no action, suit, claim, demand, arbitration or
other proceeding, administrative or judicial, pending or, to the best knowledge
of MKRO, threatened against or relating to MKRO which, if adversely determined
or resolved, would materially and adversely affect the financial condition,
results of operations, business or prospects of MKRO.
Section 4.14 PATENTS AND TRADEMARKS.
(a) Except as set forth on Schedule 4.14(a), MKRO does not own, or operate
under, any patent, trademark or service xxxx or any applications therefor. All
trade names (including those whose use is limited to one or more states of the
United States) owned or used by MKRO are listed on Schedule 4.14 hereof and, to
the extent indicated therein, have been duly registered with the states of the
United States or the corresponding offices of other countries. Except as set
forth on Schedule 4.14, MKRO is the sole and exclusive owner of, or has the sole
and exclusive power with respect to, or has the sole and exclusive right to use,
the trade names specified on Schedule 4.14.
(b) Except as set forth on Schedules 4.14(b) hereof, MKRO has not ever been
charged with infringement or violation of any adversely held trademark, trade
name or copyright.
(c) Except as set forth on Schedules 4.14(a) and 4.14(b), there are no claims or
demands of any other person, firm or corporation pertaining to the trade names,
copyright registrations or pending copyright registration applications, as the
case may be, listed on such schedules, and no proceedings have been instituted
which challenge the right of MKRO in respect thereof.
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Section 4.15 EMPLOYEE BENEFITS.
(a) Schedule 4.15 hereof contains a list of (i) each pension, profit sharing,
bonus, deferred compensation, or other retirement plan or arrangement for the
benefit of any employee or group of employees of MKRO or any independent
contractors or group of independent contractor of MKRO, (ii) each medical,
health, disability, insurance or other plan or arrangement of MKRO, and (iii)
each employee stock option plan or other plan providing for the purchase of
shares of capital stock of MKRO. All of such plans and arrangements of MKRO are
referred to herein as the "employee benefit plans".
(b) The amounts reflected in the Financial Statements as liabilities or
contingent liabilities with respect to employee benefit plans have been
calculated in accordance and compliance with applicable law, including
accounting principles relating thereto.
(c) All of the employee benefit plans maintained by MKRO (and each funding
medium which may be attendant thereto) are in compliance with applicable law and
all reporting and disclosure requirements under applicable laws and regulations,
and have been administered and operated in accordance with their respective
provisions and applicable law. There are no actions, suits or claims (other than
routine claims for benefits) pending with respect to the employee benefit plans.
(d) MKRO has filed, published and disseminated all reports, documents,
statements and communications which are required to be filed, published or
disseminated under applicable law and the rules and regulations promulgated
thereunder relating to, and have timely made all modifications and amendments
to, the employee benefit plans.
Section 4.16 TAXES AND TAX RETURNS. MKRO has duly filed all income, franchise
and other tax returns and reports required to be filed by it and has duly paid
or made provision for the payment of all taxes (including any interest or
penalties) which are due and payable pursuant to such returns. MKRO has withheld
proper and accurate amounts from their employees' compensation in substantial
compliance with all withholding and similar provisions of applicable law. There
are and will hereafter be no tax deficiencies (including penalties and interest)
of any kind assessed against MKRO with respect to any period ending on or before
the Closing Date.
Section 4.17 CONTRACTS. MKRO has heretofore furnished to PPI or its counsel true
and complete copies of each document, and a written description of each oral
contact set forth on Schedule 4.17 hereof. Schedule 4.17 is a true and complete
list of all contracts, understandings, commitments, arrangements and agreements
of the following types, including all amendments thereto to which MKRO is a
party:
(a) Contracts relating to equipment purchases, or series of similar equipment
purchases from the same supplier, involving an expenditure of, or if in a
series, expenditures in the aggregate of, more than $25,000;
(b) Bonus, incentive, pension, profit-sharing, hospitalization, insurance,
deferred compensation, retirement, stock option or stock purchase plans or
similar plans providing employee benefits;
(c) Factoring, loan, note, financing or similar contracts with any lenders or
guarantees of undertakings to answer for the debts or defaults of another, or
any contracts encumbering title to any properties, involving in each case, or if
in a series involving the same lender, guarantor or property, as the case may
be, in the aggregate, at least $25,000;
(d) Contracts for the acquisition or disposition of a business or substantially
all of the property, assets or capital stock or other securities of a business
or company under which there are continuing or unperformed obligations on the
part of any of the parties hereto, which contracts in each case involve at least
$25,000;
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(e) Conditional sales contracts, leases of personal property or contracts for
the purchase or sale of real or personal property, involving in each case at
least twenty-five thousand dollars ($25,000);
(f) Management or consulting contracts, involving in each case, or with respect
to any individual in the aggregate, at least twenty-five thousand
dollars($25,000);
(g) Contracts for the furnishing of services or products to or by MKRO,
involving an expenditure in each case of at least twenty-five thousand dollars
($25,000);
(h) Royalty or licensing contracts or contracts requiring similar payments to
unrelated parties individually, or with respect to any unrelated party in the
aggregate, involving or which reasonably may in the future involve an amount in
excess of twenty-five thousand dollars ($25,000) annually;
(i) All employment agreements between MKRO and any of its employees; and
(j) All agreements, contracts and commitments not listed on any other schedule
hereto which individually involve the payment of twenty-five thousand dollars
($25,000) or more.
Except as set forth on Schedule 4.17, all such contracts, understandings,
commitments, arrangements and agreements are in full force and effect.
Section 4.18 COLLECTIVE BARGAINING AGREEMENTS. Schedule 4.18 hereof is a list of
all collective bargaining agreements with any labor organization to which MKRO
is a party. The relations of MKRO with its employees are good and there are no
impending labor difficulties.
Section 4.19 INSURANCE. MKRO is insured by insurers unaffiliated with MKRO or
MKRO with respect to its properties and the conduct of its business in such
amounts and against such risks as are generally and prudently maintained for
comparable businesses and consistent with its past practice.
Section 4.20 REAL PROPERTY.
(a) Schedule 4.20 hereof sets forth a true and complete list of (i) all real
property owned by MKRO and (ii) all real property leases to which MKRO is a
party. MKRO has heretofore furnished to PPI or its counsel true and complete
copies of each written contract and a written description of each oral contract
relating to the list set forth on Schedule 4.20.
(b) With respect to the leases described on Schedule 4.20, except as set forth
on Schedule 4.20:
(i) All such leases are in writing and duly executed, and, where
required, witnessed, acknowledged and recorded to make them valid and binding
and in full force and effect for the full term thereof, and none have been
modified;
(ii) The rental set forth in each such lease is the actual rental being
paid, and there are no separate agreements or understandings with respect to the
same not set forth in Schedule 4.20;
(iii) The lessee under each such lease has the full right to exercise
any renewal option contained therein and upon due exercise will be entitled to
enjoy the use of the premises for the full term of such renewal option;
(iv) Upon performance by the lessee of the terms of each such lease,
the lessee has the full right to enjoy the use of the premises demised
thereunder for the full term thereof; and
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(v) Except as set forth on Schedule 4.20, all security deposits
required by such leases have been made and no forfeiture with respect thereto
claimed, in whole or in part, by any of the lessors.
Section 4.20 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties made by MKRO under this Agreement or in any certificate, schedule or
other document furnished or to be furnished to PPI or its counsel pursuant
hereto, or in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements of fact
contained therein not misleading.
5. COVENANTS AND TRANSACTIONS PRIOR TO CLOSING
Section 5.1 CONDUCT AND TRANSACTIONS OF PPI PRIOR TO THE CLOSING. Between the
date of this Agreement and the Closing, the executive officers and board of
directors of PPI shall retain full control of the management and business of
their respective businesses. In order to assure protection and preservation of
PPI's business as well as PPI's performance of its obligations under and related
to this Agreement, PPI agrees that from the date of this Agreement up to and
including the Closing:
(a) PPI shall give MKRO, its counsel, accountants, appraisers and other
representatives or experts retained by MKRO full access on reasonable notice to
all the premises and books, records and personnel of PPI during normal business
hours and cause PPI to furnish to MKRO such financial and operating data and
other information with respect to the business and properties of PPI as MKRO may
from time to time reasonably request. In the event of termination of this
Agreement for any reason, MKRO will return all documents, work papers and other
materials obtained from PPI or PPI and will not further disclose to third
parties any confidential information obtained by it pursuant hereto.
(b) PPI shall use all reasonable efforts to (i) preserve intact the present
business organization and personnel of PPI, (ii) preserve the present goodwill
and advantageous relationships of PPI with all persons having business dealings
with PPI, and (iii) preserve and maintain in force all licenses, certificates,
leases, contracts, permits, registrations, franchises, confidential information,
trade names and copyrights, and applications for any of same, bonds and other
similar rights of PPI. Except as otherwise provided in this Agreement, PPI shall
refrain from entering into any new employment or consulting agreements with any
of its present officers, management personnel or consultants, or any other
employment or consulting agreement with any other person, not terminable by PPI
on less than thirty (30) days' notice. PPI shall maintain in force all property,
casualty, crime, life, directors, officers and other forms of insurance and
bonds which it presently carries and, except with the written consent of MKRO,
no cancellation or assignment of existing insurance coverage will be effected by
PPI.
(c) MKRO shall operate its business only in the usual, regular and ordinary
course and manner, and, except with the written consent of MKRO, shall refrain
from (i) selling or agreeing to sell any capital stock, or (ii) except in the
ordinary course of business, encumbering or mortgaging any property or assets or
terminating or modifying any lease or incurring any obligation (contingent or
otherwise).
(d) PPI or PPI shall not discuss or negotiate with any third party a possible
sale of all or any part of the capital shares or assets of PPI, nor provide any
information to any third party with respect thereto, other than such information
which is provided in the ordinary course of the business operation of PPI to
third parties, provided PPI has no reason to believe that such information may
be utilized to evaluate a possible sale of the capital shares or assets of PPI.
(e) PPI will exert its best efforts to fulfill in a timely manner all objectives
and conditions to permit consummation of the transactions as contemplated by
this Agreement and execute and deliver to MKRO any and all documents necessary,
in the reasonable opinion of its counsel, to consummate the transactions
contemplated by this Agreement.
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(f) PPI acknowledges that at the Closing MKRO will transfer to Xxxx Xxxx or
designee, all assets subject to liabilities and/or all stock of Information
Management Systems, Inc., its wholly owned subsidiary, in exchange for
cancellation of 4,445,000 shares of common stock of MKRO standing in his name.
Section 5.2 CONDUCT BY MKRO PRIOR TO CLOSING. Between the date of this Agreement
and the Closing Date, MKRO shall use its best efforts to fulfill in a timely
manner all objectives and conditions to permit consummation of the transactions
as contemplated by this Agreement and execute and deliver to PPI any and all
documents necessary, in the reasonable opinion of its counsel, to consummate the
transactions contemplated by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF MKRO
The obligations of MKRO under this Agreement are, at its option, subject to
satisfaction of the following conditions at or prior to the Closing:
Section 6.1 REPRESENTATIONS OF PPI. The representations and warranties of PPI
set forth in this Agreement shal be true and complete in all material respects
on and as of the Closing to the same extent and with the same force and effect
as if made on such date, except as expressly provided to the contrary in this
Agreement.
Section 6.2 CONSENTS. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies and from all other
commissions, boards, agencies and from any other person, firm or entity whose
approval or consent is necessary to the consummation of the transactions
contemplated by this Agreement.
Section 6.3 PERFORMANCE BY PPI. PPI shall have duly performed all obligations,
covenants and agreements undertaken by them herein and complied with all terms
and conditions applicable to them hereunder to be performed and complied with
prior to the Closing.
Section 6.4 DOCUMENTS TO BE DELIVERED TO MKRO. MKRO shall have received:
(a) A certificate, dated as of the Closing and executed by PPI certifying as to
the fulfillment of the matters contained in Sections 6.1, 6.2 and 6.3;
(b) True and complete copy of the certificates of incorporation of PPI,
certified by the Secretary of State of Nevada, and of the by-laws of PPI,
together with all amendments thereto, certified by the Secretary of PPI;
(c) Good standing certificate for PPI, certified by the Secretary of State of
Nevada;
(d) Certificates representing 5,000,000 of the PPI Shares, duly endorsed for
transfer, and PPI shall have received the MKRO Shares, duly endorsed for
transfer. All such shares shall be subject to Rule 144 legend.
(e) The Employment Agreement duly executed by the employees listed on, in the
form of Schedule 2.6 hereof.
Section 6.5 SUITS. No suit, action or other proceeding shall be a threatened or
pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement or which is likely to materially and adversely
affect the financial condition, results of operations, business or prospects of
PPI.
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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF PPI
The obligations of PPI under this Agreement are, at its option, subject to
satisfaction of the following conditions at or prior to the initial Closing:
Section 7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of MKRO set forth in this Agreement shall be true and complete in all material
respects on and as of the Closing to the same extent and with the same force and
effect as if made on such date, except as affected by the transactions
contemplated by this Agreement.
Section 7.2 CONSENTS. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies and from all other
commissions, boards, agencies and from any other person, firm or entity whose
approval or consent is necessary to the consummation of the transactions
contemplated by this Agreement.
Section 7.3 PERFORMANCE BY MKRO. MKRO shall have duly performed all obligations,
covenants and agreements undertaken by it herein and complied with all the terms
and conditions applcable to them hereunder to be performed or complied with
prior to the Closing.
Section 7.4 DOCUMENTS TO BE DELIVERED TO PPI. PPI shall have received:
(a) A certificate, dated as of the Closing, and executed by an officer of MKRO,
certifying as to the fulfillment of the matters contained in Sections 7.1, 7.2
and 7.3;
(b) Certificates representing the MKRO Shares, duly endorsed for transfer, and
MKRO shall have received 5,000,000 of the PPI Shares, duly endorsed for
transfer.
(c) True and complete copies of the certificate of incorporation of MKRO,
certified by the Secretary of State of Utah, and of the by-laws of MKRO,
together with all amendments thereto, certified by the Secretary of MKRO;
(d) Good standing certificate for MKRO, certified by the Secretary of State of
the domicile of each entity; and
(e) True and correct copies of Minutes of the Board of Directors authorizing the
officers of MKRO to consummate the transaction.
Section 7.5 SUITS. No suit, action or other proceeding shall be threatened or
pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
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8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
Section 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding the
closing of the transactions contemplated by this Agreement, or any investigation
made by or on behalf of PPI or MKRO, the representations and warranties of PPI
or MKRO contained in this Agreement or in any certificate, schedule, chart,
list, letter, compilation or other document delivered pursuant hereto, shall
survive the Closing for a period of one (1) year; provided, however, that as to
any breach of, or misstatement in, any such representation or warranty as to
which one party has given notice to the other on or prior to the expiration of
such one (1) year period, the same shall continue to survive beyond said period,
but only as to the matters contained in such notice.
Section 8.2 PPI'S INDEMNIFICATION. PPI covenants and agrees to indemnify and
save harmless MKRO and its directors, officers, employees and agents from any
and all costs, expenses, losses, damages and liabilities incurred or suffered
directly or directly by any of them (including reasonable legal fees and costs)
proximately resulting from or attributable to the breach of, or misstatement in,
any one or more of the representations or warranties of PPI made in or pursuant
to this Agreement.
Section 8.3 MKRO'S INDEMNIFICATION. MKRO covenants and agrees to indemnify and
save harmless PPI and its directors, officers, employees and agents from any and
all costs, expenses, losses, damages and liabilities incurred or suffered by any
of them (including reasonable legal fees and costs) proximately resulting from
or attributable to the breach of, or misstatement in, any one or more of the
representations or warranties of MKRO made in or pursuant to this Agreement.
Section 8.4 DEFENSE AGAINST ASSERTED CLAIMS. If any claim or assertion of
liability is made or asserted by a third party against a party indemnified
pursuant to this Section 8 ("Indemnified Party") based on any liability or
absence of right which, if established, would constitute a matter for which the
Indemnified Party would be entitled to indemnification by another party hereto
("the Indemnifying Party") the Indemnified Party shall with reasonable
promptness give to the Indemnifying Party written notice of the claim or
asserting of liability and request the Indemnifying Party to defend the same.
Failure to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of any liability which the Indemnifying Party might have to the
Indemnified Party unless such failure materially prejudices the Indemnifying
Party's position. The Indemnifying Party shall have the right to defend against
such liability or assertion, in which event the Indemnifying Party shall give
written notice to the Indemnified Party of the acceptance of defense of such
claim and the identity of counsel selected by the Indemnifying Party with
respect to such matters. The Indemnified Party shall be entitled to participate
with the Indemnifying Party in such defense and also shall be entitled at its
option to employ separate counsel for such defense at the expense of the
Indemnified Party. In the event the Indemnifying Party does not accept the
defense of the matter as provided above or in the event that the Indemnifying
Party or its counsel fails to use reasonable care in maintaining such defense,
the Indemnified Party shall have the full right at its option to defend against
the liability or assertion and to employ counsel for such defense at the expense
of the Indemnifying Party. All parties hereto will cooperate with each other in
the defense of any such action and the relevant records of each shall be
available to the others with respect to such defense.
9. ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
The rights under this Agreement shall not be assignable nor the duties delegable
by any party without the written consent of all parties hereto having been
obtained thereto. Nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity, other than the parties hereto, and
their successors in interest, any rights or remedies under or by reason of this
Agreement unless so stated expressly to the Contrary. All covenants, agreements,
representations, and warranties of the parties contained herein shall be binding
upon and inure to the benefit of MKRO and PPI and their respective successors
and permitted assigns.
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10. ABANDONMENT
In the event the transactions contemplated hereby are terminated or abandoned by
mutual agreement or the parties hereto, there shall be no liability on the part
of any of the parties by reason of such termination or abandonment.
11. NOTICES
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered or
deposited in the United States mail, certified or registered, return receipt
requested, postage prepaid, addressed to the parties at the following addresses
(or at such other address as shall be given in writing by any party to the
other) as follows:
To MKRO: Attn: XXX X XXXXX
--------------------
Micronetics Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000 Facsimile: 818.784.6552
With a copy to: Xxxx Xxxx Xxxxx, Esq.
Xxxxx Xxxxxxxxx Xxx & Stone
0000 Xxxxxxx Xxxx Xxxx #0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000 Facsimile: 310.274.8889
To PPI: Attn: ____________________
Praxis Pharmaceuticals Inc.
Northwestern Building
314-1008 Xxxxx Boulevard
Vancouver, B.C. 6VB 2X1
Telephone: 000.000.0000 Facsimile: 604.718.6828
With a copy to: Xxxx Xxx Xxxxxxx, Esq.
Xxxx Xxxx Xxxx Xxxxxxxxxx & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: 000.000.0000 Facsimile: 303.777.3823
12. REMEDIES NOT EXCLUSIVE
No remedy conferred by any of the provisions of this Agreement is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative and
shall be in addition to every remedy given hereunder or now or hereafter
existing, at law or in equity by statute or otherwise. The election of any one
or more remedies by MKRO or PPI shall not constitute a waiver of the right to
pursue other available remedies.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together shall constitute one and
the same instrument.
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14. CAPTIONS AND SECTION HEADINGS
Captions and section headings used herein are for convenience only and are not a
part of this Agreement and shall not be used in construing it.
15. WAIVERS
Any failure by any of the parties hereto to comply with all of the obligations,
agreements or conditions set forth herein may be waived by the other party or
parties, provided, however that any such waiver shall not be deemed a waiver of
any other obligation, agreement or condition contained herein.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties. There are
not and shall not be any verbal statements, representations, warranties,
undertakings or agreements between the parties, and this Agreement may not be
amended or modified in any respect except by a written instrument signed by the
parties hereto.
17. APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the laws of
the State of California.
IN WITNESS WHEREOF, the parties have duly executed the Agreement as of the dated
first above written.
MICRONETICS INC.
By /S/XXXX X. XXXX
Name XXXX X. XXXX
Title PRESIDENT
PRAXIS PHARMACEUTICALS INC.
By
Name
Title
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