EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
DISEASE SCIENCES, INC., a Delaware corporation
AND
ICEWEB COMMUNICATIONS, INC., a Delaware corporation
March 21, 2002
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of March 21, 2002
(the "Execution Date"), by and among DISEASE SCIENCES, INC., a Delaware
corporation (formerly known as AuctionAnything.com, Inc. ("DSSC") and ICEWEB
COMMUNICATIONS, INC., a Delaware corporation ("ICEWEB"). The parties hereto are
sometimes hereinafter referred to collectively as the "Companies," or
individually as a "Company."
WHEREAS, the respective Boards of Directors of the Companies deem it
advisable and in the best interests of their respective stockholders that ICEWEB
be acquired by and become a wholly owned subsidiary of DSSC and, in furtherance
thereof, the Boards of Directors of the Companies have approved, as applicable,
the merger of a Delaware corporation [to be formed and to be a wholly owned
subsidiary of DSSC ("Acquisition Sub")] with ICEWEB, upon the terms and subject
to the conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the merger
shall qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
Article I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2 hereof), ICEWEB shall be merged
(the "Merger") with and into Acquisition Sub, with Acquisition Sub being the
surviving corporation in the Merger (the "Surviving Corporation") and the
separate existence of ICEWEB shall thereupon cease. The Merger shall have the
effects set forth in Section 252 of the Delaware General Business Corporation
Law ("DGL").
1.2 Effective Time of the Merger. The Merger shall become effective (the
"Effective Time") upon the completion of the filing of properly executed
Articles of Merger and Certificate of Merger with the Secretary of State of the
State of Delaware, which filing shall be made on the Closing Date after
satisfaction of the conditions set forth in Article VIII.
Article II
DSSC AND THE SURVIVING AS THE CORPORATION
Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of Acquisition Sub shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law.
2.2 Bylaws of the Surviving Corporation. The Bylaws of Acquisition Sub as
in effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.3 Directors and Officers of the Surviving Corporation.
(a) At the Effective Time the individuals set forth on Schedule 2.3
shall be the initial directors of the Surviving Corporation of the Merger and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
(b) At the Effective Time the individuals set forth on Exhibit 2.3
shall be the initial officers of the Surviving Corporation of the Merger and
shall hold office from the Effective Time until removed or until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law.
Article III
CONVERSION OF SHARES
3.1 Exchange Ratio. At the Effective Time by virtue of the Merger and
without any action on the part of the holder thereof:
(a) (i) Each of the 22,720,500 share of common stock of ICEWEB
[the "ICEWEB Common Shares"] issued and outstanding immediately prior to the
Effective Time (other than the Excluded Shares as defined in Section 3.6 below
and ICEWEB Shares held by DSSC or any subsidiary of DSSC, if any), shall be
converted at the Effective Time into the right to receive 1.07 shares of
restricted common stock, par value $0.001 per share, of DSSC ("DSSC Common
Shares"), for an aggregate of 24,311,000 more or less DSSC Common Shares (odd
lots are to be rounded up to the nearest hundred shares);
(ii) Each of the 5,441,000 warrants to purchase ICEWEB Common
Shares issued and outstanding immediately prior to the Effective Time but not
exercised shall be converted at the Effective Time into the right to receive one
(1) warrant to purchase 1.07 DSSC Common Shares upon exercise of said warrant,
for an aggregate of 5,441,000 warrants to purchase 1.07 DSSC Common Shares upon
exercise of the warrant, more or less (odd lots are to be rounded up to the
nearest hundred shares);
(iii) Each of the 2,588,000 options to purchase ICEWEB Common
Shares issued and outstanding immediately prior to the Effective Time but not
exercised shall be converted at the Effective Time into the right to receive one
(1) option to purchase 1.07 DSSC Common Shares upon exercise of said options,
for an aggregate of 2,588,000 options to purchase 1.07 DSSC Common Shares upon
exercise of the options, more or less (odd lots are to be rounded up to the
nearest hundred shares)(the ratio of 1.07 DSSC Common Shares to be received in
exchange for each ICEWEB Common Share; the ratio of one (1) warrant to purchase
1.07 DSSC Common Shares to be received upon exercise of the warrant, in exchange
for each warrant to purchase one (1) ICEWEB Common Share; and the ratio of one
(1) option to purchase 1.07 DSSC Common Shares to be received upon exercise of
the option, in exchange for each option to purchase one (1) ICEWEB Common Share,
shall be referred to as the "ICEWEB Exchange Ratio"). The ICEWEB Exchange Ratio
is subject to the issuance of additional and authorized but unissued DSSC Shares
to all record holders of ICEWEB Shares immediately prior to the Effective Time
("Exchanging ICEWEB Shareholders") in accordance with Section 7.9 below, should
Exchanging ICEWEB Shareholders not, in the aggregate be the Controlling DSSC
Shareholders (as that term is defined in Section 3.1(a)(iv) below); and
(iv) if Exchanging ICEWEB Shareholders do not own at least 66
2/3 percent (66 2/3%) of all issued and outstanding DSSC Shares following the
exchange of shares utilizing the ICEWEB Exchange Ratio, for any reason, with all
options, warrants and other rights convertible into DSSC Shares being considered
as having been fully converted, including ICEWEB warrants exchangeable by ICEWEB
Shareholders into DSSC Warrants, but prior to the issuance of any shares,
options, warrants or other security convertible to DSSC Shares or any form of
recapitalization after the Effective Time (said 66 2/3% status being referred to
as the "Controlling DSSC Shareholders") then, and in any such event, DSSC shall
immediately issue to Exchanging ICEWEB Shareholders, from authorized but
unissued DSSC Shares or DSSC Shares in the treasury, for no additional
consideration, that number of DSSC Shares, fully paid and non-assessable, as
will cause Exchanging ICEWEB Shareholders to be the Controlling DSSC
Shareholders, pro rata, in the proportions their issued and outstanding ICEWEB
Shares bear to each other.
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(b) At the Effective Time, all ICEWEB Shares (other than the
Excluded Shares) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
representing any such ICEWEB Shares shall thereafter represent the DSSC Shares,
into which such ICEWEB Shares have been converted. Certificates representing
ICEWEB Shares shall be exchanged for certificates representing whole DSSC
Shares.
(c) If, prior to the Effective Time, DSSC should split or combine
the DSSC Shares, or pay a stock dividend or other stock distribution in, DSSC
Shares, then the ICEWEB Exchange Ratio shall be appropriately adjusted to
reflect such split, combination, dividend, or other distribution.
(d) Each ICEWEB Share held in treasury (or held in a subsidiary, as
such term is defined in Article IV hereof) and each such Share held by DSSC or
any subsidiary of DSSC immediately prior to the Effective Time shall be canceled
and retired and cease to exist, and no DSSC Shares shall be issued in exchange
therefor.
(e) Each share of common stock of Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall remain outstanding.
3.2 Exchange of Shares
(a) Prior to the Effective Time, DSSC shall select and enter into an
agreement with a bank or trust company to act as Exchange Agent hereunder (the
"Exchange Agent"). No later than the Effective Time, DSSC shall cause the
Exchange Agent, pursuant to irrevocable instructions, to make available and
deliver, and each holder of ICEWEB Shares (other than Excluded Shares) shall be
entitled to receive, upon surrender to the Exchange Agent of one or more
certificates representing such ICEWEB Shares for cancellation, certificates
representing the number of DSSC Shares into which such ICEWEB Shares are
converted in the Merger. The DSSC Shares into which the ICEWEB Shares shall be
converted in the Merger shall be deemed to have been issued at the Effective
Time.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding ICEWEB Shares (the "Certificates") whose ICEWEB Shares were
converted into DSSC Shares pursuant to Section 3.1, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as DSSC
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing DSSC Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole DSSC Shares which such holder has the right to receive in
respect of the Certificates surrendered pursuant to the provisions of this
Article III.
(c) In the event that any stock certificate representing ICEWEB
Shares shall have been lost, stolen, or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to be lost,
stolen, or destroyed, DSSC shall issue or cause to be issued in exchange for
such lost, stolen, or destroyed certificate the number of DSSC Shares into which
such shares are converted in the Merger in accordance with this Article III.
When authorizing such issuance in exchange therefor, the Board of Directors of
DSSC may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate to
give DSSC a standard form of indemnity against any claim that may be made
against DSSC with respect to the certificate alleged to have been lost, stolen,
or destroyed.
3.3 Stock Options, Warrants, and other Agreements. Except as shown on
Schedule 3.3, as of the Effective Time, any stock options, warrants, convertible
securities or other contractual commitments or agreements of any kind to
purchase or issue ICEWEB Shares that are outstanding both as of the date hereof
and at the Effective Time (whether or not contingent or otherwise requiring
further shareholder
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approval) shall terminate as of the Effective Time, and prior to the Effective
Time, ICEWEB shall take or cause to be taken all necessary actions to ensure
that following the Effective Time no participant in any such plan, program or
arrangement shall have any right thereunder to acquire any equity securities of
ICEWEB or the Surviving Corporation or any subsidiary thereof
3.4 Dividends; Transfer Taxes. No dividends that are declared on DSSC
Shares shall be paid to persons entitled to receive certificates representing
DSSC Shares until such persons surrender their certificates representing ICEWEB
Shares. Upon such surrender, there shall be paid to the person in whose name the
certificates representing such DSSC Shares shall be issued any dividends which
shall have become payable with respect to such DSSC Shares between the Effective
Time and the time of such surrender. In no event shall the person entitled to
receive such dividends be entitled to receive interest on such dividends. If any
certificates for any DSSC Shares are to be issued in a name other than that in
which the certificate representing ICEWEB Shares surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such DSSC Shares in
a name other than that of the registered holder of the Certificate surrendered,
or shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of DSSC Shares
for any DSSC Shares or dividends thereon or, in accordance with Section 3.4
hereof, the cash payment for fractional interests, delivered to a public
official pursuant to applicable escheat laws.
3.5 No Fractional Securities. No certificates or scrip representing
fractional DSSC Shares shall be issued upon the surrender for exchange of
certificates representing Shares pursuant to this Article III and no dividend,
stock split-up, or other change in the capital structure of DSSC shall relate to
any fractional security, and such fractional interests shall not entitle the
owner thereof to vote or to any rights of a security holder. In lieu of any such
fractional securities, each holder of Shares who would otherwise have been
entitled to a fraction of a DSSC Share upon surrender of stock certificates for
exchange pursuant to this Article III shall be paid cash upon such surrender in
an amount equal to the product of such fraction multiplied by the average
closing price for a DSSC Share on the Nasdaq National Market, Nasdaq SmallCap
Market or principal exchange on which its common stock is listed for the five
(5) trading days immediately following the Closing Date (as defined below).
3.6 Closing of Transfer Books. At the Effective Time, the stock transfer
books of ICEWEB shall be closed and no transfer of Shares shall thereafter be
made. If, after the Effective Time, certificates representing Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing DSSC Shares in accordance with the terms hereof. At
and after the Effective Time, the holders of Shares to be exchanged for DSSC
Shares pursuant to this Agreement shall cease to have any rights as shareholders
of ICEWEB except for the right to surrender such stock certificates in exchange
for DSSC Shares as provided hereunder.
3.7 Dissenting Shares. If holders of ICEWEB Shares are entitled to dissent
from the Merger and demand appraisal of any such ICEWEB Shares in accordance
with the provisions of the DGL concerning the right of such holders to dissent
from the Merger and demand appraisal of their shares ("Dissenting Holders"), any
ICEWEB Shares held by a Dissenting Holder as to which appraisal has been so
demanded ("Excluded Shares") shall not be converted as described in Section 3.1,
but shall from and after the Effective Time represent only the right to receive
such consideration as may be determined to be due to such Dissenting Holder
pursuant to the DGL; provided, however, that each ICEWEB Share held by a
Dissenting Holder who shall, after the Effective Time, withdraw his demand for
appraisal or lose his right of appraisal with respect to such ICEWEB Shares, in
either case pursuant to the DGL, shall not be deemed Excluded Shares but shall
be deemed to be converted, as of the Effective Time, into the right to receive
DSSC Shares in accordance with the ICEWEB Exchange Ratio, as applicable.
3.8 Closing. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Atlas Pearlman,
P.A., 350 East Las Olas Boulevard, Suite 1700, Fort Lauderdale, Florida 33301,
at 11:00 a.m., local time, no later than 2 business days following the day that
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all the conditions to Closing set forth in Article VIII herein have been
satisfied or waived by the applicable Company (the "Closing Date"), subject to
satisfaction of the conditions set forth in Article VIII herein.
3.9 Supplementary Action. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either DSSC or ICEWEB, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of each, in the name of and on behalf of them as appropriate, to execute
and deliver any and all things necessary or proper to vest or to perfect or
confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
Article IV
REPRESENTATIONS AND WARRANTIES OF ICEWEB
As used in this Agreement, (i) the term "Material Adverse Effect" means,
with respect to DSSC and its subsidiaries or ICEWEB and its subsidiaries, as the
case may be, a material adverse effect on the business, assets, results of
operations, or financial condition of such party and its subsidiaries taken as a
whole or in the ability of such party to materially perform its obligations
hereunder, and (ii) the word "subsidiary" when used with respect to any party
means any corporation or other organization, whether incorporated or
unincorporated, of which such party or any other subsidiary of such party is a
general partner (excluding partnerships the general partnership interests of
which held by such party or any subsidiary of such party do not have a majority
of the voting interests in such partnership) or of which at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporations or other organizations is directly
or indirectly owned or controlled by such party and/or by any one or more of the
subsidiaries.
ICEWEB represents and warrants, with respect to itself and its
subsidiaries, except as disclosed to DSSC in the ICEWEB Schedule of Exceptions
identified herein and attached hereto and incorporated herein by this reference,
as follows:
4.1 Organization. Each of ICEWEB and its subsidiaries is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be conducted.
Each of ICEWEB and its subsidiaries is duly qualified as a foreign corporation
to do business, and is in good standing (to the extent the concept of good
standing exists), in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified shall not
have a Material Adverse Effect.
4.2 Capitalization. As of the date hereof, the authorized capital stock of
ICEWEB and each of its subsidiaries is as set forth in Schedule 4.2. As of the
date hereof, the number of Shares of ICEWEB and the number of shares of ICEWEB
preferred stock ("ICEWEB Preferred") which are issued and outstanding is as set
forth in Schedule 4.2. All of the issued and outstanding Shares of ICEWEB and
ICEWEB Preferred are validly issued, fully paid, and non-assessable and free of
preemptive rights or similar rights created by statute, the Certificate of
Incorporation or Bylaws of ICEWEB or any agreement by which ICEWEB or any of its
subsidiaries or the ICEWEB Shareholders is a party or by which it is bound.
Except (a) as set forth above or, (b) as disclosed in Schedule 4.2, there are
not as of the date of this Agreement any shares of capital stock of ICEWEB
issued or outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities, or other agreements or commitments obligating ICEWEB to
issue, transfer, or sell any shares of its capital stock.
4.3 Authority Relative to this Agreement. ICEWEB has the corporate power
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by ICEWEB and the consummation by
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ICEWEB of the transactions contemplated hereby have been duly authorized by its
Board of Directors, and have been consented to by the requisite votes of
ICEWEB's shareholders consenting to this transaction , and no other corporate
proceedings on the part of ICEWEB are necessary to approve this Agreement or the
transactions contemplated hereby.
4.4 Consents and Approvals; No Violations. Except filing and recordation
of Articles or Certificates of Merger under the DGL, no filing with, and no
permit, authorization, consent, or approval of, any public body or authority is
necessary for the consummation by ICEWEB of the transactions contemplated by
this Agreement. Neither the execution and delivery of this Agreement by ICEWEB,
nor the consummation by it of the transactions contemplated hereby, nor
compliance by ICEWEB with any of the provisions hereof, shall (a) result in any
breach of the Certificate of Incorporation or Bylaws of ICEWEB, (b) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any type of termination, cancellation,
or acceleration) under, any of the terms, conditions, or provisions of any note,
bond, mortgage, indenture, license, contract, agreement, or other instrument or
obligation to which ICEWEB or any of its subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or (c) violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to
ICEWEB, any of its subsidiaries or any of their properties or assets, except in
the case of clauses (b) and (c) for violations, breaches and defaults, that
would not have a material adverse effect on ICEWEB.
4.5 Financial Statements and Related Securities Matters. The audited
balance sheet dated September 30, 2000 and the unaudited balance sheet dated
September 30, 2001 fairly present in all material respects the consolidated
financial position of ICEWEB and its subsidiaries as of the respective dates
thereof, and the other related statements included therein fairly present in all
material respects the results of operations, changes in stockholders' equity and
cash flows of ICEWEB and its subsidiaries for the respective periods or as of
the respective dates set forth therein, all in conformity with generally
accepted accounting principles consistently applied during the periods involved,
except as otherwise noted therein. The financial statements are as set forth on
Schedule 4.5. ICEWEB has not, in connection with the sale or purchase of ICEWEB
Shares, directly or indirectly, by the use of any means or instrumentality of
interstate commerce, or of the mails, or of any facility of any national
securities exchange, or otherwise, (a) employed any device, scheme, or artifice
to defraud; (b) made any untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading; or (c) engaged in
any act, practice, or course of business which operates or would operate as a
fraud or deceit upon any person, in connection with the purchase or sale of any
security. There have been no investigations of ICEWEB by the SEC or any state
Blue Sky Commission and ICEWEB knows of no reason any such investigation should
be commenced
4.6 Absence of Certain Changes or Events; Undisclosed Liabilities.
(a) Since September 30, 2001, neither ICEWEB nor any of its
subsidiaries has, except as disclosed on Schedule 4.6: (i) taken any of the
actions set forth in Sections 6.1 hereof; (ii) incurred any liability material
to ICEWEB and its subsidiaries on a consolidated basis, except in the ordinary
course of its business, consistent with past practices; (iii) suffered a change,
or any event involving a prospective change, in the business, assets, financial
condition, or results of operations of ICEWEB or any of its subsidiaries which
has had, or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect, (other than as a result of changes or proposed changes
in federal or state regulations of general applicability or interpretations
thereof, changes in generally accepted accounting principles, and changes that
could, under the circumstances, reasonably have been anticipated in light of
disclosures made in writing by ICEWEB to DSSC pursuant hereto); or (iv)
subsequent to the date hereof, except as permitted by Section 6.1 hereof,
conducted its business and operations other than in the ordinary course of
business and consistent with past practices.
(b) Neither ICEWEB nor its subsidiaries has any liability (and the
Company is not aware of any basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rising to any liability which individually or is in the
aggregate
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are reasonably likely to have a Material Adverse Effect on ICEWEB) except for
(i) liability set forth on the face of the September 30, 2001 balance sheet,
(ii) liabilities which have arisen after the September 30, 2001 balance sheet in
the ordinary course of business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, tort,
infringement, or violation of law), and (iii) items identified in Schedule 4.6.
4.7 Litigation. As of the date of this Agreement, and to ICEWEB's
knowledge, except as set forth in Schedule 4.7, (i) there is no action, suit,
judicial, or administrative proceeding, arbitration or investigation pending or
to ICEWEB's knowledge threatened against or involving ICEWEB or any of its
subsidiaries, or any of their properties or rights, before any court,
arbitrator, or administrative or governmental body; (ii) there is no judgment,
decree, injunction, rule, or order of any court, governmental department,
commission, agency, instrumentality, or arbitrator outstanding against ICEWEB or
any of its subsidiaries; and (iii) ICEWEB and its subsidiaries are not in
violation of any term of any judgments, decrees, injunctions, or orders
outstanding against them, except to the extent that such events, violations or
incidents set forth in (i) through (ii) above in the aggregate would not have a
Material Adverse Effect on ICEWEB. ICEWEB has furnished to DSSC in writing, a
description of all litigation, actions, suits, proceedings, arbitrations,
investigations known to it, judgments, decrees, injunctions or orders pending;
or to its best knowledge, threatened against or involving ICEWEB or any of its
subsidiaries, or any of their properties or rights as of the date hereof. All
such litigation descriptions are set forth in Schedule 4.7.
4.8 Contracts.
(a) Each of the material contracts, instruments, mortgages, notes,
security agreements, leases, agreements, or understandings, whether written or
oral, to which ICEWEB or any of its subsidiaries is a party that relates to or
affects the assets or operations of ICEWEB or any of its subsidiaries or to
which ICEWEB or any of its subsidiaries or their respective assets or operations
may be bound or subject is a valid and binding obligation of ICEWEB and in full
force and effect (with respect to ICEWEB or such subsidiary), except for where
the failure to be in full force and effect would not, individually or in the
aggregate, have a Material Adverse Effect. Schedule 4.8 sets forth a complete
list of all material contracts. For purposes of this Agreement a material
contract shall be any contract or agreement which involves consideration in
excess of $5,000. Except to the extent that the consummation of the transactions
contemplated by this Agreement may require the consent of third parties, as
disclosed in Schedule 4.1, there are no existing defaults by ICEWEB or any of
its subsidiaries thereunder or, to the knowledge of ICEWEB, by any other party
thereto, which defaults, individually or in the aggregate, would have a Material
Adverse Effect except as set forth in Schedule 4.7.
(b) Except for this Agreement and any agreement listed in Schedule
4.8, neither ICEWEB nor any of its subsidiaries is a party to any oral or
written (i) consulting agreement not terminable on 30 days' or less notice
involving the payment of more than $5,000 per annum, in the case of any such
agreement with an individual; (ii) joint venture agreement; (iii) noncompetition
or similar agreements that restricts ICEWEB or its subsidiaries from engaging in
a line of business; (iv) agreement with any executive officer or other employee
of ICEWEB or any subsidiary the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
ICEWEB of the nature contemplated by this Agreement and which provides for the
payment of in excess of $5,000; (v) agreement with respect to any executive
officer of ICEWEB or any subsidiary providing any term of employment or
compensation guaranty in excess of $5,000 per annum; or (vi) agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan, or stock purchase plan, any of the benefits of which shall be
increased, or the vesting of the benefits of which shall be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which shall be calculated on the basis of any of
the transactions contemplated by this Agreement.
4.9 Employee Benefit Plans.
(a) Disclosed in Schedule 4.9 is a true and complete list of each
written or formal employee benefit plan (including, without limitation, any
"employee benefit plan" as defined in Section
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3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) policy or agreement that is maintained (all of the foregoing, the
"Benefit Plans"), or is or was contributed to by ICEWEB or pursuant to which
ICEWEB or any trade or business, whether or not incorporated (an "ERISA
Affiliate"), which together with ICEWEB would be deemed a "single employer"
within the meaning of Section 4001 of ERISA, is still potentially liable for
payments, benefits, or claims. A copy of each Benefit Plan as currently in
effect and, if applicable, the most recent Annual Report, Actuarial Report or
Valuation, Summary Plan Description, Trust Agreement, and a Determination Letter
issued by the IRS for each Benefit Plan have heretofore been delivered to DSSC.
No Benefit Plan was or is subject to Title IV of ERISA or Section 412 of the
Code (including any "multiemployer plan," as defined in Section 3(37) of ERISA).
(b) Each of the Benefit Plans that are subject to ERISA is in
compliance with ERISA; each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401 (a) of the Code is so qualified; and no event
has occurred, and to ICEWEB's knowledge, there exists no condition or set of
circumstances, in connection with which ICEWEB or any ERISA Affiliate is or
could be subject to liability (except liability for benefit claims and funding
obligations payable in the ordinary course) under ERISA, the Code, or any other
applicable law with respect to any Benefit Plan.
(c) All contributions or other amounts payable by ICEWEB or its
subsidiaries through September 30, 2001 with respect to each Benefit Plan in
respect of current or prior plan years have been either paid or accrued on the
most recent financial statements of ICEWEB made available to DSSC. Any
contributions or other amounts payable by ICEWEB or its subsidiaries for periods
between September 30, 2001 and the Effective Time with respect to each Benefit
Plan in respect of current or prior plan years have been or shall be either paid
or accrued in the normal course of business on the books and records of ICEWEB
at or prior to the Effective Time. There are no pending, or, to the knowledge of
ICEWEB, threatened or anticipated claims (other than routine claims for
benefits) by or on behalf of or against any of the Benefit Plans or any trusts
or other funding vehicles related thereto.
(d) No Benefit Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees for periods extending beyond their retirement or other
termination of service (other than (i) coverage mandated by Part 6 of Subtitle B
of Title I of ERISA, Section 4980B of the Code or any comparable state law, (ii)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of ICEWEB or the ERISA Affiliates, or (iv)
benefits the full cost of which is borne by the current or former employee or
his or her beneficiary).
4.10 Taxes. For the purposes of this section, the term "tax" shall include
all taxes, charges, withholdings, fees, levies, penalties, additions, interest,
or other assessments imposed by any United States federal, state, or local
authority or any other taxing authority on ICEWEB or any of its Tax Affiliates
(as hereinafter defined) as to their respective income, profit, franchise, gross
receipts, payroll, sales, employment, worker's compensation, use, property,
withholding, excise, occupancy, environmental, and other taxes, duties, or
assessments of any nature, whatsoever. ICEWEB has filed or caused to be filed
timely and accurately in all material respects all federal, state, local, and
foreign tax returns required to be filed or requests for extensions to file such
returns have been timely filed, by each of its and any member of its
consolidated, combined, unitary, or similar group (each such member a "Tax
Affiliate"), except to the extent that any failure to file or inaccuracies in
filed returns would not individually or in the aggregate reasonably be expected
to have a Material Adverse Effect on ICEWEB. ICEWEB has paid or caused to be
paid or has made adequate provision or set up an adequate accrual or reserve for
the payment of, all taxes shown to be due in respect of the periods for which
returns are due, and has established (or shall establish at least quarterly) an
adequate accrual or reserve for the payment of all taxes payable in respect of
the period subsequent to the last of said periods required to be so accrued or
reserved. Neither ICEWEB nor any of its Tax Affiliates has any liability for
taxes in excess of the amount so paid or accruals or reserves so established.
Neither ICEWEB nor any of its Tax Affiliates is delinquent in the payment of any
tax in excess of the amount reserved or provided therefor, and no deficiencies
for any tax, assessment, or governmental charge in excess of the amount reserved
or provided therefor have been
8
threatened, claimed, proposed, or assessed. No waiver or extension of time to
assess any taxes has been given or requested. The Internal Revenue Service or
comparable state agencies have never audited ICEWEB's federal and state income
tax returns.
4.11 Compliance With Applicable Law. ICEWEB and each of its subsidiaries
holds all licenses, permits, and governmental authorizations necessary for the
lawful conduct of its business under and pursuant to, and the business of each
of ICEWEB and its subsidiaries is not being conducted in violation of, any
provision of any federal, state, local, or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license, or other governmental authorization or approval applicable to ICEWEB
or any of its subsidiaries except for such licenses, permits, governmental
authorizations, the failure of which, and violations of which, would not have in
the aggregate a Material Adverse Effect on ICEWEB.
4.12 Subsidiaries. Schedule 4.12 lists all the subsidiaries of ICEWEB as
of the date of this Agreement and indicates for each such corporate subsidiary
as of such date the jurisdiction of incorporation or organization. All of the
outstanding shares of capital stock or other equity interests of each of the
subsidiaries are (i) held by ICEWEB or one of such wholly-owned subsidiaries;
(ii) fully paid and non-assessable; and (iii) owned by ICEWEB or one of such
wholly owned subsidiaries free and clear of any claim, lien, or encumbrance.
4.13 Labor and Employment Matters. Except as set forth in Schedule 4.13,
(a) ICEWEB and its subsidiaries are and have been in compliance in all respects
with all applicable laws respecting employment and employment practices, terms,
and conditions of employment and wages and hours, including, such laws
respecting employment discrimination, equal opportunity, affirmative action,
worker's compensation, occupational safety, and health requirements and
unemployment insurance and related matters, and are not engaged in and have not
engaged in any unfair labor practice; (b) no investigation or review by or
before any governmental entity concerning any violations of any such applicable
laws is pending nor, to the knowledge of ICEWEB is any such investigation
threatened or has any such investigation occurred during the last three years,
and no governmental entity has provided any notice to ICEWEB or any of its
subsidiaries or otherwise asserted an intention to conduct any such
investigation; (c) there is no labor strike, dispute, slowdown, or stoppage
actually pending or threatened against ICEWEB or any of its subsidiaries; (d) no
union representation question or union organizational activity exists respecting
the employees of ICEWEB or any of its subsidiaries; (e) no collective bargaining
agreement exists which is binding on ICEWEB or any of its subsidiaries; (f)
neither ICEWEB nor any of its subsidiaries has experienced any work stoppage or
other labor difficulty; and (g) in the event of termination of the employment of
any of the current officers, directors, employees, or agents of ICEWEB or any of
its subsidiaries, neither ICEWEB nor any of its subsidiaries shall pursuant to
any agreement or by reason of anything done prior to the Effective Time by
ICEWEB or any of its subsidiaries be liable to any of said officers, directors,
employees, or agents for so-called "severance pay" or any other similar payments
or benefits, including, without limitation, post-employment healthcare (other
than pursuant to COBRA) or insurance benefits, except to the extent that any
matter in Items (a), (b), (f) and (g) could reasonably be expected individually
or in the aggregate to have a Material Adverse Effect on ICEWEB.
4.14 Intellectual Property.
(a) Except as set forth in Schedule 4.14(b) and to the extent that
any inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on ICEWEB:
9
(i) ICEWEB and each of its subsidiaries owns, or is licensed
or otherwise has the legally enforceable right to use
(in each case, clear of any liens or encumbrances of any
kind), all Intellectual Property (as hereinafter
defined) used in or necessary for the conduct of its
business as currently conducted;
(ii) no claims are pending or, to the knowledge of ICEWEB,
threatened that ICEWEB or any of its subsidiaries is
infringing on or otherwise violating the rights of any
person with regard to any Intellectual Property used by,
owned by, and/or licensed to ICEWEB or any of its
subsidiaries;
(iii) as of the date of this Agreement, to the knowledge of
ICEWEB, no person is infringing on or otherwise
violating any right of ICEWEB or any of its subsidiaries
with respect to any Intellectual Property owned by
and/or licensed to ICEWEB or any of its subsidiaries;
and
(iv) as of the date of this Agreement, neither ICEWEB nor any
of its subsidiaries have received any notice of any
claim challenging the ownership or validity of any
Intellectual Property owned by ICEWEB or any of its
subsidiaries or challenging ICEWEB's or any of its
subsidiaries' license or legally enforceable right to
use any Intellectual Property licensed by it.
(b) For purposes of this Agreement, "Intellectual Property" is
listed in Schedule 4.14 (a) and means trademarks (registered or unregistered),
service marks, brand names, certification marks, trade dress, assumed names,
trade names, and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patented, patentable, or not in any jurisdiction; trade secrets
and confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works of authorship,
whether copyrighted, copyrightable, or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights and computer programs and software (including source code, object code,
and data); licenses, immunities, covenants not to sue, and the like relating to
the foregoing. Any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing are listed in Schedule
4.14(b).
(c) Schedule 4.14(c) sets forth a list of all domain names owned by
ICEWEB. ICEWEB has full and complete ownership of all domain names.
4.15 Insurance. Except to the extent that the lack of an insurance policy
would not reasonably be expected to have a Material Adverse Effect on ICEWEB,
ICEWEB and each of its subsidiaries have insurance policies, including fire and
casualty policies, that ICEWEB believes are necessary to conduct its business.
All policies of insurance insuring ICEWEB or any of its subsidiaries or their
respective businesses, assets, employees, officers, and directors are in full
force and effect. As of the date hereof, there are no claims by ICEWEB or any of
its subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
At the Closing Date, all ICEWEB insurance policies continue in full force and
effect. Schedule 4.15 lists all of ICEWEB and each of its subsidiaries'
insurance policies.
10
4.16 State Anti-Takeover Statutes. The ICEWEB Board of Directors has
approved this Agreement, and the transactions contemplated hereby and thereby.
Such approval constitutes approval of the Merger and other transactions
contemplated hereby and thereby by the ICEWEB Board of Directors as required by
the DGL. No state anti-takeover statute is applicable to the Merger.
4.17 Absence of Certain Business Practices. Neither ICEWEB nor any
director, officer, employer, or agent of the foregoing, nor any person acting on
its behalf, directly or indirectly has to ICEWEB's knowledge given or agrees to
give any gift or similar benefit to any customer, supplier, governmental
employee or other person which (i) might subject ICEWEB to any damage or penalty
in any civil, criminal, or governmental litigation or proceeding, (ii) if not
given in the past, might have had a Material Adverse Effect on ICEWEB, or (iii)
if not continued in the future, might have a Material Adverse Effect on ICEWEB
or which might subject ICEWEB to suit or penalty in any private or governmental
litigation or proceeding.
4.18 DSSC Shares. The Company acknowledges that each certificate
representing a DSSC Share shall contain a restrictive legend set forth in
Schedule 4.18, representing that these Shares have not been registered under the
Securities Act. The Shares may not be sold or offered for sale or otherwise
distributed without an effective registration statement for the Shares under the
Securities Act or an opinion of counsel satisfactory to DSSC that such
registration is not required as to the sale, offer or distribution thereof.
4.19 No Undisclosed Information. No provision of this Article or of any
Schedule or any document or agreement furnished by ICEWEB contains any untrue
statement of a material fact, or omits to state a material fact necessary in
order to make this statement contained herein or therein in light of the
circumstances under which such statements were made, not misleading. No
preclosing investigation of ICEWEB, its subsidiaries, their respective assets
for their businesses shall relieve ICEWEB of its obligation under this
Agreement.
4.20 Required Vote of ICEWEB Shareholders. The affirmative vote of the
holders of a majority of outstanding shares of ICEWEB Common is required to
approve the Merger. No other vote of the stockholders of ICEWEB is required by
law, the Certificate of Incorporation or bylaws of ICEWEB or otherwise in order
for ICEWEB to consummate the Merger and the transactions contemplated hereby.
Stockholders holding in excess of 50% of the outstanding shares have agreed to
vote for the merger.
Article V
REPRESENTATIONS AND WARRANTIES OF DSSC
DSSC represents, warrants and agrees, with respect to itself and its
subsidiaries, except as disclosed to ICEWEB in the DSSC Schedule of Exceptions
identified herein and attached hereto and incorporated herein by this reference,
as follows:
5.1 Organization. Each of DSSC and its subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be conducted.
Each of DSSC and its subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing (to the extent the concept of good standing
exists), in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified shall not have a Material
Adverse Effect.
5.2 Capitalization. As of the date hereof, the authorized capital stock of
DSSC and each of its subsidiaries is as set forth in Schedule 5.2. As of the
date hereof, the number of DSSC Shares and the number of shares of DSSC
preferred stock ("DSSC Preferred") which are issued and outstanding, and the
record holder said DSSC Shares are as set forth in Schedule 5.2. All of the
issued and outstanding
11
DSSC Shares and DSSC Preferred are validly issued, fully paid, and
non-assessable and free of preemptive rights or similar rights created by
statute, the Certificate of Incorporation or Bylaws of DSSC or any agreement by
which DSSC or any of its subsidiaries is a party or by which it is bound. Except
(a) as set forth above or, (b) described in DSSC SEC Report, (c) as disclosed in
Schedule 5.2, there are not as of the date of this Agreement any shares of
capital stock of DSSC issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities, or other agreements or
commitments obligating DSSC to issue, transfer, or sell any shares of its
capital stock.
5.3 Authority Relative to this Agreement. DSSC has the corporate power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by DSSC and the consummation by DSSC of
the transactions contemplated hereby have been duly authorized by its Board of
Directors, and no votes of the DSSC Shareholders is necessary to approve this
Agreement or the transactions contemplated hereby.
5.4 Consents and Approvals; No Violations. Except for applicable
requirements, including those under the Securities Act of 1933, the Securities
Exchange Act of 1934 (the "Exchange Act"), the principal exchange on which its
common stock is listed state law relating to takeovers, state securities or blue
sky laws, and, as applicable, filing and recordation of Articles of Merger under
the DGL, no filing with, and no permit, authorization, consent, or approval of,
any public body or authority is necessary for the consummation by ICEWEB of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by DSSC, nor the consummation by it of the transactions
contemplated hereby, nor compliance by DSSC with any of the provisions hereof,
shall (a) result in any breach of the Certificate of Incorporation or Bylaws of
DSSC, (b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any fight of
termination, cancellation, or acceleration) under, any of the terms, conditions,
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement, or other instrument or obligation to which DSSC or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (c) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to DSSC, any of its subsidiaries or any of their
properties or assets, except in the case of clauses (b) and (c) for violations,
breaches, or defaults that would not have a Material Adverse Effect.
5.5 Reports, Financial Statements, and Related Securities Matters. DSSC
has filed all reports except as set forth in Schedule 5.5 required to be filed
by it with the SEC pursuant to the Exchange Act and required to be filed by
state securities regulators ("Blue Sky Commissions") since it was first required
to so file, including, without limitation, an Annual Report on Form 10-KSB for
the year ended January 31, 2001, and DSSC officers, directors, insiders, and
holders of the requisite minimum amounts of DSSC Shares (collectively "DSSC
Insiders") have filed all reports required to be filed by DSSC Insiders with the
SEC and with Blue Sky Commissions (collectively, the "DSSC SEC/Blue Sky
Reports"), and has previously furnished or made available to ICEWEB true and
complete copies of all such DSSC SEC/Blue Sky Reports. None of such DSSC
SEC/Blue Sky Reports, as of their respective dates (as amended or supplemented
through the date hereof), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the balance sheets (including the related notes)
included in the DSSC SEC/Blue Sky Reports fairly presents in all material
respects the consolidated financial position of DSSC and its subsidiaries as of
the respective dates thereof, and the other related statements (including the
related notes) included therein fairly present in all material respects the
results of operations and cash flows of DSSC and its subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein and the absence of any
notes thereto. . DSSC has not, in connection with the sale or purchase of DSSC
Shares, directly or indirectly, by the use of any means or instrumentality of
interstate commerce, or of the mails, or of any facility of any national
securities exchange, or otherwise, (a) employed any device, scheme, or artifice
to defraud; (b) made any untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading; or (c) engaged in
any act, practice, or
12
course of business which operates or would operate as a fraud or deceit upon any
person, in connection with the purchase or sale of any security. Except as set
forth in Schedule 5.5 or in the SEC reports, there have been no investigations
of DSSC by the SEC or any state Blue Sky Commission and DSSC knows of no reason
any such investigation should be commenced.
5.6 Absence of Certain Changes or Events; Undisclosed Liabilities.
(a) Since October 31, 2001, neither DSSC nor any of its subsidiaries
has except as disclosed on Schedule 5.6 or in the DSSC SEC Reports: (i) taken
any of the actions set forth in Section 6.1 hereof;(ii) incurred any liability
material to DSSC and its subsidiaries on a consolidated basis, except in the
ordinary course of its business, consistent with past practices; (iii) suffered
a change, or any event involving a prospective change, in the business, assets,
financial condition, or results of operations of DSSC or any of its subsidiaries
which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect, (other than as a result of changes or
proposed changes in federal or state regulations of general applicability or
interpretations thereof, changes in generally accepted accounting principles,
and changes that could, under the circumstances, reasonably have been
anticipated in light of disclosures made in writing by DSSC pursuant hereto); or
(iv) subsequent to the date hereof, conducted its business and operations other
than in the ordinary course of business and consistent with past practices.
(b) Neither DSSC nor its subsidiaries has any liability (and the
Company is not aware of any basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rising to any liability which in the aggregate are reasonably
likely to have a Material Adverse Effect on DSSC) except for (i) liability set
forth on the face of the October 31 balance sheet, (ii) liabilities which have
risen after the October 31, balance sheet in the ordinary course of business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, torte, infringement, or violation of law),
and (iii) items identified in Schedule 5.6.
5.7 Taxes. For the purposes of this section, the term "tax" shall include
all taxes, charges, withholdings, fees, levies, penalties, additions, interest,
or other assessments imposed by any United States federal, state, or local
authority or any other taxing authority on DSSC or any of its Tax Affiliates (as
hereinafter defined) as to their respective income, profit, franchise, gross
receipts, payroll, sales, employment, worker's compensation, use, property,
withholding, excise, occupancy, environmental, and other taxes, duties, or
assessments of any nature, whatsoever. DSSC has filed or caused to be filed
timely and accurately in all material respects all material federal, state,
local, and foreign tax returns required to be filed or requests for extensions
to file such returns have been timely filed, by each of its and any member of
its consolidated, combined, unitary, or similar group (each such member a "Tax
Affiliate"), except to the extent that any failure to file or inaccuracies in
filed returns would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect on DSSC. DSSC has paid or caused to be paid or has made
adequate provision or set up an adequate accrual or reserve for the payment of,
all taxes shown to be due in respect of the periods for which returns are due,
and has established (or shall establish at least quarterly) an adequate accrual
or reserve for the payment of all taxes payable in respect of the period
subsequent to the last of said periods required to be so accrued or reserved.
Neither DSSC nor any of its Tax Affiliates has any liability for taxes in excess
of the amount so paid or accruals or reserves so established. Neither DSSC nor
any of its Tax Affiliates is delinquent in the payment of any tax in excess of
the amount reserved or provided therefor, and no deficiencies for any tax,
assessment, or governmental charge in excess of the amount reserved or provided
therefor have been threatened, claimed, proposed, or assessed. No waiver or
extension of time to assess any taxes has been given or requested. The Internal
Revenue Service or comparable state agencies have never audited DSSC's federal
and state income tax returns.
5.8 Compliance With Applicable Law. DSSC and each of its subsidiaries
holds all licenses, permits, and governmental authorizations necessary for the
lawful conduct of its business under and pursuant to, and the business of each
of DSSC and its subsidiaries is not being conducted in violation of, any
provision of any federal, state, local, or foreign statute, law, ordinance,
rule, regulation, judgment,
13
decree, order, concession, grant, franchise, permit or license, or other
governmental authorization or approval applicable to DSSC or any of its
subsidiaries except for such licenses, permits, governmental authorizations, the
failure of which, and violations which, would not reasonably be expected to have
in the aggregate a Material Adverse Effect on DSSC.
5.9 Intellectual Property.
(a) Except as set forth in Schedule 5.9(b) and to the extent that
any inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on DSSC:
(i) DSSC and each of its subsidiaries owns, or is licensed or
otherwise has the legally enforceable right to use (in each
case, clear of any liens or encumbrances of any kind), all
Intellectual Property (as hereinafter defined) used in or
necessary for the conduct of its business as currently
conducted;
(ii) no claims are pending or, to the knowledge of DSSC,
threatened that DSSC or any of its subsidiaries is infringing
on or otherwise violating the rights of any person with regard
to any Intellectual Property used by, owned by, and/or
licensed to DSSC or any of its subsidiaries;
(iii) as of the date of this Agreement, to the knowledge of
DSSC, no person is infringing on or otherwise violating any
right of DSSC or any of its subsidiaries with respect to any
Intellectual Property owned by and/or licensed to DSSC or any
of its subsidiaries; and
(iv) as of the date of this Agreement, neither DSSC nor any of
its subsidiaries have received any written notice of any claim
challenging the ownership or validity of any Intellectual
Property owned by DSSC or any of its subsidiaries or
challenging DSSC's or any of its subsidiaries' license or
legally enforceable right to use any Intellectual Property
licensed by it.
(b) For purposes of this Agreement, "Intellectual Property" is
listed in Schedule 5.9(a) and means trademarks (registered or unregistered),
service marks, brand names, certification marks, trade dress, assumed names,
trade names, and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patented, patentable, or not in any jurisdiction; trade secrets
and confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works of authorship,
whether copyrighted, copyrightable, or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights and computer programs and software (including source code, object code,
and data); licenses, immunities, covenants not to sue, and the like relating to
the foregoing. Any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing are set forth in
Schedule 5.9(b).
(c) Schedule 5.9(c) sets forth a list of all domain names owned by
DSSC. DSSC has full and complete ownership of all domain names.
14
5.10 Absence of Certain Business Practices. Neither DSSC nor any director,
officer, employer, or agent of the foregoing, nor any person acting on its
behalf, directly or indirectly has to DSSC's knowledge given or agree to give
any gift or similar benefit to any customer, supplier, governmental employee or
other person which (i) might subject DSSC to any damage or penalty in any civil,
criminal, or governmental litigation or proceeding, (ii) if not given in the
past, might have had a Material Adverse Effect on DSSC, or (iii) if not
continued in the future, might have a Material Adverse Effect on DSSC or which
might subject DSSC to suit or penalty in any private or governmental litigation
or proceeding.
5.11 Litigation. As of the date of this Agreement, and to DSSC's knowledge
except as set forth on Schedule 5.11 (i) there is no action, suit, judicial, or
administrative proceeding, arbitration or investigation pending or threatened
against or involving DSSC or any of its subsidiaries, or any of their properties
or rights, before any court, arbitrator, or administrative or governmental body;
(ii) there is no judgment, decree, injunction, rule, or order of any court,
governmental department, commission, agency, instrumentality, or arbitrator
outstanding against DSSC or any of its subsidiaries; and (iii) DSSC and its
subsidiaries are not in violation of any term of any judgments, decrees,
injunctions, or orders outstanding against them, except to the extent that such
events, violations or incidents set forth in (i) through (iii) above in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
DSSC. DSSC has furnished to DSSC in writing, a description of all litigation,
actions, suits, proceedings, arbitrations, investigations known to it,
judgments, decrees, injunctions or orders pending; or to its best knowledge,
threatened against or involving DSSC or any of its subsidiaries, or any of their
properties or rights as of the date hereof. All such litigation descriptions are
set forth in Schedule 5.11.
5.12 Contracts.
(a) Each of the material contracts, instruments, mortgages, notes,
security agreements, leases, agreements, or understandings, whether written or
oral, to which DSCC or any of its subsidiaries is a party that relates to or
affects the assets or operations of DSCC or any of its subsidiaries or to which
DSCC or any of its subsidiaries or their respective assets or operations may be
bound or subject is a valid and binding obligation of DSCC and in full force and
effect (with respect to DSCC or such subsidiary), except for where the failure
to be in full force and effect would not, individually or in the aggregate, have
a Material Adverse Effect. Schedule 5.12 sets forth a complete list of all
material contracts. For purposes of this Agreement a material contract shall be
any contract or agreement which involves consideration in excess of $5,000.
Except to the extent that the consummation of the transactions contemplated by
this Agreement may require the consent of third parties, as disclosed in
Schedule 5.12, there are no existing defaults by DSCC or any of its subsidiaries
thereunder or, to the knowledge of DSCC, by any other party thereto, which
defaults, individually or in the aggregate, would have a Material Adverse Effect
except as set forth in Schedule 4.8.
(b) Except for this Agreement and any agreement listed in Schedule
5.12, neither DSCC nor any of its subsidiaries is a party to any oral or written
(i) consulting agreement not terminable on 30 days' or less notice involving the
payment of more than $5,000 per annum, in the case of any such agreement with an
individual; (ii) joint venture agreement; (iii) noncompetition or similar
agreements that restricts DSCC or its subsidiaries from engaging in a line of
business; (iv) agreement with any executive officer or other employee of DSCC or
any subsidiary the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving DSCC of the
nature contemplated by this Agreement and which provides for the payment of in
excess of $5,000; (v) agreement with respect to any executive officer of DSCC or
any subsidiary providing any term of employment or compensation guaranty in
excess of $5,000 per annum; or (vi) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan, or stock
purchase plan, any of the benefits of which shall be increased, or the vesting
of the benefits of which shall be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which shall be calculated on the basis of any of the transactions
contemplated by this Agreement.
5.13 Required Vote of DSSC Stockholders. No DSSC stockholder votes are
necessary to enter into and complete this Agreement and Merger.
15
5.14 Real Estate. DSSC owns no real property.
5.15 Cash Requirement. As of the Closing, DSCC, will have no obligation to
have any available cash.
5.16 DSSC Controlling Shareholders. Based on the ICEWEB Exchange Ratio,
the Exchanging ICEWEB Shareholders shall be the DSSC Controlling Shareholder at
the Effective Time.
5.17 Employee Benefit Plans.
(a) Disclosed in Schedule 5.17 is a true and complete list of each
written or formal employee benefit plan (including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of ERISA) policy or agreement
that is maintained (all of the foregoing, the "Benefit Plans"), or is or was
contributed to by DSSC or pursuant to which DSSC or any trade or business,
whether or not incorporated (an "ERISA Affiliate"), which together with DSSC
would be deemed a "single employer" within the meaning of Section 4001 of ERISA,
is still potentially liable for payments, benefits, or claims. A copy of each
Benefit Plan as currently in effect and, if applicable, the most recent Annual
Report, Actuarial Report or Valuation, Summary Plan Description, Trust
Agreement, and a Determination Letter issued by the IRS for each Benefit Plan
have heretofore been delivered to DSSC. No Benefit Plan was or is subject to
Title IV of ERISA or Section 412 of the Code (including any "multiemployer
plan," as defined in Section 3(37) of ERISA).
(b) Each of the Benefit Plans that are subject to ERISA is in
compliance with ERISA; each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401 (a) of the Code is so qualified; and no event
has occurred, and to DSSC's knowledge, there exists no condition or set of
circumstances, in connection with which DSSC or any ERISA Affiliate is or could
be subject to liability (except liability for benefit claims and funding
obligations payable in the ordinary course) under ERISA, the Code, or any other
applicable law with respect to any Benefit Plan.
(c) All contributions or other amounts payable by DSSC or its
subsidiaries through December 31, 2001 with respect to each Benefit Plan in
respect of current or prior plan years have been either paid or accrued on the
most recent financial statements of DSSC made available to DSSC. Any
contributions or other amounts payable by DSSC or its subsidiaries for periods
between December 31, 2001 and the Effective Time with respect to each Benefit
Plan in respect of current or prior plan years have been or shall be either paid
or accrued in the normal course of business on the books and records of DSSC at
or prior to the Effective Time. There are no pending, or, to the knowledge of
DSSC, threatened or anticipated claims (other than routine claims for benefits)
by or on behalf of or against any of the Benefit Plans or any trusts or other
funding vehicles related thereto.
No Benefit Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees for periods extending beyond their retirement or other
termination of service (other than (i) coverage mandated by Part 6 of Subtitle B
of Title I of ERISA, Section 4980B of the Code or any comparable state law, (ii)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of DSSC or the ERISA Affiliates, or (iv)
benefits the full cost of which is borne by the current or former employee or
his or her beneficiary).
5.18 Subsidiaries. Schedule 5.18 lists all the subsidiaries of DSSC as of
the date of this Agreement and indicates for each such corporate subsidiary as
of such date the jurisdiction of incorporation or organization. All of the
outstanding shares of capital stock or other equity interests of each of the
subsidiaries are (i) held by DSSC or one of such wholly-owned subsidiaries; (ii)
fully paid and non-assessable; and (iii) owned by DSSC or one of such wholly
owned subsidiaries free and clear of any claim, lien, or encumbrance.
16
5.19 Insurance. Except to the extent that the lack of an insurance policy
would not reasonably be expected to have a Material Adverse Effect on DSSC, DSSC
and each of its subsidiaries have insurance policies, including fire and
casualty policies, that DSSC believes are necessary to conduct its business. All
policies of insurance insuring DSSC or any of its subsidiaries or their
respective businesses, assets, employees, officers, and directors are in full
force and effect. As of the date hereof, there are no claims by DSSC or any of
its subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
At the Closing Date, all DSSC insurance policies continue in full force and
effect. Schedule 5.19 lists all of DSSC and each of its subsidiaries' insurance
policies.
5.20 State Anti-Takeover Statutes. The DSSC Board of Directors has
approved this Agreement, and the transactions contemplated hereby and thereby.
Such approval constitutes approval of the Merger and other transactions
contemplated hereby and thereby by the DSSC Board of Directors as required by
the DGL. No state anti-takeover statute is applicable to the Merger.
5.21 No Undisclosed Information. No provision of this Article or of any
Schedule or any document or agreement furnished by DSSC contains any untrue
statement of a material fact, or omits to state a material fact necessary in
order to make this statement contained herein or therein in light of the
circumstances under which such statements were made, not misleading. No
pre-closing investigation of DSSC, its subsidiaries, their respective assets, or
their businesses shall relieve DSSC of its obligation under this Agreement.
Article VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business Pending the Merger. ICEWEB and DSSC agree on their
own behalf and on behalf of their subsidiaries that, except as may be agreed to
by the parties hereto or may be permitted by this Agreement, during the period
from the date of this Agreement and continuing until the Effective Time:
(a) the respective businesses of ICEWEB and DSSC and their
subsidiaries shall be conducted only in the ordinary and usual course of
business and consistent with past practices;
(b) ICEWEB, DSSC and their subsidiaries shall not (i) sell or pledge
or agree to sell or pledge any stock owned by it in any of its subsidiaries;
(ii) amend their Certificate of Incorporation or Bylaws; or (iii) split,
combine, or reclassify any shares of their outstanding capital stock or declare,
set aside, or pay any dividend or other distribution payable in cash, stock, or
property in respect of their capital stock, or directly or indirectly redeem,
purchase, or otherwise acquire any shares of their capital stock or other
securities or shares of the capital stock or other securities of any of their
subsidiaries;
(c) ICEWEB, DSSC and their subsidiaries shall not (i) authorize for
issuance, issue, sell, pledge, dispose of, encumber, deliver, or agree or commit
to issue, sell, pledge, or deliver any additional shares of, or rights of any
kind to acquire any shares of, their capital stock of any class or exchangeable
into shares of stock of any class or any voting debt (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase, or otherwise), except that each Company may issue shares required to
be issued upon exercise of existing stock options, warrants, or similar plans,
or under other contractual commitments previously made, which options, warrants,
plans, or commitments have been disclosed in writing to the other party; (ii)
acquire, dispose of, transfer, lease, license, mortgage, pledge, or encumber any
fixed or other substantial assets other than in the ordinary course of business
and consistent with past practices; (iii) incur, assume, or prepay any material
indebtedness, liability, or obligation or any other material liabilities or
issue any debt securities other than in the ordinary course of business and
consistent with past practices; (iv) assume, guarantee, endorse, or otherwise
become liable or responsible (whether directly, contingently, or otherwise) for
the obligations of any other person (other than a subsidiary) in a material
amount other than in the ordinary course of business and consistent with past
practices; (v) make any material loans, advances, or capital contributions to,
or investments in, any other person, other than to subsidiaries, other than in
the ordinary course of business
17
and consistent with past practices; (vi) fail to maintain adequate insurance
consistent with past practices for their businesses and properties; or (vii)
enter into any contract, agreement, commitment, or arrangement with respect to
any of the foregoing;
(d) ICEWEB and DSSC shall use their reasonable efforts, consistent
with prudent business practice, to preserve intact the business organization of
the Company and their subsidiaries, to keep available the services of their
present officers and key employees, and to preserve the goodwill of those having
business relationships with ICEWEB and DSSC;
(e) ICEWEB and DSSC shall not knowingly take or allow to be taken or
fail to take any action which act or omission would jeopardize qualification of
the Merger as a "reorganization" within the meaning of Section 368(a) of the
Code; and
(f) ICEWEB and DSSC shall use reasonable efforts to prevent any
representation or warranty of ICEWEB and of DSSC herein from becoming untrue or
incorrect in any material respect.
6.2 Compensation Plans. During the period from the date of this Agreement
and continuing until the Effective Time, ICEWEB and DSSC agree as to itself and
their subsidiaries that, they shall not, without the prior written consent of
the other party (a) enter into, adopt, or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment, severance, or other employee benefit plan, agreement, trust, plan,
fund or other arrangement between the Company and one or more of its officers,
directors, or employees, in each case so as to materially increase the benefits
thereunder (collectively, "Compensation Plans"), (b) grant or become obligated
to grant any increase in the compensation or fringe benefits of directors,
officers, or employees (including any such increase pursuant to any Compensation
Plan) or any increase in the compensation payable or to become payable to any
officer, except, with respect to employees other than officers, for increases in
compensation in the ordinary course of business consistent with past practice,
or enter into any contract, commitment, or arrangement to do any of the
foregoing, except for normal increases and non-stock benefit changes in the
ordinary course of business consistent with past practice, (c) institute any new
employee benefit, welfare program, or Compensation Plan, (d) make any change in
any Compensation Plan or other employee welfare or benefit arrangement or enter
into any employment or similar agreement or arrangement with any employee, or
(e) enter into or renew any contract, agreement, commitment, or arrangement
providing for the payment to any director, officer, or employee of DSSC or
ICEWEB of compensation or benefits contingent, or the terms of which are
materially altered in favor of such individual, upon the occurrence of any of
the transactions contemplated by this Agreement.
6.3 Current Information. From the date of this Agreement to the Effective
Time, each of ICEWEB and DSSC shall cause one or more of their designated
representatives to confer with each other on a regular and frequent basis and to
report the general status of each Company's ongoing operations and financial
condition. ICEWEB and DSSC shall promptly notify each other of any material
change in the normal course of business or in its or its subsidiaries'
properties.
6.4 Legal Conditions to Merger. Each of DSSC and ICEWEB shall, and shall
cause their subsidiaries to, use all reasonable efforts (a) to take, or cause to
be taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on such party or its subsidiaries with respect to the
Merger and to consummate the transactions contemplated by this Agreement,
subject to the appropriate vote or consent of shareholders, and (b) to obtain
(and to cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any governmental entity and/or any
other public or private third party which is required to be obtained or made by
such party or any of its subsidiaries in connection with the Merger and the
transactions contemplated by this Agreement.
18
Article VII
ADDITIONAL AGREEMENTS
7.1 Access and Information.
(a) ICEWEB and DSSC shall afford to each other and their financial
advisors, legal counsel, accountants, consultants, and other representatives
access during normal business hours throughout the period from the date hereof
to thirty days subsequent to the date hereof to all of their books, records,
properties, facilities, personnel commitments, and records (including but not
limited to Tax Returns) and, during such period, each shall furnish promptly all
information concerning its business, properties, and personnel as each party may
reasonably request in order for the requesting party to fully investigate the
business and affairs of ICEWEB or DSSC prior to the Effective Time (the
"Inspection").
All information furnished by a party pursuant hereto shall be treated as the
sole property of the furnishing party until consummation of the Merger
contemplated hereby. The parties shall hold any such information that is
nonpublic in confidence. This Confidentiality Agreement shall survive the
termination of this Agreement.
7.2 Acquisition Proposals.
(a) ICEWEB and its subsidiaries shall not, and shall use its best
efforts to cause their respective directors, officers, employees, financial
advisors, legal counsel, accountants, and other agents and representatives (for
purposes of this Section 7.2 only, being referred to as "affiliates") not to,
initiate, solicit, or encourage, directly or indirectly, or take any other
action to facilitate any inquiries or the making of any proposal with respect
to, engage or participate in negotiations concerning, provide any nonpublic
information or data to, or have any discussions with any person other than DSSC
relating to, any acquisition, tender offer (including a self-tender offer),
exchange offer, merger, consolidation, acquisition of beneficial ownership of or
the right to vote securities of such entity or any of its subsidiaries,
dissolution, business combination, purchase of all or any significant portion of
the assets or any division of, or any equity interest in, such entity or any
subsidiary, or similar transaction other than the Merger (such proposals,
announcements, or transactions being referred to as "Acquisition Proposals").
ICEWEB shall promptly notify the others orally and in writing if any such
Acquisition Proposal (including the terms thereof and identity of the persons
making such proposals) is received and furnish to the other parties hereto a
copy of any written proposal.
(b) DSSC and its subsidiaries shall not, and shall use its best
efforts to cause their respective directors, officers, employees, financial
advisors, legal counsel, accountants, and other agents and representatives (for
purposes of this Section 7.2 only, being referred to as "affiliates") not to,
initiate, solicit, or encourage, directly or indirectly, or take any other
action to facilitate any inquiries or the making of any proposal with respect
to, engage or participate in negotiations concerning, provide any nonpublic
information or data to, or have any discussions with any person other than DSSC
relating to, any acquisition, tender offer (including a self-tender offer),
exchange offer, merger, consolidation, acquisition of beneficial ownership of or
the right to vote securities of such entity or any of its subsidiaries,
dissolution, business combination, purchase of all or any significant portion of
the assets or any division of, or any equity interest in, such entity or any
subsidiary, or similar transaction other than the Merger (such proposals,
announcements, or transactions being referred to as "Acquisition Proposals").
DSSC shall promptly notify the others orally and in writing if any such
Acquisition Proposal (including the terms thereof and identity of the persons
making such proposals) is received and furnish to the other parties hereto a
copy of any written proposal.
7.3 Public Announcements. So long as this Agreement is in effect, each
Company agrees that it shall obtain the approval of the other party prior to
issuing any press release and shall use its best efforts to consult with the
others before otherwise making any public statement or responding to any press
inquiry with respect to this Agreement or the transactions contemplated hereby,
except as may be
19
required by law or any governmental agency if required by such agency or the
rules of the Nasdaq National Market, Nasdaq SmallCap Market or principal
exchange on which its common stock is listed.
7.4 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses as set forth in Schedule 7.4
7.5 Additional Agreements.
(c) Each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers,
consents, and approvals, and to effect all necessary registrations and filings.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of the Companies shall take all such necessary action.
(d) Each Company shall cooperate with the others and use all
reasonable efforts to prepare all necessary documentation to effect promptly all
necessary filings and to obtain all necessary permits, consents, approvals,
orders, and authorizations of or any exemptions by, all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement.
7.6 Survival of Representations and Warranties. The respective
representations and warranties of ICEWEB and DSSC contained in this Agreement
shall not survive the Effective Time, with the following exceptions: (I) if any
breach of DSSC's representations and warranties contained in Article V (a)
result in any liability to DSSC of more than $100,000.00 for any single breach,
or (b) result in Exchanging ICEWEB Shareholders not being the Controlling DSSC
Shareholders under the ICEWEB Exchange Ratio (as determined in accordance with
Section 7.9 below) then DSSC may elect, as and for its sole remedies the
non-recourse remedies set forth in Section 7.9 below; and (II) the
John/Goldstein Maximum DSSC Share Sales Covenant set forth in Section 7.10 shall
survive the Effective Time .
7.7 Shareholders' Meetings. ICEWEB shall, as soon as reasonably
practicable following the date hereof, establish a record date for, duly call,
give notice of, convene and hold (and reconvene and hold if adjourned for any
reason) a special meeting of its stockholders or acting by majority of the
ICEWEB Shareholders for the purpose of voting or consenting to approve this
Agreement and the Merger and the other transactions contemplated hereby. ICEWEB
shall, through its Board of Directors, recommend to its shareholders approval of
such matters.
7.8 Access After the Closing; Cooperation after Closing. ICEWEB and DSCC
agree to permit Dr. Wayne Goldstein and Brian S. John to have access to all
books and records of DSCC and its subsidiaries (including, but not limited to,
tax returns and other corporate and financial records upon reasonable prior
notice) until the later to occur of the following events: (a) five years
following the Effective Time; or (b) until Goldstein and John are no longer DSSC
Shareholders. Goldstein and John agree to work with the new DSSC management team
to effectuate a smooth transition and to fully cooperate with the new management
team in the identification and gathering of data in connection with pending
audits and other financial reviews required by the new management team
7.9 ICEWEB's Non-Recourse Remedies. In the event of a DSSC breach of
representations and warranties that survives the Effective Time as referenced in
Section 7.6 above, in the event of any liability to DSSC of more than
$100,000.00 for any single breach, for a period of one (1) year after the
Effective Time, (excluding any DSSC liability to Gary Schultheis or Herb Tabin)
DSSC may offset from the John/Goldstein Shares 100% of all such liabilities
above $100,000.00 per liability, at a value per DSSC Share of the greater of
$0.20 per share or the average price for the five (5) trading days immediately
preceding the discovery of the breach. In the event of such an offset, those
John/Goldstein Shares which are surrendered shall be returned to the DSSC
treasury and the John/Goldstein Shares shall be reduced proportionate to the
holdings of John and Goldstein respectively. The John/Goldstein Shares shall be
20
made available and tendered to DSSC for a period of no more than one (1) year
after the Effective Time to respond to any offset arising from a breach as
aforesaid.
7.10. John and Goldstein agree that they may not ever sell in the
aggregate more than 10% of the daily trading volume of DSSC Shares each for the
day on which John and/or Goldstein wish to sell DSSC Shares (this obligation
shall be referred to as the "John/Goldstein Maximum DSSC Share Sales Covenant").
However, in the event the DSSC Shares are ever traded on a national securities
exchange, including the New York Stock Exchange, the American Stock Exchange,
the NASDAQ National Market, or NASDAQ Small Caps (but excluding the current
status as an OTC bulletin board stock), the John/Goldstein Maximum DSSC Share
Sales Covenant shall be lifted as of the date trading commences on a national
securities exchange.
Article VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to the Companies' Obligation to Effect the Merger. The
respective obligations of all Companies to effect the transactions contemplated
herein shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions, any one of which may be waived by a writing signed by
DSSC and ICEWEB:
(a) This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote and/or consent of the
shareholders of ICEWEB in accordance with applicable law.
(b) No preliminary or permanent injunction or other order by any
federal, state, or foreign court of competent jurisdiction which prohibits the
consummation of any Merger shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been enacted, entered, issued, promulgated, or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger.
(c) Other than the filing of Articles or Certificate of Merger with
the Department of State for the State of Delaware, all authorizations, consents,
orders or approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any governmental entity (all of the foregoing,
"Consents") which are reasonably necessary for the consummation of the Merger,
shall have been filed, occurred, or been obtained (all such permits, approvals,
filings, and consents and the lapse of all such waiting periods being referred
to as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect.
(d) All state securities or blue sky permits and other
authorizations necessary to issue the DSSC Shares (including satisfactory
evidence of the nature of the ICEWEB Shareholders) in exchange for the Shares of
ICEWEB and to consummate the Merger shall have been received.
(e) There shall not be any action taken, or any statute, rule,
regulation, or order enacted, entered, enforced, or deemed applicable to any
Merger, by any federal or state governmental entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon DSSC or its subsidiaries (or, in the case of any disposition of
assets required in connection with such Requisite Regulatory Approval, upon any
Company or its subsidiaries), including, without limitation, requirements
relating to the disposition of assets, which in any such case would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(f) The other Company shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or prior
to the Effective Time and the representations and warranties of the other
Company contained in this Agreement shall be true at and as of the Effective
Time as if made at and as of such time, except as contemplated by this
Agreement, and each Company
21
shall have received a certificate of the Chairman of the Board, the President,
or an Executive Vice President of the other Company as to the satisfaction of
this condition.
(g) All representations and warranties of ICEWEB contained in
Article IV and all representations and warranties of DSSC contained in Article V
shall be true as of the date of execution of this Agreement, through and
including the Effective Time.
8.2 Conditions to Obligations of DSSC. The obligations of DSSC to carry
out the transactions contemplated by this Agreement are subject, at the option
of DSSC, to the satisfaction, or waiver by DSSC, of the following conditions:
(a) DSSC shall have received evidence satisfactory to it that a
sufficient number of ICEWEB Shareholders are accredited or sophisticated
investors. Schedule 8.2(a) sets forth the evidence that is satisfactory.
(b) The consent listed on Schedule 8.2(b) shall have been obtained
(c) Such other action or agreements that are reasonably necessary in
the reasonable opinion of DSSC or its counsel
8.3 Conditions to Obligations of ICEWEB. The obligations of ICEWEB to
carry out the transactions contemplated by this Agreement are subject, at the
option of ICEWEB, to the satisfaction, or waiver by ICEWEB, of the following
conditions:
(a) Brian S. John ("John") and Dr. Wayne Goldstein ("Goldstein")
shall have entered into share exchange agreements with DSSC, the result of which
shall be that John and Goldstein shall exchange an aggregate of 59,609 shares of
DSSC Common Stock in exchange for (I) $55,000 in cash at closing, and (ii)
forgiveness of a stock purchase note of $10,000 owing by John and Goldstein to
DSSC. On consummation of the Share Exchange, John and Goldstein will own an
aggregate of 580,000 shares of DSSC Common Stock, 180,000 shares of which are
subject to a Registration Statement on Form S-8 for 400,000 shares of restricted
DSSC Common Stock (said 580,000 DSSC Shares shall be referred to as the
"John/Goldstein Shares").The restrictions on the John/Goldstein Shares shall be
as set forth in Schedule 8.3(a) attached (the "John/Goldstein Restriction").
(b) Such other actions or agreements that are reasonably necessary
in the reasonable opinion of ICEWEB or its counsel.
(c) The resignations of all the officers and directors of DSSC.
Article IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the shareholders of ICEWEB, as follows:
(a) By mutual written consent of all of the parties.
(b) By ICEWEB or DSSC if the Effective Time shall not have occurred
on or before the close of business on September 21, 2002.
9.2 Effect of Termination. In the event of termination of this Agreement
as provided above, this Agreement shall forthwith become of no further effect
and, except for a termination resulting from a breach by a party of this
Agreement, there shall be no liability or obligation on the part of any Company
22
or their respective officers or directors (except as set forth in Sections 7.4,
7.5, 9.2, 10.1, 10.5 and 10.9 hereof all of which shall survive the
termination). Nothing contained in this Section 9.2 shall relieve any party from
liability for willful breach of this Agreement that results in termination of
this Agreement. Upon request therefor, each party shall redeliver all documents,
work papers, and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing same.
9.3 Amendment. No amendment to this Agreement shall be made which alters
the Exchange Ratio (subject to the DSSC Controlling Shareholder requirement at
all times) or which in any way materially adversely affects the rights of such
shareholders, without the further approval of such shareholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
9.4 Waiver. At any time prior to the Effective Time, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Such extensions or waivers shall be in
writing, executed by each of DSSC and ICEWEB. Such waiver shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure
Article X
GENERAL PROVISIONS
10.1 Brokers. Each Company represents and warrants to the others that no
broker, finder, or financial advisor is entitled to any brokerage, finder's, or
other fee or commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any party hereto, except as reflected in Schedule 10.1 hereto.
10.2 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by telex or telecopy or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to Disease Sciences, Inc.
DISEASE SCIENCES, INC.
20283 State Road 7
Suite 300
Boca Raton, FL 33498
Attention: Dr. Wayne Goldstein
(b) If to ICEWEB Communications, Inc.
ICEWEB Communications, Inc.
620 Herndon Parkway, Suite
360
Herndon, VA
20170-5483
Attention: John Signorello
10.3 Descriptive Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23
10.4 Entire Agreement: Assignment. This Agreement (including the Exhibits,
Schedules, and other documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement and supersede all
other prior agreements and understandings, both written and oral, among the
parties or any of them, with respect to the subject matter hereof; and (b) shall
not be assigned by operation of law or otherwise.
10.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
provisions thereof relating to conflicts of law.
10.6 Parties in Interest. Except for Section 7.8, hereof, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefit, or remedies of any nature whatsoever or by reason of
this Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
10.8 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not effect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
10.9 Jurisdiction and Venue. Each Party hereto hereby agrees that any
proceeding relating to this Agreement and the Merger shall be brought in the
Circuit Court of Fairfax County, Virginia or the United States District Court
for the Eastern District of Virginia, Alexandria Division, a it being understood
and agreed that DSSC's headquarters will, on and after the Effective Time, be
transferred to ICEWEB's current Fairfax County, Virginia headquarters. Each
party hereto hereby consents to personal jurisdiction in any such action brought
in any such Virginia court, consents to service of process by registered mail
made upon such party and such party's agent and waives any objection to venue in
any such Virginia court or to any claim that such Virginia court is an
inconvenient forum.
10.10 Investigation. The respective representations and warranties of each
Company contained herein or in the certificates or other documents delivered
prior to the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party hereto.
IN WITNESS WHEREOF, each Company has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
DISEASE SCIENCES, INC., ICEWEB COMMUNICATIONS, INC.,
a Delaware corporation a Delaware corporation
By: /s/ Dr. Wayne Goldstein By: /s/ John Signorello
-------------------------------- --------------------------------
Name: Dr. Wayne Goldstein Name: John Signorello
Title: President Title: CEO
DR. WAYNE GOLDSTEIN AND BRIAN JOHNS
JOIN IN THIS AGREEMENT PERSONALLY FOR
THE SOLE PURPOSE OF EVIDENCING THEIR
AGREEMENT TO THOSE PROVISIONS RELATING
TO THE JOHN/GOLDSTEIN SHARES CONTAINED
IN PARAGRAPHS _____________
By: /s/ Dr. Wayne Goldstein
--------------------------------
Dr. Wayne Goldstein, individually
By: /s/ Brian Johns
--------------------------------
Brian Johns, individually
24
SCHEDULE 2.3
OFFICERS AND DIRECTORS
OF ACQUISITION SUB
The initial officers and directors of the Surviving Corporation shall be John R.
Signorello, CEO and Chairman of the Board and those other persons designated on
this Schedule as amended between the Execution Date and the Effective Time.
25
SCHEDULE 3.3
HOLDERS OF ICEWEB STOCK OPTIONS, WARRANTS, AND OTHER AGREEMENTS
CERT # SHARES WARRANTS OPTIONS TOTAL
- -------------------------------------------------------------------------
43 5000 10000 0 15000
- -------------------------------------------------------------------------
39 7500 15000 0 22500
- -------------------------------------------------------------------------
30 25000 50000 0 75000
- -------------------------------------------------------------------------
35 12500 25000 0 37500
- -------------------------------------------------------------------------
40 5000 10000 0 15000
- -------------------------------------------------------------------------
34 15000 30000 0 45000
- -------------------------------------------------------------------------
32 25000 50000 0 75000
- -------------------------------------------------------------------------
47 2500 5000 0 7500
- -------------------------------------------------------------------------
45 5000 10000 0 15000
- -------------------------------------------------------------------------
37 10000 20000 0 30000
- -------------------------------------------------------------------------
15 125000 250000 0 375000
- -------------------------------------------------------------------------
25 25000 50000 0 75000
- -------------------------------------------------------------------------
21 50000 100000 0 150000
- -------------------------------------------------------------------------
44 5000 10000 0 15000
- -------------------------------------------------------------------------
28 25000 50000 0 75000
- -------------------------------------------------------------------------
20 75000 150000 0 225000
- -------------------------------------------------------------------------
33 25000 50000 0 75000
- -------------------------------------------------------------------------
22 50000 100000 0 150000
- -------------------------------------------------------------------------
31 25000 50000 0 75000
- -------------------------------------------------------------------------
14 125000 250000 0 375000
- -------------------------------------------------------------------------
11 500000 1000000 0 1500000
- -------------------------------------------------------------------------
11 125000 250000 0 375000
- -------------------------------------------------------------------------
17 100000 200000 0 300000
- -------------------------------------------------------------------------
27 25000 50000 0 75000
- -------------------------------------------------------------------------
36 10000 20000 0 30000
- -------------------------------------------------------------------------
16 100000 200000 0 300000
- -------------------------------------------------------------------------
12 500000 1000000 0 1500000
- -------------------------------------------------------------------------
19 75000 150000 0 225000
- -------------------------------------------------------------------------
42 5000 10000 0 15000
- -------------------------------------------------------------------------
38 8000 16000 0 24000
- -------------------------------------------------------------------------
26 25000 50000 0 75000
- -------------------------------------------------------------------------
13 375000 750000 0 1125000
- -------------------------------------------------------------------------
41 5000 10000 0 15000
- -------------------------------------------------------------------------
29 25000 50000 0 75000
- -------------------------------------------------------------------------
24 50000 100000 0 150000
- -------------------------------------------------------------------------
23 50000 100000 0 150000
- -------------------------------------------------------------------------
29 25000 50000 0 75000
- -------------------------------------------------------------------------
18 75000 150000 0 225000
- -------------------------------------------------------------------------
1 17000000 0 600000 17600000
- -------------------------------------------------------------------------
5 600000 600000
- -------------------------------------------------------------------------
3 1400000 0 600000 2000000
- -------------------------------------------------------------------------
2 1000000 0 100000 1100000
- -------------------------------------------------------------------------
1288000 1288000
- -------------------------------------------------------------------------
22720500 5441000 2588000 30749500
- -------------------------------------------------------------------------
26
SCHEDULE 4.2
ICEWEB CAPITALIZATION
The authorized capital of IceWEB is 250,000,000 shares of common stock,
par value $.001 per share, and 10,000,000 shares of preferred stock, par value
$.001 per share. As of the Execution Date there are 22,720,500 ICEWEB Common
Shares outstanding. As of the date of execution of the Agreement there are no
Preferred Shares outstanding. The rights and preferences accorded to the
Preferred Stock are not defined at this time.
As of the Execution Date there are 5,441,000 warrants to purchase ICEWEB Common
Shares issued and outstanding. None of said warrants has been exercised.
As of the Execution Date there are 2,588,000 options to purchase ICEWEB Common
Shares issued and outstanding. None of said options has been exercised.
See spreadsheet attached to Schedule 3.3.
27
SCHEDULE 4.5
ICEWEB FINANCIAL STATEMENTS
(TO BE PROVIDED WITHIN 60 DAYS)
SCHEDULE 4.6
CHANGES OF EVENTS - ICEWEB
Except for the ICEWEB Common Stock, Warrants, and Options issued in the
ordinary course of business and reflected in the relevant Schedules attached to
this Agreement, there are no changes, etc. prohibited by Paragraph 4.6.
SCHEDULE 4.7
LITIGATION - ICEWEB
No litigation is pending.
SCHEDULE 4.8
CONTRACTS - ICEWEB
ICEWEB is an operating business actively engaged in various aspects of the
streaming media business, including webcasting and other dissemination of voice,
video, and data across the Internet. The company has full-time employees, leased
space, and customer contracts in the ordinary course of business.
No further disclosure will be made in this Schedule and DSSC has waived any
further disclosure in this Schedule. Financial statements and information
statements set forth material information
SCHEDULE 4.9
EMPLOYEE BENEFIT PLANS - ICEWEB
Medical and Dental Insurance and 401K
SCHEDULE 4.12
SUBSIDIARIES - ICEWEB
The only subsidiary of Iceweb Communications, Inc., a Delaware corporation,
is Iceweb Worldwide, Inc., a Virginia corporation
SCHEDULE 4.13
LABOR AND EMPLOYMENT MATTERS - ICEWEB
There are no pending labor or employment controversies.
SCHEDULES 4.14(a), 4.14(b) & 4.14(c)
INTELLECTUAL PROPERTY MATTERS - ICEWEB
Schedule 14.4(a)
Iceweb owns software assets, including source code, object code, documentation,
licensing rights, and other incidents of ownership of software assets. Certain
of these assets are denominated the E-Course Engine, PowerPoint Pro, IceShow,
IceSlide, IceCast, IceShowPro, IceMaker, IceStudio and IceEnterprise. There are
other webcasting software assets and other software assets owned by Iceweb.
28
Iceweb claims ownership of the ICEWEB, E-COURSE ENGINE, POWERPOINT PRO, ICESHOW,
ICESLIDE, ICECAST, ICESHOWPRO, ICEMAKER, ICESTUDIO, and other marks; copyrights;
inventions; trade secrets; know-how and show-how; contractual confidentiality,
non-disclosure and invention assignment rights; acknowledgments that Iceweb
intellectual property assets were created for Iceweb as works for hire by
contractors and employees; and other intellectual property rights. At this time
Iceweb holds no US, foreign or state registered trademarks or service marks, no
US or foreign registered copyrights, and no US or foreign patents.
Schedule 14.4(b)
There are substantial infringements of Iceweb intellectual property rights.
Legal action has been taken against infringers. On advice of counsel, the
infringement activities being addressed at this time will not be disclosed in
this schedule. Following the institution of litigation, if any litigation is
required, the names and details of the infringement will be disclosed, unless
disclosure is prohibited by a court of competent jurisdiction.
Schedule 14.4(c)
iceweb.com
learningstream.com
SCHEDULE 4.15
INSURANCE POLICIES - ICEWEB
SEE ATTACHED
SCHEDULE 5.2
DSSC CAPITALIZATION
As of the date of execution of the Agreement there are 100,000,000 DSSC Common
Shares authorized, of which 10,750,000 are issued and outstanding. As of the
date of execution of the Agreement there are 1,000,000 DSSC Preferred Shares
authorized, of which none is outstanding. The rights and preferences accorded to
the 1,000,000 Shares of Preferred Stock are not defined at this time.
The 10,750,000 DSSC Common Shares are held by the persons and in the quantities
as set forth in Exhibit 1 to this Schedule 5.2.
Dr. Goldstein holds 3,590,000 DSSC Common Shares. Brian Johns holds 2,590,000
DSSC Common Shares, for a combined total of 6,180,000 DSSC Common Shares.
5,600,000 of these DSSC Common Shares shall be redeemed by DSSC at the Effective
Time in consideration for (a) forgiveness of $10,000 promissory notes owing by
each to DSSC; and (b) payment of $55,000 by DSSC to each of Goldstein and John.
580,000 DSSC Common Shares are being retained collectively by Goldstein and John
in the respective amounts to which they agree.
Therefore, the source of the approximately 24,311,000, more or less DSSC Common
Shares being exchanged for approximately 22,720,500 ICEWEB Common Shares, as
rounded up [odd lots are to be rounded up to the nearest hundred shares] is as
follows: 5,600,000 DSSC Common Shares shall have been returned to the DSSC
Treasury following the redemption of the John and Goldstein DSSC Common Shares;
and approximately 18,711,000 additional DSSC Common Shares shall be issued from
the DSSC Treasury.
As of the date of the execution of this Agreement there are 6,980,000 warrants
to purchase DSSC Common Shares issued and outstanding. None of said warrants has
been exercised.
29
As of the date of the execution of this Agreement, on a fully diluted basis,
there are 10,750,000 DSSC Common Shares issued and outstanding and 6,980,000
unexercised warrants to purchase DSSC Common Shares issued and outstanding, for
a total of 17,730,000 DSSC Common Shares on a fully diluted basis.
EXHIBIT 1
DESCRIPTION SHARES WARRANTS TOTAL
- --------------------------------------------------------------------------------
John 2590000 2590000
- --------------------------------------------------------------------------------
Goldstein 3590000 3590000
- --------------------------------------------------------------------------------
Tabin 700000 700000
- --------------------------------------------------------------------------------
Schultheis 700000 700000
- --------------------------------------------------------------------------------
1600 Shareholders 470000 1880000 2350000
- --------------------------------------------------------------------------------
Villaponteau 400000 400000
- --------------------------------------------------------------------------------
2nd Placement 1700000 5100000 6800000
- --------------------------------------------------------------------------------
Float 600000 600000
- --------------------------------------------------------------------------------
Warrants 6980000
- --------------------------------------------------------------------------------
Total 10750000 17730000
- --------------------------------------------------------------------------------
(5600000)
- --------------------------------------------------------------------------------
Retained Vote 12130000
- --------------------------------------------------------------------------------
SCHEDULE 5.5
SEC REPORTS
DSSC has not filed a Form 8K/A with respect to the financial statements
required for a completed acquisition.
SCHEDULE 5.6
CHANGES OF EVENTS - DSSC
NONE
SCHEDULES 5.9(a), 5.9(b) & 5.9(c)
INTELLECTUAL PROPERTY MATTERS - DSSC
Schedule 5.9(a)
DSSC TO PROVIDE
Schedule 5.9(b)
NONE
Schedule 5.9(c)
Diseasesciences.com
Superantioxidants.com
Healthspansciences.com
30
SCHEDULE 5.11
LITIGATION - DSSC
On December 27, 2001, an action was instituted in the Circuit Court for the
Fifteenth Judicial Circuit for Palm Beach County, Florida, entitled Christopher
Mayr v. Disease Science, Inc. f/k/a Auction Anything.com, Inc. The Complaint
seeks damages in an undisclosed amount from the Company arising out of an
incentive Stock Option Agreement dated August 25, 2000 held by a former employee
who blames the Company for his failure to exercise his option on a timely basis
following his departure from employment.
On February 5, 2002, the Company received a Notice of Demand for Arbitration
from Investek Holdings, LLC claiming the company violated a no-reverse stock
split provision in their agreement with the Company. Documentation involving
this transaction is incomplete and somewhat contradictory, but stock records for
the Company reflect Investek Holdings maintaining 1,000 shares of common stock
(e.e., 10,000 share pre-reverse stock split). No formal arbitration has been
requested by Investek.
SCHEDULE 5.12
CONTRACTS & OTHER OBLIGATIONS - DSSC
Promissory notes payable to Herb Tabin and Gary Schultheis.
THERE ARE NO OTHER CONTRACTUAL OBLIGATIONS UNDER THIS SCHEDULE.
THERE ARE NO TAXES OWING TO ANY LOCAL, STATE OR FEDERAL TAXING AUTHORITY
HEALTHSPAN AGREEMENTS
R&D AGREEMENT
EMPLOYMENT AGREEMENT WITH VILIPANTO
SCHEDULE 5.17
EMPLOYEE BENEFIT PLANS - DSSC
None
SCHEDULE 5.18
SUBSIDIARIES - DSSC
The only subsidiary of DSSC is HealthSpan Sciences - 51% owned by DSSC
SCHEDULE 5.19
INSURANCE - DSSC
Health insurance - Aetna US Healthcare. John and Goldstein to amend or transfer
the policy from DSSC to third party. John and Goldstein to the extent covered
shall pay for such insurance costs.
Liability -- None
D&O - None
No other insurance.
31
SCHEDULE 7.4
EXPENSES
Expenses of the merger, including attorneys and accounting fees, shall be
borne by the party incurring said expenses, except Iceweb shall pay all
outstanding legal fees owed to Atlas Pearlman, P.A., except $2,000 of which
shall be paid by DSSC. Any liabilities, except disclosed liabilities which
accrued prior to the date hereof and which are disclosed to Iceweb by 4/21/02
shall be the liability of John/Goldstein to the extent they exceed $10,000.
SCHEDULE 8.2(b)
CONSENTS
None.
SCHEDULE 8.3(a)
JOHN /GOLDSTEIN RESTRICTIONS
The restrictions on this stock are referenced in the Agreement in connection
with setoff rights.
32