Exhibit 99.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered
into as of June 28, 2001 (the "Agreement Date") by and between CERTIFIED
SERVICES, INC. a Nevada corporation ("CSRV"), UNILOC, INC., a California
corporation ("Uniloc"), an entity to be created by Xxxxxx Xxxxxxxx and Xxxxxxx
Xxxxxxx ("Newco") and certain CSRV shareholders ("Selling Shareholders").
WHEREAS, the parties intend that, subject to the terms and conditions
of this Agreement, Uniloc will acquire 1,800,000 of the issued and outstanding
pre-split shares of common stock of CSRV from CSRV's Selling Shareholders for
the purchase price of $310,000 and 75,000 shares of newly-issued Uniloc common
stock; and
WHEREAS, the parties intend that, subject to the terms and conditions
of this Agreement, CSRV will acquire 13,818,816 shares of the issued and
outstanding shares of common stock of Uniloc from Uniloc in exchange for
13,818,816 shares of common stock of CSRV, as defined in section 1 herein
("Exchange Shares"); and
WHEREAS, the Selling Shareholders are the holders of shares of CSRV
common stock in the following amounts Xxxxxx Xxxxxxxx (750,000 shares), Xxxxxxx
Xxxxxxx (750,000 shares), St. Xxxxxxx Venture Capital (105,000 shares),
Xxxxxxxxx Xxxxxxx (100,000 shares)Xxxxx Xxxxxxx (85,000 shares) and Xxxxx Xxxxxx
(10,000 shares) and the Selling Shareholders desire to sell their shares of CSRV
common stock under the terms and conditions set forth herein; and
WHEREAS, the parties intend that, subject to the terms and conditions
of this Agreement, Newco will acquire certain designated assets as defined in
Section 1 herein, to be transferred by CSRV in exchange for the assumption of
certain designated liabilities, as specified herein; and
WHEREAS, the parties have negotiated a Letter of Intent containing the
terms and conditions of a plan of exchange and asset disposition ("Term Sheet");
and
WHEREAS, upon the effectiveness of the exchange, as defined below, all
the issued and outstanding shares of Uniloc will be transferred to CSRV in
exchange for the Exchange Shares, and the parties acknowledge and accept that
although CSRV shall be the surviving corporation in exchange, from a corporate
law perspective, the transaction shall be treated as a "reverse acquisition,"
wherein Uniloc shall be deemed the surviving entity for accounting and financial
statements purposes; and
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WHEREAS, the mutual representations and warranties of the parties
herein are a material inducement to enter into this Agreement; and
WHEREAS, the parties acknowledge that the exchange will qualify and is
intended to qualify as a reorganization under Section 368 of the U.S. Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms will
have the meanings set forth below:
1.1 "ADA" means asset disposition agreement negotiated between CSRV and
Newco, which contemplates transfer of Designated Assets and Designated
Liabilities from CSRV to Newco.
1.2. "Closing" is defined in Section 11.1.
1.3. "Closing Date" is defined in Section 11.1.
1.4. "Designated Assets" means all of the assets of CSRV appearing on
CSRV's unaudited financial statements for the quarter ending forty five (45)
days from the Closing Date.
1.5. "Designated Liabilities" means all of the liabilities of CSRV
appearing on CSRV's unaudited financial statement for the quarter ending forty
five (45) days from the Closing.
1.6. "Exchange" means, collectively, the exchange of all of the issued and
outstanding Uniloc common stock for the Exchange Shares contemplated by Section
2 below.
1.7. "Exchange Shares" means the total number of CSRV shares of common
stock that will be issued under this Agreement to Uniloc shareholders in
exchange for all of the shares of Uniloc common stock that are issued and
outstanding immediately prior to the Closing.
1.8. "Intellectual Property Rights" means, collectively, all worldwide
industrial and intellectual property rights, including, without limitation,
patents, patent applications, patent rights, trademarks, trademark applications,
trade dress rights, trade names, service marks, service xxxx applications,
copyrights, copyright applications, mask work rights, mask work registrations,
franchises, licenses, inventions, trade secrets, know-how, customer lists,
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proprietary processes and formulae, software source and object code, algorithms,
architecture, structure, display screens, layouts, inventions, development tools
and all documentation and media constituting, describing or relating to the
above, including, without limitation, manuals, memoranda and records.
1.9 "Material Adverse Effect" means any event, change or effect that is (or
will with the passage of time be) materially adverse to a party's condition
(financial or otherwise), properties, assets, liabilities, business, operations,
or results of operations, it being understood that none of the following shall
be deemed by itself or by themselves, either alone or in combination, to
constitute a Material Adverse Effect for any effect arising out of or resulting
from actions contemplated by the parties in connection with the announcement of
this Agreement and the transactions contemplated hereby.
1.10 "PEX" means a definitive Plan of Exchange negotiated by parties to
this Agreement and filed with he respective state governments of the parties.
1.11 "CSRV Shares" means the issued and outstanding shares of CSRV's common
stock as of the execution date of this Agreement.
1.12 "CSRV Unaudited Financial Statements" means unaudited financial
statements and notes thereto covering each fiscal quarter ending forty five (45)
days form the Closing Date, comparative to the same quarter in the preceding
fiscal year, including income statements, balance sheets and statements of cash
flow and shareholder equity. Such statements shall be (i) prepared in conformity
with United States Generally Accepted Accounting Principles; (ii) prepared in
Form 10Q-SB format, and (iii) reviewed by CSRV's independent certified public
accountants.
1.13 "CSRV's Audited Financial Statements" means financial statements and
notes thereto for years ended December 1999 and 2000, which include income
statements, balance sheets, statements of cash flow and shareholder equity.
CSRV's Audited Financial Statements shall be prepared in conformity with United
States Generally Accepted Accounting Principles, which are consistently applied
and shall be the subject of an unqualified opinion of a recognized firm of
independent certified public accountants reasonably acceptable to Uniloc in Form
10-KSB format.
1.14 "Selling Shareholders" means those CSRV Shareholders transferring
their 1,800,000 pre-split shares of CSRV common stock to Uniloc.
1.15. "Uniloc Shares" means the issued and outstanding shares of Uniloc
common stock of, as of the execution date of this Agreement, $0.01 par value per
share, comprising the entire issued capital of Uniloc, as constituted
immediately prior to the Closing.
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1.16. "Uniloc's Audited Financial Statements" means financial statements
and notes thereto for years ended December 1999 and 2000, which include income
statements, balance sheets, statements of cash flow and shareholder equity.
Uniloc's Audited Financial Statements shall be prepared in conformity with
United States Generally Accepted Accounting Principles, which are consistently
applied and shall be the subject of an unqualified opinion of a recognized firm
of independent certified public accountants reasonably acceptable to CSRV in
Form 10-KSB format
1.17. "Uniloc's Unaudited Financial Statements" means statements and notes
thereto covering each fiscal quarter ending forty five (45) days from the
Closing Date, comparative to the same quarter in the preceding year including
income statements, balance sheets and statements of cash flow and shareholder
equity. Uniloc's Unaudited Financial statements shall be (i) prepared in
conformity with United States generally accepted accounting principles; (ii)
prepared in Form 10 QSB format, and (iii) reviewed by CSRV's independent
certified public accountants.
1.18 "Additional Deposit" shall refer to the refundable payment of $50,000
which shall be maintained in escrow by NevWest Securities Corporation
("NevWest"). At the closing the Additional Deposit shall be credited against the
Purchase Price and paid to the Selling Shareholders.
Other capitalized terms defined elsewhere in this Agreement and not defined
in this Section 1 shall have the meanings assigned to such terms in this
Agreement.
2. THE EXCHANGE. Subject to the terms and conditions of this Agreement, at
the Closing:
(a) Uniloc shall acquire 360,000 post-split (1,800,000 pre-split) shares of
CSRV common stock from the Selling Shareholders for the amount of $310,000 (a
non-refundable deposit of $5,500 shall have been paid to oration NevWest. and
the Additional Deposit of $50,000 of good-faith money shall have been deposited
in escrow at the signing of this Agreement with NevWest in its escrow account
maintained at Xxxxx Fargo Bank and shall be credited toward the Purchase Price
at the closing); and
(b) CSRV will acquire 13,818,816 shares of Uniloc common stock in exchange
for 13,818,816 shares of newly issued CSRV common stock to Uniloc shareholders
on a pro-rata basis; and
(c) CSRV shall have affected a reverse split of its common stock on a 1 for
5 basis reducing the total number of issued and outstanding shares of common
stock to 684,229 shares; and
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(d) Newco shall acquire Designated Assets and Designated Liabilities from
CSRV pursuant to the ADA; and
(e) CSRV shall transfer the Designated Assets and Designated Liabilities to
Newco; and
(f) Uniloc shall issue 75,000 shares of newly-issued Uniloc common stock to
the Selling Shareholders;
(g) Uniloc shall issue 100,000 shares of newly-issued Uniloc common stock
to CSRV Shareholders on an adjusted pro-rata basis exclusive of those shares
issued to the Selling Shareholders as set forth in subsection (p) above;
(h) All CSRV Shareholders shall have approved a Lock-up Agreement
restricting the sale of CSRV Shares such that fifty percent (50%) of the CSRV
shares held by CSRV Shareholders as of the date of execution of the Lock-Up
Agreement shall not be eligible for sale in market or public transaction(s) for
a period of five (5) months.
2.1. Exchange of Shares.
2.1.1. Exchange of Uniloc Stock. Subject to surrender and delivery to CSRV
by Uniloc shareholders of all applicable share certificates at the Closing and
the accompanying Share Transfer Form and Form W-8, Uniloc shareholders shall
receive stock certificates for the Exchange Shares at the Closing.
2.1.2. Fractional Shares. No fractional shares of CSRV common stock shall
be issued in connection with the Exchange. Instead, CSRV shall issue common
stock in an amount rounded up to the next whole share.
2.1.3. Registration Rights. Effective upon the Closing, Uniloc shareholders
shall be granted registration rights under the Securities Act of 1933, as
amended (the "1933 Act").
2.2. Adjustments for Capital Changes. Notwithstanding the provisions of
Section 2.1, if at any time after the Agreement Date and prior to the Closing,
CSRV or Uniloc recapitalizes, either through a subdivision (or stock split) of
any of its issued and outstanding shares into a greater number of shares, or a
combination (or reverse stock split) of any of its issued and outstanding shares
into a lesser number of shares, or reorganizes, reclassifies or otherwise
changes its issued and outstanding shares into the same or a different number of
shares of other classes (other than through a subdivision or combination of
shares provided for in the previous clause), or declares a dividend on its
issued and outstanding shares payable in shares or securities convertible into
shares of CSRV common stock (a "Capital Change"), then the number of shares of
CSRV common stock for which shares of Uniloc Stock are to be exchanged in the
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Exchange shall be appropriately, equitably and proportionately adjusted (as
agreed to in writing by CSRV and Uniloc if the adjustment for such Capital
Change involves something other than a mathematical adjustment) so as to
maintain the proportionate interests of shareholders of Uniloc and CSRV
contemplated hereby so as to maintain the proportional interests of the holders
of Uniloc Stock contemplated by this Agreement. The provisions of this Section
shall not apply to any transaction not permitted to be undertaken by Uniloc
under the provisions of this Agreement. In the event that a Capital Change
affecting CSRV common stock occurs prior to the Closing, then all prices per
share and numbers of shares used to compute the Exchange Number shall be deemed
to have been equitably adjusted to reflect such Capital Change as necessary to
effect the purposes and intent of this Section.
2.3. Further Assurances. If, at any time after the Closing, the parties
hereto consider or are advised that any further instruments, deeds, assignments
or assurances are reasonably necessary or desirable to consummate the Exchange
or to carry out the purposes of this Agreement at or after the Closing, then
parties to this Agreement shall execute and deliver all such proper deeds,
assignments, instruments and assurances and do all other things necessary or
desirable to consummate the Exchange and to carry out the purposes and intent of
this Agreement.
2.4. Securities Laws Issues. CSRV shall issue the Exchange Shares pursuant
to an exemption from registration under Section 4(2) and/or Regulation D
promulgated under the 1933 Act. Concurrently with execution of this Agreement,
Uniloc will execute and deliver to CSRV an Investment Representation Letter in
the form of Exhibit A hereto (the "Investment Representation Letter").
2.5 Compliance with Securities Laws. For as long as this Agreement shall
remain in full force and effect, CSRV shall comply with all relevant Securities
Laws including its requirement to file periodic, quarterly and annual reports,
as well as all reporting requirements required by this Agreement.
3. UNILOC REPRESENTATIONS AND WARRANTIES.
Uniloc hereby represents and warrants to CSRV that each of the following
representations and statements in this Section 3 are true and correct.
3.1. Organization and Good Standing. Uniloc is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Uniloc has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted, and is duly qualified to transact business in each
jurisdiction in which its failure to be so qualified would have a Material
Adverse Effect.
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3.2. Power, Authorization and Validity.
3.2.1. Uniloc has the right, power, legal capacity and authority to enter
into, execute, deliver and perform all Uniloc obligations under this Agreement
and has the requisite power and authority to consummate the Exchange. No filing,
authorization, consent, approval or order, governmental or otherwise, required
by law is necessary or required to be made or obtained by Uniloc to enable it to
lawfully enter into, and to perform his respective obligations this Agreement.
3.2.2. This Agreement is, or when executed by Uniloc will be, a valid and
binding obligation of Uniloc enforceable in accordance with its terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.
3.2.3. All representations, warranties and other statements made by Uniloc
in the Investment Representation Letter executed and delivered to CSRV by Uniloc
pursuant hereto (a) are now, and at the Closing shall be true and correct, and
(b) shall be deemed to be representations and warranties made pursuant to this
Section 3 for all purposes of this Agreement.
3.3. Capitalization of Uniloc.
3.3.1. Authorized Share Capital. The authorized share capital of Uniloc
consists entirely of 100,000,000 shares of common stock, $.01 par value per
share and no shares of preferred stock, $.01 par value per share. There are
currently a total of 13,818,816 shares of common stock issued and outstanding
and no shares of preferred stock, issued or outstanding. No other shares in the
share capital of Uniloc are, or will at Closing be, authorized, issued or
outstanding. No fractional shares of Uniloc Stock are, or will at Closing be,
issued or outstanding. All issued and outstanding shares of Uniloc Stock have
been duly authorized and validly issued, are fully paid, nonassessable, and not
subject to any claim, lien, preemptive right, or right of rescission, and have
been offered, issued, sold and delivered by Uniloc (and, if applicable,
transferred) in compliance with all registration or qualification requirements
(or applicable exemptions therefrom) of all applicable securities laws, Uniloc's
Articles of Incorporation and Bylaws and other documents and agreements to which
Uniloc is a party.
3.3.2. Options, Warrants or Rights. Uniloc has granted an aggregate of
567,500 options to purchase shares of its common stock. The exercise price of
$.50 per share. There are currently 6,270,139 warrants issued and outstanding.
1,108,333 warrants are exercisable at $.60 per share and expire in 2006.
4,316,806 warrants are exercisable at $.50 per share which expire in 2005.
Additionally, 845,000 warrants have been issued to consultants at exercise
prices between $.50 and $1.00, exercising in 2005 and 2006. There are no other
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options, warrants, convertible or other securities, calls, commitments,
conversion privileges, preemptive rights or other rights or agreements
outstanding to purchase or otherwise acquire, whether directly or indirectly,
any shares of Uniloc's share capital or any securities convertible into or
exchangeable for any shares of Uniloc's capital stock or obligating Uniloc to
grant, issue, extend, or enter into, any such option, warrant, convertible or
other security, call, commitment, conversion privilege, preemptive right or
other right or agreement, and Uniloc has no liability for any dividends accrued
but unpaid. No person or entity holds or has any other option, warrant or other
right to acquire any issued and outstanding shares of the capital stock of
Uniloc from any record or beneficial holder of shares of the capital stock of
Uniloc. No shares of Uniloc Stock are reserved for issuance under any stock
purchase, stock option or other benefit plan.
3.3.3. No Voting Arrangements or Registration Rights. Uniloc is aware of no
voting agreements, voting trusts, rights of first refusal or other restrictions,
other than normal restrictions on transfer under applicable securities laws,
applicable to any of Uniloc's issued and outstanding shares of to the conversion
of any shares of Uniloc Stock in the Exchange. Uniloc is under an obligation to
register under the Securities Act of 1933, as amended, securities that may be
issued to investors in its Private Placement Offering dated May 1, 2001 when and
if Uniloc files a registration statement of any kind.
3.4. Subsidiaries. Uniloc has never been a subsidiary of any corporation,
partnership, limited liability company, joint venture or other business entity.
3.5. No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement nor the consummation of the Exchange or any of the
other transactions contemplated hereby, nor Uniloc's discussion or negotiation
with CSRV of the Exchange or any other transaction contemplated hereby, will
conflict with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of: (i) any provision of the
Articles of Incorporation and Bylaws of Uniloc, as currently in effect; (ii) any
federal, state or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to Uniloc or its assets or properties; or (iii) any
material instrument, agreement, contract, letter of intent or commitment to
which Uniloc is a party or by which Uniloc, or its assets or properties, are or
were bound, except such conflicts, terminations, breaches, impairments or
violations as would not have a Material Adverse Effect.
3.6. Litigation. As of the date hereof, there is no action, suit,
arbitration, mediation, proceeding, claim or investigation pending against
Uniloc (or against any officer or director of Uniloc or, to the best of the
knowledge of Uniloc, against any employee or agent of Uniloc, in their capacity
as such or relating to their employment, services or relationship with Uniloc)
before any court, administrative agency or arbitrator that, if determined
adversely to Uniloc (or any such officer, director, employee or agent) may
reasonably be expected to have a Material Adverse Effect on Uniloc, nor, to the
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best of Uniloc's knowledge any such action, suit, proceeding, arbitration,
mediation, claim or investigation been threatened. Except for the regulatory
approvals required hereunder, there is no basis for any person, firm,
corporation or other entity, to assert a claim against Uniloc or CSRV based upon
Uniloc's entering into this Agreement or consummating the Exchange. There is no
basis for any person, firm, corporation or other entity to assert a claim
against Uniloc based upon (a) any claims of ownership, rights to ownership, or
options, warrants or other rights to acquire ownership, of any shares of the
capital stock of Uniloc; or (b) any rights as a Uniloc shareholder, including
any option, warrant or preemptive rights or rights to notice or to vote. To the
knowledge of Uniloc, there is no judgment, decree, injunction, rule or order of
any governmental entity or agency, court or arbitrator outstanding against
Uniloc.
3.7. Taxes. Uniloc has timely filed tax returns required to be filed, has
timely paid or provided for all taxes required to be paid in respect of all
periods for which returns have been filed, has established an adequate accrual
or reserve for the payment of all taxes payable in respect of the periods
subsequent to the periods covered by the most recent applicable tax returns, has
made all necessary estimated tax payments, and has no material liability for
taxes in excess of the amount so paid or accruals or reserves so established.
Uniloc is not delinquent in the payment of any tax or in the filing of any tax
returns, and no deficiencies for any tax have been threatened, claimed, proposed
or assessed. Uniloc has not received any notification that any issues have been
raised (and are currently pending) by any taxing authority regarding Uniloc and
no tax return of Uniloc has ever been audited by any taxing agency or authority.
For the purposes of this Section, the terms "tax" and "taxes" include any state
and federal income, alternative or add-on minimum income, gains, franchise,
excise, property, sales, use, employment, license, payroll (including any taxes
or similar payments required to be withheld from payments of salary or other
compensatory payments), ad valorem, payroll, stamp, occupation, recording, value
added or transfer taxes, governmental charges, fees, customs duties, levies or
assessments (whether payable directly or by withholding), and, with respect to
such taxes, any estimated tax, interest and penalties or additions to tax and
interest on such penalties and additions to tax.
CSRV will not be required to deduct and withhold any amount pursuant to
Section 1445(a) of the Internal Revenue Code of 1986, as amended.
3.8. Uniloc Financial Statements. Uniloc was incorporated on March 2, 1998
Uniloc's financial year ends on the 31st day of December. Uniloc has delivered
to CSRV an unaudited balance sheet, an unaudited income statement and unaudited
cash flow statement as parts of Uniloc's Unaudited Financial Statements package,
as defined in Section 1 herein. Uniloc has also delivered to CSRV Uniloc's
audited balance sheet, an audited consolidated cash flow for the financial year
ended 1999 as parts of Uniloc's Audited Financial Statements package, as defined
in Section 1.
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Both Uniloc's Audited Financial Statements and Uniloc's Unaudited Financial
Statements (a) have been prepared in accordance with the books and records of
Uniloc, (b) fairly present the financial condition of Uniloc at the dates
therein indicated and the results of operations for the periods therein
specified and (c) have been prepared in accordance with Generally Accepted
Accounting Principles ("GAAP") applied on a consistent basis with prior periods.
Uniloc has no material debt, liability or obligation of any nature (whether
intercompany or owed to third parties), whether accrued, absolute, contingent or
otherwise, and whether due or to become due, except for (i) those shown on the
unaudited balance sheet and (ii) those that may have been incurred after such
balance sheet date in the ordinary course of Uniloc's business. All reserves
established by Uniloc and set forth in Uniloc's Unaudited Financial Statements
are reasonably adequate. As of the date of Uniloc's Unaudited Financial
Statements, there were no material contingent liabilities, as such term is used
in GAAP, which are not adequately provided for in the balance sheet as required
by GAAP.
3.9. Title to Properties. Uniloc has good and marketable title to all of
its assets (including but not limited to those shown on a balance sheet which is
a part of Uniloc's Unaudited Financial Statement), free and clear of all liens,
mortgages, security interests, claims, charges, restrictions or encumbrances,
except where the failure to hold such title would not have a Material Adverse
Effect. All machinery, vehicles, equipment and other tangible personal property
included in such assets and properties are in good condition and repair, normal
wear and tear excepted, and all leases of real or personal property to which
Uniloc is a party are fully effective and afford Uniloc peaceful and undisturbed
possession of the real or personal property that is the subject of the lease.
Uniloc is not in violation of any zoning, building, safety or environmental
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties (the violation of which would have a
Material Adverse Effect on its business), nor has Uniloc received any notice of
violation with which it has not complied.
3.10. Absence of Certain Changes. Since the date of Uniloc's Unaudited
Financial Statements through the Agreement Date, there has not been with respect
to Uniloc any:
(a) material adverse change in Uniloc's condition (financial or otherwise),
properties, assets, liabilities, businesses, operations, or results of
operations;
(b) amendments or changes in the memorandum and articles of association of
Uniloc;
(c) (i) incurrence, creation or assumption by Uniloc of any mortgage,
security interest, pledge, lien or other encumbrance on any of the assets or
properties of Uniloc or any material obligation or liability or any indebtedness
for borrowed money; or (ii) issuance or sale of, or change with respect to the
rights of, any debt or equity securities of Uniloc or any options or other
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rights to acquire from Uniloc, directly or indirectly, any debt or equity
securities of Uniloc;
(d) payment or discharge of a lien or liability which lien or liability was
not either shown in Uniloc's Unaudited Financial Statements or incurred in the
ordinary course of business after Uniloc's Unaudited Financial Statements date;
(e) purchase, license, sale or other disposition, or any agreement or other
arrangement for the purchase, license, sale or other disposition, of any of the
assets, properties or goodwill of Uniloc other than in the ordinary course of
its business consistent with its past practice;
(f) damage, destruction or loss, whether or not covered by insurance,
having (or likely with the passage of time to have) a Material Adverse Effect on
Uniloc;
(g) declaration, setting aside or payment of any dividend on, or the making
of any other distribution in respect of, the Uniloc Stock, any split,
combination or recapitalization of the Uniloc Stock or any direct or indirect
redemption, purchase or other acquisition of Uniloc Stock or any change in any
rights, preferences, privileges or restrictions of any issued and outstanding
security of Uniloc;
(h) change or increase in the compensation payable or to become payable to
any of the officers, employees, consultants or agents of Uniloc, or in any bonus
or pension, insurance or other benefit payment or arrangement (including without
limitation stock awards, stock appreciation rights or stock option grants) made
to or with any of such officers, employees, consultants or agents except in
connection with normal salary or performance reviews or otherwise in the
ordinary course of business consistent with Uniloc's past practice;
(i) change with respect to the management, supervisory or other key
personnel of Uniloc;
(j) obligation or liability incurred by Uniloc to any of its officers,
directors or the Uniloc Shareholder except in the ordinary course of business
consistent with Uniloc's past practice;
(k) making of any loan, advance or capital contribution to, or any
investment in, any officer, director or record or beneficial shareholder of
Uniloc;
(l) entering into, amendment of, relinquishment, termination or non-renewal
by Uniloc of any contract, lease, transaction, commitment or other right or
obligation other than in the ordinary course of its business consistent with its
past practice or, to Uniloc's knowledge, any written or oral indication or
assertion by the other party thereto of problems with Uniloc's services or
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performance under such contract, lease, transaction, commitment or other right
or obligation or such other party's desire to so amend, relinquish, terminate or
not renew any such contract, lease, transaction, commitment or other right or
obligation;
(m) material change in the manner in which Uniloc extends discounts or
credits to customers or otherwise deals with its customers;
(n) entering into by Uniloc of any transaction, contract or agreement or
the conduct of business or operations other than in the ordinary course of its
business consistent with its past practices; or
(o) transfer or grant of a right under any Uniloc IP Rights, as defined in
Section 3.13 below, other than those transferred or granted in the ordinary
course of Uniloc's business consistent with Uniloc's past practice.
3.11. Contracts and Commitments. Exhibit B sets forth a list of each of the
following written or oral contracts, agreements, commitments or other
instruments to which Uniloc is a party or to which it or any of its assets or
properties is bound as of the Agreement Date:
(a) consulting or similar agreement under which Uniloc provides any advice
or services to a customer of Uniloc;
(b) continuing contract for the future purchase, sale, license, provision
or manufacture of products, material, supplies, equipment or services requiring
payment to or from Uniloc which is not terminable on 90 days' or less notice
without cost or other liability to Uniloc or in which Uniloc has granted or
received manufacturing rights, most favored customer pricing provisions or
exclusive marketing rights relating to any product or services, group of
products or services or territory;
(c) contract providing for the acquisition of software by Uniloc, for the
development of software for Uniloc, or the license of software to Uniloc, which
software is used or incorporated in any products currently distributed by Uniloc
or services currently provided by Uniloc or is contemplated to be used or
incorporated in any products to be distributed or services to be provided by
Uniloc (other than software generally available to the public at a per copy
license fee);
(d) joint venture or partnership contract or agreement or other agreement
which has involved or is reasonably expected to involve a sharing of profits or
losses in excess of $25,000 per annum with any other party;
(e) contract or commitment for the employment of any officer, employee or
consultant of Uniloc or any other type of contract or understanding with any
officer, employee or consultant of Uniloc which is not immediately terminable by
Uniloc without cost or other liability, except as otherwise provided by law;
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(f) indenture, mortgage, trust deed, promissory note, loan agreement,
guarantee or other agreement or commitment for the borrowing of money, for a
line of credit or for a leasing transaction of a type required to be capitalized
in accordance with GAAP;
(g) lease or other agreement under which Uniloc is lessee of or holds or
operates any items of tangible personal property or real property owned by any
third party and under which payments to such third party exceed $25,000 per
annum;
(h) agreement or arrangement for the sale of any assets, properties,
services or rights, other than in the ordinary course of business consistent
with past practice, and except as otherwise contemplated by this Agreement;
(i) agreement which restricts Uniloc from engaging in any aspect of its
business or competing in any line of business in any geographic area;
(j) agreement relating to the sale, issuance, grant, exercise, award,
purchase, repurchase or redemption of any shares of Uniloc Stock or any options,
warrants or other rights to purchase or otherwise acquire any such shares of
Uniloc Stock, other securities or options, warrants or other rights therefore;
(k) contract with or commitment to any labor union; or
(l) other agreement, contract, commitment or instrument that is material to
the business of Uniloc or that involves a commitment by Uniloc in excess of
$25,000.
No consent or approval of any third party is required to ensure that
following the Closing, any Uniloc Material Agreement shall continue to be in
full force and effect without any breach or violation thereof caused by virtue
of the Exchange or by any other transaction called for by this Agreement.
3.12. No Default. Uniloc is not in breach or default of any Uniloc Material
Agreement. Uniloc is not a party to any contract, agreement or arrangement which
has had, or could reasonably be expected to have, a Material Adverse Effect on
Uniloc. Uniloc does not have any material liability for renegotiation of
government contracts or subcontracts, if any.
3.13. Intellectual Property.
3.13.1 Uniloc owns, or has the irrevocable right to use, sell or license
all material Intellectual Property Rights, as defined below, necessary or
required for the conduct of its business as presently conducted (such
Intellectual Property Rights being hereinafter collectively referred to as the
"Uniloc IP Rights"), and such rights to use, sell or license are sufficient for
such conduct of its business. Uniloc is the legal and beneficial owner of all
rights, including all copyright to those materials, together with all
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alterations, modifications and reconfigurations thereof in all forms of
expression, including but not limited to, the source code, object code,
flowcharts, block diagrams, manuals and all other documentation no matter how
stored, transmitted, read or utilized and all copyrights, trade secrets,
patents, inventions, whether patentable or not, proprietary rights and
intellectual property rights associated therewith.
3.13.2. The execution, delivery and performance of this Agreement and the
consummation of the Exchange and the other transactions contemplated hereby will
not constitute a material breach of or default under any instrument, contract,
license or other agreement governing any Uniloc IP Right (the "Uniloc IP Rights
Agreements") and will not cause the forfeiture or termination, or give rise to a
right of forfeiture or termination, of any Uniloc IP Right or materially impair
the right of Uniloc to use, sell, license, provide or otherwise commercially
exploit any Uniloc IP Right or portion thereof (except where such breach,
forfeiture or termination would not have a Material Adverse Effect on Uniloc).
There are no royalties, honoraria, fees or other payments payable by Uniloc to
any person by reason of the ownership, use, license, sale, exploitation or
disposition of the Uniloc IP Rights.
3.13.3. Neither the manufacture, marketing, license, sale, furnishing or
intended use of any product or service currently licensed, utilized, sold,
provided or furnished by Uniloc or currently under development by Uniloc has
violated or now violates any license or agreement between Uniloc and any third
party or, to the knowledge of Uniloc infringes or misappropriates any
intellectual property right of any other party; and there is no pending or, to
the best knowledge of Uniloc, no threatened claims or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any Uniloc IP
Right nor, to the best knowledge of Uniloc, is there any basis for any such
claim, nor has Uniloc received any notice asserting that any Uniloc IP Right or
the proposed use, sale, license or disposition thereof conflicts or will
conflict with the rights of any other party, nor, to the best knowledge of
Uniloc, is there any basis for any such assertion. To the best knowledge of
Uniloc, no employee or agent of or consultant to Uniloc is in violation of any
term of any employment contract, patent disclosure agreement, noncompetition
agreement, non-solicitation agreement or any other contract or agreement, or any
restrictive covenant relating to the right of any such employee, agent or
consultant to be employed thereby, or to use trade secrets or proprietary
information of others, and the employment of such employees or engagement of
such agents and consultants does not subject Uniloc to any liability.
3.13.4. Uniloc is currently taking reasonable and practicable steps
designed to protect, preserve and maintain the secrecy and confidentiality of
all material Uniloc IP Rights and all Uniloc's proprietary rights therein. All
officers, employees, agents and consultants of Uniloc having access to
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proprietary information have executed and delivered to Uniloc an agreement
regarding the protection of such proprietary information and the assignment of
inventions to Uniloc in the form provided to counsel for CSRV and copies of all
such agreements, executed by all such persons, have been delivered to CSRV's
counsel.
3.13.5. Exhibit C contains a list of all Uniloc IP Rights and all worldwide
applications, registrations, filings and other formal actions made or taken
pursuant to federal, state and foreign laws by Uniloc to secure, perfect or
protect its interest in Uniloc IP Rights, including, without limitation, all
patents, patent applications, copyrights (whether or not registered), copyright
applications, trademarks, service marks and trade names (whether or not
registered) and trademark, service xxxx and trade name applications.
3.14. Compliance with Laws. Uniloc has complied, and is now and at the
Closing Date will be in compliance, in all material respects, with all
applicable federal, state or foreign laws, ordinances, regulations, and rules,
and all orders, writs, injunctions, awards, judgments, and decrees applicable to
Uniloc or to Uniloc's assets, properties, and business, except where the failure
to so comply would not have a Material Adverse Effect. Uniloc holds all permits,
licenses and approvals from, and has made all filings with, third parties,
including government agencies and authorities, that are necessary in connection
with Uniloc's present business, accept those where failure to do so would not
have a Material Adverse Effect.
3.15. Certain Transactions and Agreements. Except as contemplated by this
Agreement, none of the officers, directors of Uniloc, nor any member of their
immediate families, has any direct or indirect ownership interest in any firm or
corporation that competes with, or does business with, or has any contractual
arrangement with Uniloc (except with respect to any interest in less than one
percent (1%) of the stock of any corporation whose stock is publicly traded).
None of said officers, directors, employees or any member of their immediate
families, are directly or indirectly interested in any contract or informal
arrangement with Uniloc, except for normal compensation for services as an
officer, director or employee thereof that have been disclosed to CSRV. Except
as contemplated by this Agreement, none of said officers, directors, employees
or family members have any interest in any property, real or personal, tangible
or intangible, including but not limited to any Uniloc IP Rights or any other
Intellectual Property Rights, that is used in or that pertains to the business
of Uniloc, except for the normal rights of a shareholder.
3.16. Employees.
3.16.1. Uniloc is in compliance in all material respects with all
applicable laws, agreements and contracts relating to employment, employment
practices, wages, hours, and terms and conditions of employment, including, but
not limited to, employee compensation matters in each of the jurisdictions in
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which it conducts business. A list of all employees, officers and consultants of
Uniloc, their title, date of hire, employer entity and current compensation is
set forth on Exhibit D. Uniloc does not have any employment contracts or
consulting agreements currently in effect that are not terminable at will (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions), other than as may be
required by law.
3.16.2. Uniloc (i) has never been and is not now subject to a union
organizing effort, (ii) is not subject to any collective bargaining agreement
with respect to any of its employees, (iii) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization, and (iv) does not have any current labor disputes.
Uniloc has good labor relations, and has no knowledge of any facts indicating
that the consummation of the transactions contemplated hereby will have a
material adverse effect on such labor relations. As of the date hereof, Uniloc
has no knowledge that any key employee of Uniloc intends to leave the employ of
Uniloc.
3.16.3. Uniloc does not have any "employee benefit plan," as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Uniloc has no pension plan which constitutes, or has since the
enactment of ERISA constituted, a "multi-employer plan" as defined in Section
3(37) of ERISA. No Uniloc pension plans are subject to Title IV of ERISA.
3.16.4. Exhibit E lists each employment, severance or other similar
contract, arrangement or policy and each plan or arrangement (written or oral)
providing for insurance coverage (including any self-insured arrangements),
workers' benefits, vacation benefits, severance benefits, disability benefits,
death benefits, hospitalization benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits for employees, consultants
or directors which is entered into, maintained or contributed to by Uniloc and
covers any employee or former employee or consultant or former consultant of
Uniloc. Such contracts, plans and arrangements as are described in this Section
3.16.4 are hereinafter collectively referred to as the "Uniloc Benefit
Arrangements." The Uniloc Benefit Arrangement has been maintained in compliance
in all material respects with its terms and with the requirements prescribed by
any and all laws, statutes, orders, rules and regulations that are applicable to
such Uniloc Benefit Arrangement. Uniloc has delivered to CSRV and its counsel a
complete and correct copy and summary description of the Uniloc Benefit
Arrangement.
3.16.5. There has been no amendment to, written interpretation or
announcement (whether or not written) by Uniloc relating to, or change in
employee participation or coverage under, any Uniloc Benefit Arrangement that
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would increase materially the expense of maintaining such Uniloc Benefit
Arrangement above the level of the expense incurred in respect thereof for
Uniloc's fiscal year ended 2000.
3.16.6. The group health plans (as defined in Section 4980B(g) of the Code)
that benefit employees of Uniloc are in compliance, in all material respects,
with the continuation coverage requirements of Section 4980B of the Code as such
requirements affect Uniloc and its employees. As of the Closing Date, there will
be no material outstanding, uncorrected violations under the Consolidation
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), with respect to
any of the Uniloc Benefit Arrangements, covered employees, or qualified
beneficiaries that could result in a Material Adverse Effect on Uniloc, or in a
material adverse effect on the business, operations or financial condition of
CSRV as its successor. Uniloc has provided, or shall have provided prior to the
Closing, to individuals entitled thereto, all required notices and coverage
pursuant to Section 4980B of COBRA, with respect to any "qualifying event" (as
defined in Section 4980B(f)(3) of the Code) occurring prior to and including the
Closing Date, and no material amount payable on account of Section 4980B of the
Code has been incurred with respect to any current or former employees of Uniloc
(or their beneficiaries).
3.16.7. No benefit payable or which may become payable by Uniloc pursuant
to any Uniloc Benefit Arrangement or as a result of or arising under this
Agreement shall constitute an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code) which is subject to the imposition of an excise tax
under Section 4999 of the Code or which would not be deductible by reason of
Section 280G of the Code. Uniloc is not a party to any (a) agreement (other than
as described in (b) below) with any executive officer or other key employee
thereof (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Uniloc in the
nature of any of the transactions contemplated by this Agreement, (ii) providing
any term of employment or compensation guarantee, or (iii) providing severance
benefits or other benefits after the termination of employment of such employee
regardless of the reason for such termination of employment, or (b) agreement or
plan, including, without limitation, any stock option plan, stock appreciation
rights plan or stock purchase plan, any of the benefits of which will be
materially increased, or the vesting of benefits of which will be materially
accelerated, by the occurrence of the Exchange or any of the other transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
4. CSRV REPRESENTATIONS AND WARRANTIES
CSRV hereby represents and warrants each of the following representations
and statements in this Section 4 are true and correct:
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4.1. Organization and Good Standing. CSRV is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, and
has the corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted and as proposed to be conducted,
and is duly qualified to transact business as a foreign corporation in each
jurisdiction in which its failure to be so qualified would have a Material
Adverse Effect.
4.2. Power, Authorization and Validity.
4.2.1. CSRV has the right, power and authority to enter into, execute and
perform its obligations under this Agreement and to consummate the Exchange. The
execution, delivery and performance of this Agreement by CSRV have been duly and
validly approved and authorized by all necessary action on the part of CSRV and
CSRV's Board of Directors.
4.2.2. No filing, authorization, consent, approval or order, governmental
or otherwise, is necessary or required to enable CSRV to enter into this
Agreement and consummate the Exchange. No filing, authorization, consent,
approval or order, governmental or otherwise, is necessary or required to enable
CSRV to perform those obligations under this Agreement that are to be performed
after the consummation of the Exchange except for any filings with the
Securities and Exchange Commission as may be required to comply with applicable
securities laws in connection with the Exchange itself.
4.2.3. This Agreement is, or when executed by CSRV will be, a valid and
binding obligation of CSRV, enforceable in accordance with its terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.
4.3. No Violation of Material Agreements. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in: (a) a termination, breach, impairment or violation of
(i) any provision of the Articles of Incorporation or By-laws of CSRV, as
currently in effect or (ii) any federal, state, local or foreign judgment, writ,
decree, order, statute, rule or regulation to which CSRV or its assets or
properties is subject; or (b) a termination, or a material breach, impairment or
violation, of any material instrument or contract to which CSRV is a party or by
which CSRV is bound. CSRV is not required to obtain the consent of any third
party to consummate the Exchange.
4.4. Disclosure. CSRV has made available to Uniloc a disclosure package
consisting of CSRV's most recent Form 10-K for its fiscal year ended 2000, all
Forms 10-Q filed by CSRV with the SEC after the date of such Form 10-K and
before the Agreement Date, all Forms 8-K and 8-K/A filed by CSRV with the SEC
Page 18 of 54
after the date of its most recent Form 10-Q and the Proxy Statement for CSRV's
annual meeting of stockholders (the "CSRV Disclosure Package"). As of their
respective filing dates, documents filed by CSRV with the SEC including, without
limitation, any financial statements or schedules included or incorporated
therein and included in the CSRV Disclosure Package complied in all material
respects with the requirements of the 1933 Act or the 1934 Act, as the case may
be. The consolidated financial statements of CSRV included in such SEC documents
have been prepared in accordance with the books and records of CSRV and fairly
represent the financial condition of CSRV and its consolidated subsidiaries as
of such date and the consolidated results of operations and cash flows for the
periods then ended. The consolidated financial statements in such SEC documents
have been prepared in accordance with United States generally accepted
accounting principles consistently applied during the periods involved, except
as otherwise disclosed in the notes to such financial statements. The CSRV
Disclosure Package, this Agreement, the exhibits and schedules hereto, and any
certificates or documents to be delivered to Uniloc pursuant to this Agreement,
when taken together, do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading.
4.5. Financial Condition. There has been no material adverse change in the
financial condition or business of CSRV, taken as whole, since the date of the
most recent financial statements included in the CSRV Disclosure Package.
4.6. Validity of Shares. The shares of CSRV common stock to be issued
pursuant to the Exchange shall, when issued: (a) be duly authorized, validly
issued, fully paid and nonassessable and free of liens and encumbrances created
by CSRV, and (b) be free and clear of any transfer restrictions, liens and
encumbrances, except for restrictions on transfer under applicable United States
securities laws, including Rule 144 promulgated under the 1933 Act.
4.7. Capitalization of CSRV.
4.7.1. Authorized Share Capital. The authorized share capital of CSRV
consists entirely of 25,000,000 shares of common stock, $0.001 par value per
share, of which a total of 10,000,000 shares were issued and outstanding as of
May 30, 2001 and 3,421,145 are outstanding as of the Agreement Date. CSRV is
authorized to issue from time to time in one or more series to be determined by
CSRV's Board of Directors, shares of preferred stock. As of the Agreement Date
CSRV has no preferred stock issued or outstanding. No other shares in the share
capital of CSRV are, or will at Closing be, authorized, issued or outstanding.
No fractional shares of CSRV are, or will at Closing be, issued or outstanding.
All issued and outstanding shares of CSRV have been duly authorized and validly
issued, are fully paid and non-assessable, are not subject to any claim, lien,
preemptive right, or right of rescission, and have been offered, issued, sold
Page 19 of 54
and delivered by CSRV (and, if applicable, transferred) in compliance with all
registration or qualification requirements (or applicable exemptions therefrom)
of all applicable securities laws, CSRV's Articles of Incorporation and Bylaws
and other documents and agreements to which CSRV is a party. The CSRV shares are
quoted on the Over-the Counter Bulletin Board ("OTC BB") under the symbol CSRV.
4.7.2. No Voting Arrangements or Registration Rights. There are no voting
agreements, voting trusts, rights of first refusal or other restrictions (other
than normal restrictions on transfer under applicable securities laws)
applicable to any of CSRV's issued and outstanding shares of to the conversion
of any shares of CSRV's Stock in the Exchange. Uniloc is not under any
obligation to register under the Securities Exchange Act of 1934, as amended or
otherwise any of its presently issued and outstanding securities or any
securities that may be subsequently issued.
5. NEWCO REPRESENTATIONS AND WARRANTIES
Newco hereby represents and warrants each of the following representations
and statements in this Section 5 are true and correct:
5.1. Organization and Good Standing. Newco shall be a business organization
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted, and is duly qualified to transact business as a
foreign corporation in each jurisdiction in which its failure to be so qualified
would have a Material Adverse Effect.
5.2. Power, Authorization and Validity.
5.2.1. Newco has the right, power and authority to enter into, execute and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Newco have been duly and validly approved and
authorized by all necessary action on the part of Newco and Newco's Board of
Directors.
5.2.2. No filing, authorization, consent, approval or order, governmental
or otherwise, is necessary or required to enable Newco to enter into this
Agreement or to enable Newco to perform those obligations under this Agreement
that are to be performed after the consummation of the Exchange except for any
filings with the Securities and Exchange Commission as may be required to comply
with applicable securities laws in connection with the Exchange itself.
5.2.3. This Agreement is, or when executed by Newco will be, a valid and
binding obligation of Newco, enforceable in accordance with its terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
Page 20 of 54
affecting the rights of creditors generally and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.
5.3. No Violation of Material Agreements. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in: (a) a termination, breach, impairment or violation of
(i) any provision of the Certificate of Incorporation or Bylaws of Newco, as
currently in effect or (ii) any federal, state, local or foreign judgment, writ,
decree, order, statute, rule or regulation to which Newco or its assets or
properties is subject; or (b) a termination, or a material breach, impairment or
violation, of any material instrument or contract to which Newco is a party or
by which Newco is bound. Newco is not required to obtain the consent of any
third party to consummate the Exchange.
5.4. Disclosure. Financial Condition. There has been no material adverse
change in the financial condition or business of Newco, taken as whole, since
the date of the most recent financial statements included in the disclosure
package previously provided by Newco to all parties to this Agreement.
6. COVENANTS OF UNILOC.
During the period from the Agreement Date until the earlier to occur of (i)
the Closing or (ii) the termination of this Agreement in accordance with Section
16, Uniloc hereby covenants and agrees as follows:
6.1. Advice of Changes. Uniloc will promptly advise CSRV and other parties
to this Agreement in writing (a) of any event occurring subsequent to the date
of this Agreement that would render any representation or warranty of Uniloc
contained in Section 3 of this Agreement, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect and (b)
of any material adverse change in Uniloc's assets, business, results of
operations or financial condition. Uniloc shall deliver to CSRV within thirty
(30) days after the end of each quarterly accounting period ending after the
Agreement Date and before the Closing Date, an unaudited balance sheet and
statement of operations, which financial statements shall be prepared in the
ordinary course of business consistent with Uniloc's past practice, in
accordance with Uniloc's books and records and GAAP and shall fairly present the
financial position of Uniloc on a consolidated basis as of their respective
dates and the results of Uniloc's operations on a consolidated basis for the
periods then ended.
6.2. Maintenance of Business. Uniloc shall carry on and preserve its
business and its relationships with customers, suppliers, employees, consultants
and others in substantially the same manner as it has prior to the date hereof.
If Uniloc becomes aware of a material deterioration in the relationship with any
customer, supplier, key employee, consultant or business partner, it xxxx
Xxxx 21 of 54
promptly bring such information to the attention of CSRV in writing and, if
requested by CSRV, will exert its best efforts to restore the relationship.
6.3. Conduct of Business. Uniloc shall continue to conduct its business and
maintain its business relationships in the ordinary and usual course and to not,
without the prior written consent of the President or the CEO of CSRV:
(a) borrow or lend any money other than advances to in the ordinary course
of Uniloc's business consistent with Uniloc's past practice;
(b) purchase or sell shares or other equity interest in any corporation or
other business or enter into any transaction or agreement not in the ordinary
course of Uniloc's business consistent with Uniloc's past practice;
(c) encumber, or permit to be encumbered, any of its assets;
(d) sell, transfer or dispose of any of its assets except in the ordinary
course of Uniloc's business consistent with Uniloc's past practice;
(e) enter into any material lease or contract for the purchase or sale of
any property, whether real or personal, tangible or intangible, except as
otherwise contemplated by this Agreement, or except in the ordinary course of
business and consistent with past practice;
(f) pay any bonus, increased salary or special remuneration to any officer,
employee or consultant (except for normal salary increases consistent with past
practices not to exceed 5% of such officer's, employee's or consultant's base
annual compensation, except pursuant to existing arrangements previously
disclosed to and approved in writing by CSRV) or enter into any new employment
or consulting agreement with any such person;
(g) change any of its accounting practices and procedures;
(h) declare, set aside or pay any cash or stock dividend or other
distribution in respect of any of its shares, redeem, repurchase or otherwise
acquire any of its capital stock or other securities, pay or distribute any cash
or property to any Uniloc shareholder or security holder or make any other cash
payment to any shareholder or security holder of Uniloc that is unusual,
extraordinary, or not made in the ordinary course of Uniloc's business
consistent with Uniloc's past practice;
(i) amend or terminate any material contract, agreement or license to which
it is a party;
(j) guarantee or act as a surety for any obligation of any third party;
Page 22 of 54
(k) waive or release any material right or claim except in the ordinary
course of business, consistent with past practice or agree to any audit
assessment by any tax authority or file any federal or state income or franchise
tax return unless copies of such returns have been delivered to CSRV for its
review prior to filing;
(l) issue, sell, create or authorize any shares of its capital stock of any
class or series or any other of its securities, or issue, grant or create any
warrants, obligations, subscriptions, options, convertible securities, or other
commitments to issue shares of its capital stock or securities ultimately
exchangeable for, or convertible into, shares of its capital stock;
(m) subdivide or split or combine or reverse split the issued and
outstanding shares of its capital stock of any class or enter into any
recapitalization affecting the number of issued and outstanding shares of its
capital stock of any class or affecting any other of its securities;
(n) merge, consolidate or reorganize with, or acquire, any entity or enter
into any negotiations, discussions or agreement for such purpose;
(o) amend its charter documents;
(p) enter into any license or agreement to license any of its technology or
Intellectual Property Rights;
(q) change any insurance;
(r) agree to do any of the things described in the preceding clauses 7.3(a)
through 7.3(q).
6.4. Regulatory Approvals. Uniloc shall promptly execute and file, or join
in the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which CSRV may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement, provided that
CSRV shall pay the costs associated with such filings or applications. Uniloc
shall cause its officers, directors and employees to use their respective best
efforts to promptly obtain, and to cooperate with CSRV to promptly obtain, all
such authorizations, approvals and consents.
6.5. Necessary Consents. Uniloc, its officers and directors will use their
respective best efforts to promptly obtain such written consents and take such
other actions as may be necessary or appropriate in addition to those set forth
in Section 6.4 to allow the consummation of the transactions contemplated hereby
and to allow CSRV to carry on Uniloc's business after the Closing.
Page 23 of 54
6.6. Litigation. Uniloc shall cause Uniloc to notify CSRV in writing
promptly after learning of any action, suit, arbitration, mediation, proceeding
or investigation by or before any court, arbitrator or arbitration panel, board
or governmental agency, initiated by or against it, or known by it to be
threatened against it or any of its directors, officers, employees or consultant
in their capacity as such.
6.7. No Other Negotiations. From the Agreement Date until the earlier of
termination of this Agreement in accordance with Section 16 or the consummation
of the Exchange, Uniloc, its officers, directors and employees will not
authorize, encourage or permit, any officer, director, employee, shareholder or
affiliate of Uniloc, or any other person, on its or their behalf to, directly or
indirectly, solicit or encourage any offer from any party or consider any
inquiries or proposals received from any other party, participate in any
negotiations regarding, or furnish to any person any information with respect
to, or otherwise cooperate with, facilitate or encourage any effort or attempt
by any person (other than CSRV and other parties to this Agreement), concerning
any agreement or transaction regarding the possible disposition of all or any
substantial portion of the business, assets or capital stock of Uniloc by
merger, consolidation, reorganization, sale of assets, sale of stock, exchange,
tender offer or any other form of business combination ("Alternative
Transaction"). Uniloc shall promptly notify CSRV orally and in writing of any
such inquiries or proposals. In addition, Uniloc shall not execute, enter into
or become bound by (a) any letter of intent or agreement or commitment between
Uniloc on the one hand, and any third party, on the other hand, that is related
to an Alternative Transaction or (b) any agreement or commitment between Uniloc
on the one hand, and a third party, on the other hand, providing for an
Alternative Transaction, except for existing Uniloc individual and corporate
relationships and employees, in the ordinary course of business.
6.8. Access to Information. Until the Closing, Uniloc shall allow CSRV and
its agents reasonable access to the files, books, records and offices of Uniloc,
including, without limitation, any and all information relating to Uniloc's
taxes, commitments, contracts, leases, licenses, and real, personal and
intangible property and financial condition, and subject to Uniloc's
confidentiality obligations to third parties. Uniloc shall cause its accountants
to cooperate with CSRV and its agents in making available all financial and tax
information reasonably requested, including without limitation the right to
examine all working papers pertaining to all financial statements and tax
returns, prepared or audited by such accountants, provided that such access to
information does not unreasonably interfere with the operations of Uniloc.
6.9. Satisfaction of Conditions Precedent. Uniloc, its directors and
officers will use their respective best efforts to satisfy or cause to be
satisfied all the conditions precedent which are set forth in Sections 12, 13,
and 14 of this Agreement, and use their respective best efforts to cause the
transactions contemplated by this Agreement to be consummated; and, without
Page 24 of 54
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on
Uniloc's part in order to effect the transactions contemplated hereby.
6.10. Securities Laws. Uniloc shall use its best efforts to assist CSRV to
the extent necessary to comply with the securities laws of all jurisdictions
which are applicable in connection with the Exchange, provided that all costs
associated with such compliance shall be borne by CSRV.
6.11. Termination of Registration and Voting Rights. Uniloc shall cause all
registration rights agreements and voting agreements applicable to or affecting
any issued and outstanding shares or other securities of Uniloc (if any) to be
duly terminated and canceled by Uniloc by no later than the Closing.
6.12. Assignment and Confidentiality Agreements. Uniloc shall obtain from
each employee, agent and consultant of Uniloc who has had access to any
copyrightable, patentable or other proprietary works or intellectual property
owned or developed by Uniloc or other Intellectual Property Rights, or to any
other confidential or proprietary information of Uniloc or its clients, an
invention assignment and confidentiality agreement in substantially the form of
the agreement provided to counsel to CSRV, duly executed by such employee, agent
or consultant and delivered to Uniloc.
6.13. Delivery of Uniloc Financial Statements. Prior to the Closing, and as
soon as practicable following the execution of this Agreement, Uniloc shall
deliver to CSRV Uniloc's Audited Financial Statements. Also prior to Closing,
Uniloc shall deliver to CSRV Uniloc's unaudited financial statements, as well as
Uniloc's unaudited consolidated statement of operations, consolidated statement
of cash flow and consolidated statements of shareholders' equity for nine (9)
months prior to the date of closing prepared in accordance with the GAAP (the
"Interim Financials").
6.14. Closing of Exchange. Uniloc shall not refuse to effect the Exchange
if, on or before the Closing Date, all the conditions precedent to their
obligations to effect the Exchange have been satisfied or, in their sole
discretion, been waived by them.
7. COVENANTS OF CSRV
During the period from the Agreement Date until the earlier to occur of (i)
the Closing or (ii) the termination of this Agreement in accordance with Section
15, CSRV covenants and agrees as follows:
7.1. Advice of Changes. CSRV will promptly advise Uniloc and other parties
to this Agreement in writing (a) of any event occurring subsequent to the date
of this Agreement that would render any representation or warranty of CSRV
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contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect and (b) of any
material adverse change in CSRV's business, results of operations or financial
condition.
7.2. Regulatory Approvals. CSRV will execute and file, or join in the
execution and filing, of any application or other document that may be necessary
in order to obtain the authorization, approval or consent of any governmental
body, federal, state, local or foreign, which may be reasonably required, in
connection with the consummation of the transactions contemplated by this
Agreement in accordance with the terms of this Agreement. CSRV will use its best
efforts to obtain all such authorizations, approvals and consents.
7.3. Satisfaction of Conditions Precedent. CSRV will use its best efforts
to satisfy or cause to be satisfied all the conditions precedent which are set
forth in Sections 12, 13, and 14 of this Agreement, and CSRV will use its best
efforts to cause the Exchange and the transactions contemplated by this
Agreement to be consummated in accordance with the terms of this Agreement, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby. In particular,
CSRV will use its best efforts to cause the Exchange to become effective in
accordance with this Agreement.
7.4. Securities Laws. CSRV shall take such steps as may be necessary to
comply with the securities and Blue Sky laws of all jurisdictions which are
applicable in connection with the Exchange, with the cooperation and assistance
of Uniloc and other parties to this Agreement.
7.5. Employee Benefits. As soon as practicable after the Agreement Date,
CSRV and Uniloc shall confer and work in good faith to agree upon a plan under
which Uniloc employees will be covered either by (a) CSRV's employee benefits
plans or (b) Uniloc's employee benefit plans, with such decision to be made no
later than six (6) months following the Closing, in a manner that results in
minimal disruption to the continuing operations of Uniloc, and minimal cost to
CSRV.
7.6. Closing of Exchange. CSRV shall not refuse to effect the Exchange if,
on or before the Closing Date, all the conditions precedent to their obligations
to effect the Exchange under Sections 12, 13, and 14 hereof have been satisfied
or, in its sole discretion, been waived by it.
8. COVENANTS OF NEWCO
During the period from the Agreement Date until the earlier to occur of (i)
the Closing or (ii) the termination of this Agreement in accordance with Section
16, Newco covenants and agrees as follows:
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8.1. Advice of Changes. Newco will promptly advise all parties to this
Agreement in writing (a) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of Newco contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (b) of any material adverse
change in Newco's business, results of operations or financial condition.
8.2. Regulatory Approvals. Newco will execute and file, or join in the
execution and filing, of any application or other document that may be necessary
in order to obtain the authorization, approval or consent of any governmental
body, federal, state, local or foreign, which may be reasonably required, in
connection with the consummation of the transactions contemplated by this
Agreement in accordance with the terms of this Agreement. Newco will use its
best efforts to obtain all such authorizations, approvals and consents.
8.3. Satisfaction of Conditions Precedent. Newco will use its best efforts
to satisfy or cause to be satisfied all the conditions precedent which are set
forth in Sections 12, 13, and 14 of this Agreement, and Newco will use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated in accordance with the terms of this Agreement, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby
8.4. Closing of Exchange. CSRV shall not refuse to effect the transactions
contemplated by this Agreement if, on or before the Closing Date, all the
conditions precedent to their obligations to effect the transactions
contemplated by this Agreement under Sections 12, 13, and 14 hereof have been
satisfied or, in its sole discretion, been waived by it.
9. CLOSING MATTERS
9.1. The Closing. Subject to termination of this Agreement as provided in
Section 15 below, the closing of the transactions for consummation of the
Exchange and other transactions contemplated by this Agreement (the "Closing")
will take place at the offices of NevWest Securities at 10:00 a.m., Western
Standard Time on August 31, 2001, or on such other date on or before the
Termination Date, as defined herein, as the parties to this Agreement may
mutually agree upon in writing (the "Closing Date"), but not later than within
three (3) business days after the last to occur of the CSRV Shareholders Meeting
or Uniloc Shareholders Meeting, approving the terms and conditions of the PEX
and ADA, provided that all conditions of closing specified in Sections 12, 13,
and 14 herein have been met. Any party to this Agreement, provided that such
party is not then in breach of its obligations under this Agreement, could
terminate the PEX and/or ADA as defined in Section 1 herein, if the Closing has
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not occurred on or before October 31, 2001 unless the closing has not occurred
as a result of the failure of any party to obtain approval from the Securities
and Exchange Commission.
9.2. Exchanges at the Closing.
9.2.1. At the Closing, the Uniloc Certificates shall be exchanged for the
Exchange Shares, evidenced by the certificates therefore, as provided in Section
2 hereof.
9.2.2. At the Closing, Uniloc shall advance the sum of Three Hundred Ten
Thousand ($310,000) Dollars to CSRV, of which $5,500 shall have been previously
paid in the form of a non-refundable deposit to NevWest Securities Corp. and
$50,000 shall have been deposited in escrow with Xxxxx Fargo upon execution of
this Agreement. Therefore, at Closing Uniloc shall deliver the additional sum of
$254,500.00 in the form of a certified bank check or wire transfer payable to
the escrow account and disbursed in accordance with the terms of the escrow
agreement.
9.2.3. At the Closing, Uniloc shall deliver such additional quarterly
Unaudited Financial Statement of Uniloc for all quarters from the date of the
quarters previously provided up to any quarter ending forty five (45) days from
the Closing Date.
9.2.4. At the Closing, parties to this Agreement shall deliver
acknowledgments that although CSRV shall be surviving corporation in the
Exchange, from a corporate perspective, the Exchange shall be treated as a
"reverse acquisition" for accounting and financial statements purposes wherein
Uniloc shall be deemed the surviving entity.
9.2.5. At the Closing Uniloc shall tender to CSRV for cancellation and
reissuance to CSRV of all Uniloc shares and such additional shares as defined in
the PEX and ADA given in settlement of debt, all with properly executed stock
powers and medallion guarantees.
9.2.2. At the Closing, all titles and other documents evidencing ownership
of Designated Assets and all assignments and other documents evidencing
Designated Liabilities shall be delivered by CSRV to Newco, which shall be
delivered by Newco to CSRV, as provided in Section 2 hereof.
9.2.4. Uniloc understands and agrees that stop transfer instructions will
be given to CSRV's transfer agent with respect to certificates evidencing the
Exchange Shares to assure compliance with the provisions of the Investment
Representation Letter and that there will be placed on the certificates
evidencing such Exchange Shares legends as specified in the Investment
Representation Letter.
Page 28 of 54
9.2.5. After the Closing there will be no further registration of transfers
on the share register of Uniloc or its transfer agent or company secretary of
the Uniloc Stock that was issued and outstanding immediately prior to the
Closing. If, after the Closing, Uniloc Certificates are presented for any
reason, they will be canceled.
10. CONDITIONS TO OBLIGATIONS OF UNILOC
The obligations of Uniloc to consummate the Exchange are subject to the
fulfillment or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Uniloc in its sole
discretion, but only in a writing signed by Uniloc):
10.1. Accuracy of Representations and Warranties. The representations and
warranties of CSRV and Newco set forth in Sections 12, 13, and 14 shall be true
and accurate in every material respect on and as of the Agreement Date with the
same force and effect as if they had been made at the Closing, and Uniloc shall
have received a certificate to such effect executed by such parties Presidents
or Chief Financial Officers.
10.2. Covenants and Conditions.
10.2.1. CSRV and Newco shall have performed and complied in all material
respects with all of its covenants contained herein or before the Closing, and
Uniloc shall have received a certificate to such effect signed by such parties
Presidents or Chief Financial Officers.
10.2.2. All parties to this Agreement shall negotiate and deliver a
definitive PEX and ADA containing the basic terms and conditions set forth
herein together with such other representations, warranties, covenants, terms,
indemnities and conditions as would be usual and customary for a transaction of
this nature and which are mutually agreeable to the parties including, without
limitation, the making of all necessary filings and obtaining the necessary
approvals and consents by third parties required to consummate the Exchange and
other transactions contemplated in this Agreement.
10.2.3. CSRV's Board of Directors shall approve the PEX and designate and
authorize a representative of CSRV to execute the PEX on or before JULY 31,
2001. CSRV shall approve, adopt, execute and deliver the PEX and the ADA and
recommendations to the shareholders by the Board of Directors of CSRV and Uniloc
in accordance with Nevada law, to other parties to this Agreement by [July 31,
2001.]
10.2.4. CSRV's shareholders shall approve the PEX and ADA under Nevada
Revision Law, at a duly called meeting of Shareholders ("CSRV Shareholder
Page 29 of 54
Meeting") after filing a preliminary and definitive proxy statement with the SEC
and service upon such shareholders.
10.2.5. The Board of Directors of Newco shall approve the PEX and ADA and
designate an authorized representative of Newco to execute the Term Sheet, as
well as deliver the executed Term Sheet to all parties to this Agreement on or
before August 31, 2001
10.2.6. Additionally as of the Closing:
(a) CSRV shall deliver to Uniloc copies of its Audited Financial Statements
for the fiscal year ended December 31, 2000 if the same has been filed with the
SEC on Form 10KSB, or in the event it is not filed by such date, unaudited
financial statements for the fiscal year ended December 31, 2000 and Unaudited
Financial Statements, as filed with the SEC, for all quarters after December 31,
2000 up to the period forty five (45) days from the Closing Date.
(b) there shall be no non-disclosed CSRV common stock equivalents
outstanding
(c) CSRV shall acknowledge and accept that CSRV shall be the surviving
corporation in the Exchange, where from a corporate law perspective the Exchange
shall be treated as a "reverse acquisition" for accounting and financial
statements purposes wherein Uniloc shall be deemed the surviving entity for such
purposes;
(d) CSRV shall have completed due diligence review and investigation into
the business and affairs of Uniloc as it and its counsel shall have deemed
reasonably necessary; and
(e) CSRV shall tender to Uniloc resignations of each of the officers and
directors of CSRV effective seriatim on that date which such vacancies filled by
the nominees of Uniloc set out in the proxy material provided by CSRV to its
shareholders.
10.2.7. Private Placement Offering; On the Closing Date, Uniloc shall have
completed a Private Placement Offering of its securities and shall broken escrow
on a Minimum Offering of $600,000 and shall have received proceeds therefrom
sufficient to transfer the balance of the Purchase Price to the Selling
Shareholders.
10.2.8 Proxy Filing. Prior to the Closing Date, CSRV shall have convened a
Special Meeting of its stockholders for the purposes of ratifying and approving
of the Divestiture and business combination with Uniloc and the matters
attendant thereupon (the "Special Meeting"). In connection with the Special
Meeting, CSRV shall: (i) cause a preliminary proxy statement to be prepared and
filed with the Securities and Exchange Commission (the "SEC"); (ii) respond to
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and comply with any and all comments received from the SEC; and (iii) have
implemented such stockholder mailing(s) as shall have been required by Section
14 of the Exchange Act. The Special Meeting proxy statement shall include, inter
alia: (i) ratification and approval of the Exchange; (ii) ratification and
approval of a reverse split of all issued and outstanding CSRV Shares on such
terms and conditions as Uniloc's Board of Directors shall determine on up to a
one for five basis; (iii) authorize an amendment to CSRV's Certificate of
Incorporation changing CSRV's name to Uniloc, Inc. or such other name as
Uniloc's Board of Directors shall elect, changing the authorized capital to
100,000,000 shares of Common Stock and creating a class of "blank check"
preferred stock on such terms and conditions as Uniloc's Board of Directors
shall determine; (iii) authorizing the creation of an incentive and
non-incentive stock option plan on such terms and conditions as Uniloc's Board
of Directors shall determine; and (iv) ratification and approval of an agreement
that 50% of the shares of Common Stock the CSRV Shareholders which are eligible
for trading shall be subject to a lock-up agreement for a period of five months
after the Closing.
10.3. Compliance with Law; No Legal Restraints. There shall not be
outstanding or threatened, or enacted or adopted, any order, decree, temporary,
preliminary or permanent injunction, legislative enactment, statute, regulation,
action, proceeding or any judgment or ruling by any court, arbitrator,
governmental agency, authority or entity, or any other fact or circumstance
(other than any such matter initiated by Uniloc, its officers or directors),
that, directly or indirectly, challenges, threatens, prohibits, enjoins,
restrains, suspends, delays, conditions or renders illegal or imposes
limitations on, or is likely to result in a challenge, threat to, or a
prohibition, injunction, restraint, suspension, delay or illegality of, or to
impose limitations on the Exchange or any other transaction contemplated by this
Agreement.
10.4. Government Consents. There shall have been obtained at or prior to
the Closing Date such permits and/or authorizations, and there shall have been
taken such other action by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the Exchange, including but not limited to requirements
under applicable securities and corporations laws.
10.5. Opinion of Counsel. Uniloc shall have received from counsel to CSRV
and Newco an opinion letter concerning the validity of the transactions
contemplated by this Agreement.
10.6. Documents. CSRV shall have executed and delivered to Uniloc a
certificate representing the Exchange Shares. Uniloc shall have received all
written consents, assignments, waivers, authorizations or other certificates
reasonably deemed necessary by Uniloc's legal counsel for Uniloc to lawfully
consummate the transactions contemplated hereby.
Page 31 of 54
10.7. No Litigation. No litigation or proceeding (other than any litigation
or proceeding initiated by Uniloc, its Board of Directors, shareholders or
officers or Uniloc) shall be threatened or pending for the purpose or with the
probable effect of enjoining or preventing the consummation of the Exchange or
any of the other transactions contemplated by this Agreement, or which could be
reasonably expected to have a material adverse effect on the present or future
operations or financial condition of CSRV.
10.8. Instructions to Transfer Agent; Deliveries. CSRV shall have issued
irrevocable instructions to its transfer agent to authorize the issuance of CSRV
common stock in the Exchange consistent with Section 2 hereof. CSRV shall have
made the other deliveries contemplated by Section 2 hereof.
10.9. Satisfactory Form of Legal Matters. The form, scope and substance of
all legal and accounting matters contemplated hereby and all closing documents
and other papers delivered hereunder shall be reasonably acceptable to Uniloc's
counsel.
11. CONDITIONS TO OBLIGATIONS OF CSRV
The obligations of CSRV hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by CSRV in its sole discretion, but only in a
writing signed by CSRV):
11.1. Accuracy of Representations and Warranties. The representations and
warranties of Uniloc, and Newco set forth in Sections 3, 5 and 6 and in the
Investment Representation Letters shall each be true and accurate in every
material respect on and as of the Closing with the same force and effect as if
they had been made at the Closing, except, in each case, where the failure to be
true and correct would not reasonably be expected to have a Material Adverse
Effect, and CSRV shall have received certificates to such effect executed by
such parties Presidents or Chief Financial Officers.
11.2. Covenants and Conditions.
11.2.1. Uniloc and NEWCO shall have performed and complied in all material
respects with all of its covenants contained herein or before the Closing, and
Uniloc shall have received a certificate to such effect signed by such parties
Presidents or Chief Financial Officers.
11.2.2. CSRV and NEWCO shall negotiate and deliver at closing a PEX and ADA
containing the basic terms and conditions set forth herein together with such
other representations, warranties, covenants, terms, indemnities and conditions
as would be usual and customary for a transaction of this nature and which are
mutually agreeable to the parties including, without limitation, the making of
all necessary filings and obtaining the necessary approvals and consents by
third parties required to consummate the Exchange and other transactions
contemplated in this Agreement.
Page 32 of 54
11.2.3. Uniloc's Board of Directors shall approve the PEX and designate and
authorize a representative of CSRV to execute the PEX on or before July 31,
2001. CSRV should deliver the approved and executed PEX to Uniloc and Newco on
or before July 31, 2001. Uniloc shall approve, adopt, execute and deliver the
PEX and the ADA and recommendations to the shareholders by the Board of
Directors of CSRV and Uniloc in accordance with Nevada law, to other parties to
this Agreement by July 31, 2001.
11.2.4. Uniloc shall have obtained shareholder approval in full compliance
with California Revised Statutes at a duly called meeting of Shareholders
("Uniloc Shareholder Meeting") and any dissenter's rights shall have been fully
liquidated without material change to the financial condition of Uniloc.
11.2.5. The Board of Directors of Newco shall approve the ADA and designate
an authorized representative of Newco to execute the ADA, as well as deliver the
executed ADA to all parties to this Agreement on or before August 31, 2001.
Also, Newco shall approve, adopt and deliver the PEX/ADA to the other parties to
this Agreement on or before August 31, 2001.
11.2.7. Uniloc shall have delivered to CSRV Uniloc Certificates
representing 100% of the issued and outstanding shares of Uniloc together with
the other deliverables specified in Section 2 hereof.
11.2.10. Additionally, as of the Closing:
(a) there shall be no Uniloc common stock equivalents outstanding, which
shall include any and all subscriptions, warrants, options or other rights or
commitments of any character to subscribe for or purchase from Uniloc or
obligating Uniloc to issue any Uniloc Shares or any securities convertible or
exchangeable for such shares;
(b) Uniloc shall have completed due diligence review and investigation into
the business and affairs of CSRV as it and its counsel shall have deemed
necessary; and
(c) CSRV shall have received duly executed copies of all third-party
consents, approvals, assignments, waivers, authorizations or other certificates
contemplated by this Agreement or reasonably deemed necessary by CSRV's legal
counsel to provide for the continuation in full force and effect of any and all
material contracts, agreements and leases of Uniloc and the preservation of
Uniloc's IP Rights and other assets and properties and for CSRV to consummate
the transactions contemplated hereby, in form and substance reasonably
Page 33 of 54
satisfactory to CSRV, except for such thereof as the failure to so obtain would
not have a Material Adverse Effect, or that CSRV and Uniloc shall have agreed in
writing need not be obtained.
11.3. Compliance with Law; No Legal Restraints. There shall not be
outstanding, or enacted or adopted, any order, decree, temporary, preliminary or
permanent injunction, legislative enactment, statute, regulation, action,
proceeding or any judgment or ruling by any court, arbitrator, governmental
agency, authority or entity (other than any such matter initiated by CSRV or its
officers or directors), that, directly or indirectly, challenges, threatens,
prohibits, enjoins, restrains, suspends, delays, conditions, or renders illegal
or imposes limitations on (or is likely to result in a challenge, threat to, or
a prohibition, injunction, restraint, suspension, delay or illegality of, or to
impose limitations on: (i) the Exchange or any other transaction contemplated by
this Agreement; (ii) CSRV's payment for Newco's acquisition or purchase of
Designated Assets and Designated Liabilities from CSRV; or (iii) CSRV's ability
to exercise full rights of ownership with respect to Uniloc and its respective
assets and shares, including but not limited to restrictions on CSRV's ability
to vote all the shares of Uniloc.
11.4. Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations from, and there shall have been
taken such other action, as may be required to lawfully consummate the Exchange
by, any governmental or regulatory authority having jurisdiction over any of the
parties and/or the actions herein proposed to be taken, including but not
limited to requirements under applicable securities and corporate laws.
11.5. Opinion of Uniloc's Counsel. CSRV shall have received from counsel to
Uniloc opinions concerning the validity of the transactions contemplated by this
Agreement.
11.6. No Litigation. No litigation or proceeding (other than any litigation
or proceeding initiated by CSRV, its Board of Directors, its shareholders, or
its officers) shall be pending which could be reasonably expected to have a
Material Adverse Effect on the present or future operations or financial
condition of Uniloc.
11.7. Appointment of New Directors and Officers. The directors and officers
of Uniloc in office immediately prior to the Closing of the Exchange shall have
resigned effective as of the Closing, unless otherwise directed by CSRV, and
designees of CSRV shall have been named as the sole directors and officers of
Uniloc and each of the Uniloc Subsidiaries prior to Closing, subject to any
requirements of applicable local law.
11.8. No Material Adverse Change. There shall not have been any material
adverse change in the financial condition, properties, assets, liabilities,
business, results of operations or operations of Uniloc and the Uniloc
Subsidiaries, taken as a whole, that would constitute a Material Adverse Effect.
Page 34 of 54
11.9. Satisfactory Form of Legal and Accounting Matters. The form, scope
and substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be reasonably
acceptable to CSRV's counsel and independent public accountants.
12. CONDITIONS TO OBLIGATIONS OF NEWCO
The obligations of Newco to consummate the transactions subject to this
Agreement are subject to the fulfillment or satisfaction, on and as of the
Closing, of each of the following conditions (any one or more of which may be
waived by Newco in its sole discretion, but only in a writing signed by Newco):
12.1. Accuracy of Representations and Warranties. The representations and
warranties of CSRV and Uniloc set forth herein shall be true and accurate in
every material respect on and as of the Closing with the same force and effect
as if they had been made at the Closing, and NEWCO shall have received a
certificate to such effect executed by such parties Presidents or Chief
Financial Officers.
12.2. Covenants and Conditions.
12.2.1. CSRV and Uniloc shall have performed and complied in all material
respects with all of its covenants contained herein or before the Closing, and
Newco shall have received a certificate to such effect signed by such parties
Presidents or Chief Financial Officers.
12.2.2. CRSV and NEWCO shall negotiate and deliver a definitive ADA
containing the basic terms and conditions set forth herein together with such
other representations, warranties, covenants, terms, indemnities and conditions
as would be usual and customary for a transaction of this nature and which are
mutually agreeable to the parties including, without limitation, the making of
all necessary filings and obtaining the necessary approvals and consents by
third parties required to consummate the Exchange and other transactions
contemplated in this Agreement.
12.2.3. CSRV's and Uniloc's Boards of Directors shall approve the PEX and
designate and authorize a representative of CSRV to execute the PEX on or before
July 31, 2001. CSRV and Uniloc should deliver the approved and executed PEX to
Newco on or before July 31, 2001. CSRV and Uniloc shall approve, adopt, execute
and deliver the PEX and the ADA and recommendations to the shareholders by the
Board of Directors of CSRV and Uniloc in accordance with Nevada law, to other
parties to this Agreement by August 31, 2001.
Page 35 of 54
12.2.4. CSRV's and Uniloc's shareholders shall approve the PEX and ADA
under Nevada State and California laws, respectively at CSRV Shareholder Meeting
and Uniloc Shareholder Meeting.
12.2.6. CSRV shall deliver to Newco the Deed of Assignment of Designated
Assets and Designated Liabilities.
12.3. Compliance with Law; No Legal Restraints. There shall not be
outstanding or threatened, or enacted or adopted, any order, decree, temporary,
preliminary or permanent injunction, legislative enactment, statute, regulation,
action, proceeding or any judgment or ruling by any court, arbitrator,
governmental agency, authority or entity, or any other fact or circumstance
(other than any such matter initiated by Uniloc, its officers or directors),
that, directly or indirectly, challenges, threatens, prohibits, enjoins,
restrains, suspends, delays, conditions or renders illegal or imposes
limitations on, or is likely to result in a challenge, threat to, or a
prohibition, injunction, restraint, suspension, delay or illegality of, or to
impose limitations on: (i) the transactions contemplated by this Agreement; (ii)
Newco's payment for, or acquisition or purchase of, of CSRV's Designated Assets
and Designated Liabilities.
12.4. Government Consents. There shall have been obtained at or prior to
the Closing Date such permits and/or authorizations, and there shall have been
taken such other action by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the transfer of Designated Assets and Designated
Liabilities.
12.5. Opinion of CSRV's Counsel. Newco shall have received from counsel to
CSRV, an opinion letter concerning the transfer of Designated Assets and
Designated Liabilities and other transactions contemplated by this Agreement.
12.6. No Litigation. No litigation or proceeding (other than any litigation
or proceeding initiated by Newco, its Board of Directors, shareholders or
officers) shall be threatened or pending for the purpose or with the probable
effect of enjoining or preventing the transfer of Designated Assets and
Designated Liabilities or any of the other transactions contemplated by this
Agreement, or which could be reasonably expected to have a material adverse
effect on the present or future operations or financial condition of CSRV.
12.7. Instructions to Agents. CSRV shall have issued all required
notifications concerning the irrevocable instructions to its agents, customers
and affiliates concerning the transfer of Designated Assets and Designated
Liabilities consistent with Section 2 hereof. CSRV shall have made the other
deliveries contemplated by Section 2 hereof.
Page 36 of 54
12.9. Satisfactory Form of Legal Matters. The form, scope and substance of
all legal and accounting matters contemplated hereby and all closing documents
and other papers delivered hereunder shall be reasonably acceptable to Newco's
counsel.
13. TERMINATION OF AGREEMENT
13.1. Prior to or at the Closing.
13.1.1 This Agreement may be terminated at any time prior to or at the
Closing by the mutual written consent of all parties to this Agreement.
13.1.2. This Agreement may be terminated after the Termination Date by CSRV
if the conditions precedent set forth in Sections 10 and 12 shall have not been
complied with, waived or performed and such noncompliance or nonperformance
shall not have been cured or eliminated (or by its nature cannot be cured or
eliminated) by Uniloc and/or Newco on or before Midnight, Eastern Time on August
31, 2001 (the "Termination Date").
13.1.3. This Agreement may be terminated after the Termination Date by
Uniloc if the conditions precedent set forth in Sections 11 and 12 shall have
not been complied with, waived or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by CSRV and/or Newco on or before the Termination Date.
13.1.4. This Agreement may be terminated after the Termination Date by
Newco if the conditions precedent set forth in Sections 10 and 11 shall have not
been complied with, waived or performed and such noncompliance or nonperformance
shall not have been cured or eliminated (or by its nature cannot be cured or
eliminated) by CSRV on or before the Termination Date.
13.1.4. CSRV may terminate this Agreement at any time prior to or at the
Closing if any of the representations and warranties of Uniloc and/or Newco in
Sections 12, 13 and 14 of this Agreement were incorrect, untrue or false in any
material respect as of the Agreement Date or are incorrect, untrue or false in
any material respect as of the proposed Closing Date or Uniloc and/or Newco have
breached any of their respective covenants of this Agreement, but in any case,
only to the extent that such incorrectness, untruth, falsity or breach shall
cause the condition contained herein to have failed, and the responsible party
has not cured such breach prior to the earlier of (i) the Closing, (ii) thirty
(30) days after CSRV has given such party a written notice of its intention to
terminate this Agreement pursuant to this subsection or (iii) the Termination
Date.
13.1.5. Uniloc may terminate this Agreement at any time prior to or at the
Closing if any of the representations and warranties of CSRV and/or Newco in
Page 37 of 54
Sections 12, 13 and 14 of this Agreement were incorrect, untrue or false in any
material respect as of the Agreement Date or are incorrect, untrue or false in
any material respect as of the proposed Closing Date or any of such parties has
breached any of its covenants under this Agreement, and it has not cured such
breach prior to the earlier of (i) the Closing, (ii) thirty (30) days after
Uniloc has given a written notice of his intention to terminate this Agreement
to the breaching party pursuant to this subsection, or (iii) the Termination
Date. Notwithstanding the foregoing, Uniloc may terminate this Agreement at any
time prior to or at the Closing if CSRV shall have breached its covenants
contained in herein.
13.1.6. Newco may terminate this Agreement at any time prior to or at the
Closing if any of the representations and warranties of CSRV and/or Uniloc in
Section 12, 13 and 14 of this Agreement were incorrect, untrue or false in any
material respect as of the Agreement Date or are incorrect, untrue or false in
any material respect as of the proposed Closing Date or any of such parties has
breached any of its covenants under this Agreement, and it has not cured such
breach prior to the earlier of (i) the Closing, (ii) thirty (30) days after
Newco has given a written notice of his intention to terminate this Agreement to
the breaching party pursuant to this subsection, or (iii) the Termination Date.
Notwithstanding the foregoing, Newco may terminate this Agreement at any time
prior to or at the Closing if CSRV shall have breached its covenant contained
herein.
13.2. Any termination of this Agreement under this Section 16 will be
effective by the delivery of notice of the terminating party to the other
parties hereto.
13.3. No Liability for Proper Termination. Any termination of this
Agreement in accordance with this Section 16 will be without further obligation
or liability upon any party in favor of the other party hereto or to its
stockholders, directors or officers, other than the obligations provided in the
Confidentiality Agreement; provided, however, that nothing herein will limit the
obligation of Uniloc and CSRV for any willful breach hereof or failure to use
their best efforts to cause the Exchange to be consummated. In the event of the
termination of this Agreement pursuant to this Section 15, this Agreement shall
thereafter become void and have no effect and each party shall be responsible
for its own expenses incurred in connection herewith.
14. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES, CONTINUING
COVENANTS
14.1. Survival of Representations. All representations, warranties and
covenants of Uniloc, CSRV and Newco contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
Page 38 of 54
other parties to this Agreement until that date which is the earlier of (i) the
termination of this Agreement or (ii) twelve (12) months after the Closing Date.
14.2. Agreement to Indemnify.
14.2.1. Uniloc agrees to indemnify and hold harmless CSRV and Newco, their
officers, directors, agents, shareholders and employees, and each person, if
any, who controls or may control those parties within the meaning of the 1933
Act or the 1934 Act (each hereinafter referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and against
any and all claims, demands, suits, actions, causes of actions, losses, costs,
damages, liabilities and expenses including, without limitation, reasonable
attorneys' fees, other professionals' and experts' reasonable fees and court or
arbitration costs (hereinafter collectively referred to as "Damages") incurred
and arising out of any inaccuracy, misrepresentation, breach of, or default in,
any of the representations, warranties or covenants given or made by Uniloc in
this Agreement or in any certificate delivered by or on behalf of Uniloc
pursuant hereto (if such inaccuracy, misrepresentation, breach or default
existed at the Closing Date). Any claim of indemnity made by an Indemnified
Person under this Section 17.2 must be asserted in a writing delivered to Uniloc
by no later than thirty (30) days after the filing of the Plan of Merger with
the Secretary of State of Nevada.
14.2.2. CSRV agrees to indemnify and hold harmless Uniloc and Newco, their
officers, directors, agents, shareholders and employees, and each person, if
any, who controls or may control those parties within the meaning of the 1933
Act or the 1934 Act (each hereinafter referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and against
any and all claims, demands, suits, actions, causes of actions, losses, costs,
damages, liabilities and expenses including, without limitation, reasonable
attorneys' fees, other professionals' and experts' reasonable fees and court or
arbitration costs (hereinafter collectively referred to as "Damages") incurred
and arising out of any inaccuracy, misrepresentation, breach of, or default in,
any of the representations, warranties or covenants given or made by CSRV in
this Agreement or in any certificate delivered by or on behalf of CSRV pursuant
hereto (if such inaccuracy, misrepresentation, breach or default existed at the
Closing Date). Any claim of indemnity made by an Indemnified Person under this
Section 17.2 must be asserted in a writing delivered to Uniloc by no later than
thirty (30) days after the filing of the Plan of Merger with the Secretary of
State of Nevada.
14.2.1. Newco agrees to indemnify and hold harmless CSRV and Uniloc their
officers, directors, agents, shareholders and employees, and each person, if
any, who controls or may control those parties within the meaning of the 1933
Act or the 1934 Act (each hereinafter referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and against
Page 39 of 54
any and all claims, demands, suits, actions, causes of actions, losses, costs,
damages, liabilities and expenses including, without limitation, reasonable
attorneys' fees, other professionals' and experts' reasonable fees and court or
arbitration costs (hereinafter collectively referred to as "Damages") incurred
and arising out of any inaccuracy, misrepresentation, breach of, or default in,
any of the representations, warranties or covenants given or made by NEWCO in
this Agreement or in any certificate delivered by or on behalf of NEWCO pursuant
hereto (if such inaccuracy, misrepresentation, breach or default existed at the
Closing Date). Any claim of indemnity made by an Indemnified Person under this
Section 17.2 must be asserted in a writing delivered to NEWCO by no later than
thirty (30) days after the filing of the Plan of Merger with the Secretary of
State of Nevada.
14.3. A party entitled to indemnification hereunder (an "Indemnified
Party") agrees to notify each party required to indemnify hereunder (an
"Indemnifying Party") with reasonable promptness of any claim asserted against
it in respect to which any Indemnifying Party may be liable under this
Agreement, which notification shall be accompanied by a written statement
setting forth the basis of such claim and the manner of calculation thereof. An
Indemnifying Party shall have the right to defend any such claim at its or his
own expense and with counsel of its or his choice; provided, however, that such
counsel shall have been approved by the Indemnified Party prior to engagement,
which approval shall not be unreasonably withheld or delayed; and provided
further, that the Indemnified Party may participate in such defense, if it so
chooses, with its own counsel and at its own expense.
15. MISCELLANEOUS
15.1. Governing Law/Jurisdiction. This Agreement shall be governed and
construed in accordance with the laws of the State of Nevada without regard to
conflicts of laws principles thereof and all questions concerning the validity
and construction hereof shall be determined in accordance with the laws of the
State of Nevada. Except as otherwise set forth herein, any reference to "laws"
in this Agreement shall mean the federal laws of the United Stated of America
and state laws of the State of Nevada.
15.2. Assignment; Binding Upon Successors and Assigns. No party hereto may
assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
15.3. Severability. If any provision of this Agreement will for any reason
and to any extent be invalid or unenforceable, the remainder of this Agreement
and application of such provision to other persons or circumstances will be
interpreted so as reasonably to affect the intent of the parties hereto. The
Page 40 of 54
parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.
15.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all parties reflected hereon as signatories.
15.5. Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
15.6. Amendment and Waivers. Any term or provision of this Agreement may be
amended prior to the Closing by the written consent of the parties to this
Agreement, or their successors in interest. The observance of any term,
condition or provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound thereby or for whose benefit such condition was
provided. The waiver by a party of any breach hereof or default in the
performance hereof will not be deemed to constitute a waiver of any other
default or any succeeding breach or default. In addition, at any time prior to
the Closing, parties to this Agreement may, to the extent legally allowed: (i)
extend the time for the performance of any of the obligations or other acts of
the other; (ii) waive any inaccuracies in the representations and warranties
made to it contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions for its benefit
contained herein. No such waiver or extension shall be effective unless signed
in writing by the party against whom such waiver or extension is asserted. The
failure of any party to enforce any of the provisions hereof will not be
construed to be a waiver of the right of such party thereafter to enforce such
provisions or any other provisions.
15.7. Expenses. Each party will bear its respective expenses and legal fees
incurred with respect to this Agreement, and the transactions contemplated
hereby.
15.8. Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including without limitation, costs, expenses and fees on
any appeal). The prevailing party will be entitled to recover its costs of suit,
regardless of whether such suit proceeds to final judgment.
Page 41 of 54
15.9. Notices. All notices and other communications required or permitted
under this Agreement will be in writing and will be either hand delivered in
person, sent by telecopier or sent by recognized express courier service. Such
notices and other communications will be effective upon receipt if hand
delivered or sent by telecopier, and three (3) days after dispatch if sent by
express courier, to the following addresses, or to such other addresses or fax
number as any party may notify the other parties in accordance with this
Section:
(i) If to CSRV:
Certified Services, Inc.
0000 Xxxx Xxxxxxxx Xxxx, #00
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Fax Number: 000-000-0000
with a copy to: Xxxxxx Xxxxxxxx, Esq.
Xxxxxx Xxxxxxxx & Associates
000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
(Fax) Number (000) 000-0000
(ii) If to Uniloc:
Uniloc, Inc.
00000 Xxxxx Xxxxxxxxx - Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax Number: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Levy, Boonshoft & Xxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
(iii) If to Newco:
Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxx
0000 Xxxx Xxxxxxxx Xxxx, #00
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Fax Number: 000-000-0000
Page 42 of 54
15.10. Construction of Agreement. The respective parties have negotiated
this Agreement hereto and their attorneys and the language hereof will not be
construed for or against either party. A reference to a Section or an exhibit
will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole.
15.11. No Joint Venture. Nothing contained in this Agreement will be deemed
or construed as creating a joint venture or partnership between any of the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other party and their
status is, and at all times will continue to be, that of independent contractors
with respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.
15.12. Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
15.13. Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner, employee, agent, consultant or any
party hereto or any other person or entity unless specifically provided
otherwise herein, and, except as so provided, all provisions hereof will be
personal solely between the parties to this Agreement.
15.14. Public Announcement. The transactions contemplated by this Agreement
shall not be disclosed by any of the parties in any press release or other
public announcement unless and until the sensent and timing of the same has been
approved by all parties in writing and such press release or other public
announcement is in compliance with all SEC disclosure rules and regulations.
15.15. Confidentiality. Uniloc, CSRV and NEWCO shall confirm that they have
entered into the Confidentiality Agreement and that they are each bound by, and
will abide by, the provisions of such Confidentiality Agreement (except that
CSRV and NEWCO will cease to be bound by the Confidentiality Agreement after the
Exchange becomes effective). If this Agreement is terminated, all copies of
documents containing confidential information of a disclosing party shall be
returned by the receiving party to the disclosing party or be destroyed, as
provided in the Confidentiality Agreement.
Page 43 of 54
15.16. Entire Agreement. This Agreement and the exhibits hereto constitute
the entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto other than the Confidentiality
Agreement. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
---------------------The rest of this page is intentionally left blank----------
Page 44 of 54
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
UNILOC, INC.
By: ______________________ By: ______________________
XXX XXXXXXXXXX XXXXXX XXXXXXXX
Chief Executive Officer President
CERTIFIED SERVICES, INC
By: _______________________ By: ______________________
Xxxxxx Xxxxxxxx XXXXXXX XXXXXXX
Secretary, Treasurer President
------------------------------ ------------------------
XXXXXX XXXXXXXX XXXXXXX XXXXXXX
(750,000 shares) (750,000 shares)
------------------------------ ------------------------
XXXXX XXXXXX XXXXXXXXX XXXXXXX
(10,000 shares) (100,000 shares)
------------------------------ ------------------------
ST. XXXXXXX VENTURE CAPITAL XXXXX XXXXXXX
(105,000 shares) (85,000 shares)
Page 45 of 54
EXHIBIT A
INVESTMENT REPRESENTATION LETTER
Page 46 of 54
INVESTMENT REPRESENTATION LETTER
Board of Directors
Certified Services, Inc.
0000 X. Xxxxxxxx Xxxx - #00
Xxx Xxxxx, Xxxxxx 00000
Gentlemen:
In connection with the exchange of shares by Uniloc, Inc. ("Uniloc") of
an exchange basis of 1 for 1 on the Closing Date set forth within the Exchange
Agreement with Certified Services, Inc. ("CSRV"), a California corporation (the
"Company") and delivery of the Shares to the undersigned, the undersigned for
itself and its heirs, representatives, executors, administrators, successors and
assigns, represents, warrants and agrees with the Company as follows with
respect to the shares:
1. The undersigned will be acquiring the shares for investment and not
with a view to the distribution thereof and is familiar with the meaning of such
representation and covenants and understands the restrictions which are imposed
thereby. More specifically, but without limitation, the undersigned understands
that in the view of the Securities and Exchange Commission, one who acquires
securities for investment is not exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Act"), if he merely acquires such
securities for resale upon the occurrence or non-occurrence of some
predetermined event or for holding for a fixed or determinable period in the
future.
2. The undersigned will be acquiring the shares solely for the
undersigned's own account and no other person or entity has any direct or
indirect beneficial ownership or interest therein.
3. The undersigned hereby represents and warrants that it is a
corporation which was not organized for the purpose of acquiring the shares.
4. The undersigned has been advised that in reliance on the
representations, warranties and agreements herein made by the undersigned, the
issuance, and delivery of the shares to the undersigned will not be registered
under the Act on the ground that the issuance thereof is exempt from
registration by virtue of Sections 4(2) and/or 3(b) thereof.
Page 47 of 54
5. The undersigned represents and warrants to the Company that the
investment in the Company represented by the purchase of the shares came about
as a result of direct communications between the Company and the undersigned,
and did not result from any form of general advertising or general solicitation
including but not limited to, advertisements or other communications in
newspapers, magazines, or other media; broadcasts on radio or television,
seminars or promotional meetings or any letter, circular or other written
communication.
Very truly yours,
UNILOC, INC.
By:________________________ By:______________________
Xxx Xxxxxxxxxx Xxxxxx Xxxxxxxx
Chief Executive Officer President
Page 48 of 54
EXHIBIT B
CONTRACTS AND AGREEMENTS
Page 49 of 54
Material Contracts
1. Toshiba LOI--Executed
2. eMachines, Inc. Contract
3. Hewlett-Packard -Beta Test Contract
4. Chelada -Contract
5. Discover Financial Services (Discover Card)--Marketing Agreement
6. Publisher Agreements with
a. Ubi Soft Entertainment
b. Block Financial Corporation
c. Transparent Language Inc.
d. Panda Software, Inc.
e. V Communications
x. Xxxxx & Xxxxxxxx, Inc.
g. Nova Logic
h. Sierra On-Line, Inc.
i. Eidos
7. Commercial Properties
a. Office lease
8. Outstanding Debt Obligations
Exercise
Number Price Expiration Date
Senior Bridge Warrants 1,108,333 $0.60 6/15/2004
Warrants for Converting Debt to Equity 4,316,805 $0.50 3/15/2004
Warrants for equity investment in 2001 180,000 $0.50 3/1/2004
Warrants for legal work 125,000 $0.50 3/15/2004
Warrants for Director Consulting 40,000 $0.50 5/15/2003
Warrants for Director Participation 500,000 $1.00 5/15/2005
---------------
6,270,138
===============
Page 50 of 54
Daily Number Debt
Interest @ of Days to Total and
Senior Bridge Note--Not Converted 10% 3/15/2001 Interest Interest
--------------------------------- --- --------- -------- --------
Muzik 9/19/2000 $ 20,000 $ 5.48 176 $ 964.38 $ 20,964.38
Xxxxxx 10/9/2000 $ 200,000 $ 54.79 156 $ 8,547.95 $ 208,547.95
Suerberg 10/11/2000 $ 20,000 $ 5.48 154 $ 843.84 $ 20,843.84
Xxxxxxx 10/12/2000 $ 20,000 $ 5.48 153 $ 838.36 $ 20,838.36
Xxxxxxxxxxx 10/16/2000 $ 100,000 $ 27.40 149 $ 4,082.19 $ 104,082.19
Xxxx 10/16/2000 $ 20,000 $ 5.48 149 $ 816.44 $ 20,816.44
Xxxxxxx 12/20/2000 $ 10,000 $ 2.60 84 $ 218.18 $ 10,218.18
Monolith 10/17/2000 $ 200,000 $ 54.79 148 $ 8,109.59 $ 208,109.59
Kind 10/17/2000 $ 50,000 $ 13.70 148 $ 2,027.40 $ 52,027.40
Xxxxxxxxxxx 10/19/2000 $ 15,000 $ 4.11 146 $ 600.00 $ 15,600.00
Xxxxxxxxx 10/18/2000 $ 10,000 $ 2.74 147 $ 402.74 $ 10,402.74
$ 665,000 $ 182.05 $ 27,451.06 $ 692,451.06
3 Trade Payables were converted to Notes Payable
to extend payment terms:
Page 51 of 54
EXHIBIT C
INTELLECTUAL PROPERTY RIGHTS
Assigned Rights to Patent Number 5,490,216
Page 52 of 54
EXHIBIT D
EMPLOYMENT AGREEMENTS
Xxx Xxxxxxxxxx, CEO and Chairman
Xxxxxx X. Xxxxxxxx, President
Page 53 of 54
EXHIBIT E
EMPLOYMENT BENEFIT PLANS
NONE
Page 54 of 54
