Agreement of Merger
Agreement of Merger, dated as of July 3, 2002, among MetaSource Systems, a
Delaware company, hereinafter called "MSS"; MetaSource Systems UK Limited, a UK
corporation, hereinafter called the "Acquired Company"; and the Acquired
Company's stockholders, hereinafter called the "Stockholders", as listed in
Appendix A.
1. Agreement of Merger. All of the Acquired Company's shares shall be acquired
by MSS in exchange solely for an amount of common stock of MSS as
hereinafter defined. As of the Closing Date, hereinafter defined in Article
five, the shares of MSS will be issued to the Acquired Company's
stockholders on a pro rata basis of share ownership of the Company.
Exchange of Shares. MSS and the Stockholders agree that all of the
shares of the Acquired Company shall be exchanged with MSS for one million
shares (1,000,000) of MSS common stock after MSS merges with a currently public
company.
Delivery of Shares. On the Closing Date, the Stockholders will deliver to
MSS certificates representing their Acquired Company shares duly endorsed with
signatures guaranteed and with documentary stamps affixed at the Stockholders'
expense so as to make MSS the sole owner thereof, free and clear of all claims
and encumbrances. Delivery will be made at the office of MSS.
2. Representations of Stockholders and the Acquired Company. The Stockholders
and the Acquired Company represent and warrant as follows:
a) As of the Closing Date the Stockholders will be the sole owners of
the Acquired Company shares appearing of record in their names; such
shares will be free from claims, liens or other encumbrances.
b) The Acquired Company shares will constitute validly issued shares of
the Acquired Company which are fully paid and nonassessable.
c) As of the Closing Date, there will be 1,000,000 shares of Acquired
Company's stock issued and outstanding. There are no options,
warrants, convertible or other securities, calls, commitments,
conversion privileges, preemptive rights or other rights or
agreements outstanding to purchase or otherwise acquire (whether
directly or indirectly) any of the Acquired Company's share capital
or any security convertible into or exchangeable for any shares of
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the Acquired Company's capital stock or obligating the Acquired
Company to grant, issue, extend, or enter into, any such option,
warrant, convertible or other security, call, commitment, conversion
privilege, preemptive right or other right or agreement
("Interests"). The Company has no liability for any dividends accrued
but unpaid. No Acquired Company shares are reserved for issuance
under any stock purchase, stock option or other benefit plan.
d) Since July 3, 2002, there have not been, and prior to the Closing
Date there will not be any material changes in the financial
condition of the Acquired Company, except changes arising from the
ordinary course of business.
e) Intellectual Property. The Acquired Company owns, or has the
irrevocable right to use, sell or license all of its Intellectual
Property Rights (as defined below, the "IP Rights"), necessary or
required for the conduct of its business as presently conducted, and
such rights to use, sell, or license are sufficient for such conduct
of its business. Further, the Acquired Company is the legal and
beneficial owner of all its IP Rights. Any and all intellectual
property held by the Acquired Company is owned outright, free and
clear of any claims, liens, security interests, mortgages,
encumbrances or obligations by the Acquired Company. The Acquired
Company is currently taking reasonable and practicable steps designed
to protect, preserve, and maintain the secrecy and confidentiality of
all material Acquired Company IP Rights and all of Acquired Company's
proprietary rights therein. All officers, employees, agents, and
consultants of the Acquired Company having access to proprietary
information agree not to disclose such information to any third
parties. IP Rights, as used herein, means, collectively, all
worldwide industrial and intellectual property rights, including but
not limited to patents, patent applications, patent rights,
trademarks, trademark applications, trade names, trade dress, service
marks, service mark applications, copyrights, copyright applications,
franchises, licenses, inventions, trade secrets, know-how, customer
lists, proprietary processes and formulae, manuals, memoranda and
records.
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f) The Acquired Company is not involved in any pending litigation or
governmental investigation or proceeding not reflected in the
Acquired Company's financial statements or otherwise disclosed in
writing to MSS, and to the knowledge of the Acquired Company or the
Stockholders, no litigation or governmental investigation or
proceeding is threatened against the Acquired Company.
g) As of the Closing Date, the Acquired Company will be in good standing
as a UK Company.
h) As of the Closing Date, the Acquired Company will have in effect all
fire, casualty and liability and other relevant insurance policies.
i) There will be no dividends of the Acquired Company declared and
unpaid on any shares of any class of capital stock as of the Closing
Date.
j) Prior to the Closing Date, the Acquired Company warrants that it will
not make or become a party to any contract or commitment, or renew,
extend, amend or modify any contract or commitment, except in the
ordinary course of business.
k) The Acquired Company and the Stockholders are duly authorized to
execute this agreement.
3. Representations of MSS. MSS represents and warrants as follows:
a) As of the Closing Date, the MSS shares to be delivered to the
Stockholders will constitute valid and legally issued shares of MSS,
fully paid and nonassessable.
b) The officers of MSS are duly authorized to execute this agreement.
c) MSS is not involved in any pending litigation or governmental
investigation or proceeding not reflected in such financial
statements or otherwise disclosed in writing to the Stockholders.
d) As of the Closing Date, MSS will be in good standing as a Delaware
corporation.
4. Closing Date. The Closing Date of this transaction will be no later than 60
days from the date MSS begins trading as a listed security on a nationally
recognized market, such as the Nasdaq, Over the Counter Bulletin Board, or
other stock exchange. Until such date shares will not be exchanged.
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5. Prohibited Acts. From the date this agreement is executed to the Closing
Date, the Acquired Company agrees not to do any of the following:
a) Declare or pay any dividends or other distributions on its stock or
purchase or redeem any of its stock;
b) Issue any stock or other securities, including any right or option to
purchase or otherwise acquire any of its stock, or issue any notes or
other evidences of indebtedness not in the usual course of business.
c) Make capital expenditures in excess of that made in the normal course
of business, except with the consent of MSS.
6. Delivery of Records. The Stockholders agree that on or before the Closing
Date they will cause to be delivered to MSS such corporate records or other
documents as MSS may request in order to effectuate the transaction
contemplated by this agreement.
7. Dilution of Shares. The Acquired Company consents and acknowledges that MSS
may authorize and/or issue additional common shares, preferred shares, or
warrants to purchase common shares of MSS prior to, at or subsequent to the
Closing Date. The Acquired Company and Stockholders acknowledge that the
MSS common shares held by the Stockholders may experience a dilution in
their percentage of ownership in MSS as a result of issuance by MSS of
additional shares.
8. Tax-Free Reorganization. The transactions contemplated herein shall be
treated as a tax-free plan of reorganization under Section 368(a) of the
Internal Revenue Code, the MSS shares issued in this transaction will be
issued solely in exchange for the shares held by the Stockholders, and no
other transaction shall be an adjustment to the consideration between the
parties to this agreement for the transactions contemplated hereby.
Further, no consideration which would constitute "other property" within
the meaning of Section 356(a) of the Internal Revenue Code is being
transferred by the parties as consideration pursuant to this agreement. The
parties shall not take a position on any tax return or before any taxing
authority that is inconsistent with this Article 9, unless otherwise
required by a final and binding judicial or governmental determination of
competent jurisdiction. Neither MSS nor the Acquired Company represents or
warrants that the transactions contemplated herein will qualify as a
reorganization under the Internal Revenue Code.
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9. Good and Marketable Title. After acquiring the Acquired Company, MSS shall
have good and marketable title and/or licenses or rights to use all of the
Acquired Company's tangible and intangible assets including, but not
limited to, intellectual properties necessary or required to successfully
develop and commercially exploit the Acquired Company's business.
10. Acquisition Intent of Shareholders. Stockholders are acquiring the MSS
shares for their own accounts and not with an intention of distribution
within the meaning of Section 2(11) of the Securities Act of 1933, as
amended ("Securities Act"). Each of the Stockholders represents and
confirms to MSS that he or she (i) is an accredited investor within the
meaning of Rule 501(a) pursuant to the Securities Act or, if not such an
accredited investor, has, alone or together with a purchaser representative
within the meaning of Rule 501(h) pursuant to the Securities Act, such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of an investment in the Buyer's
securities; (ii) is aware of the limits on resale of the MSS shares imposed
because of the nature of the transactions contemplated herein, including,
but not limited to, restrictions specified by Rule 144 promulgated by the
Securities and Exchange Commission; and (iii) is receiving the MSS shares
without registration pursuant to the Securities Act, in reliance on the
exemption from registration specified in Section 4(2) of the Securities Act
for investment, and without any intent to sell, resell, or otherwise
distribute the MSS shares in any manner that is in violation of the
Securities Act. The certificates representing the MSS shares, when
delivered to the Stockholders, may have appropriate orders restricting
transfer placed against them on the records of the transfer agent for such
securities, and may have placed upon them the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION PURSUANT TO THE SECURITIES ACT OF 1933. THOSE SECURITIES
MAY NOT BE TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
UNLESS THE TRANSFEROR FIRST SATISFIES THE ISSUER AND ITS COUNSEL THAT THE
PROPOSED TRANSFER, IN THE MANNER PROPOSED, DOES NOT VIOLATE THE
REGISTRATION REQUIREMENTS OF THAT ACT."
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Each Stockholder agrees not to attempt any transfer of any of the MSS
shares without first complying with the substance of that legend and agrees
that the satisfaction of MSS may, if MSS so requests, depend in part upon
an opinion of counsel acceptable in form and substance to MSS, a no-action
letter of the United States Securities and Exchange Commission, or
equivalent evidence. Each of the Stockholders acknowledges, without
limitation, that the foregoing agreement and representation shall apply to
the MSS shares issued to such Stockholders.
11. Notices. Any notice which any of the parties hereto may desire to serve
upon any of the other parties hereto shall be in writing and shall be
conclusively deemed to have been received by the party to whom addressed,
if mailed, postage prepaid, united states certified mail, to the following
addresses:
MetaSource Systems, Inc.
40 Exchange Place, Suite 1607
New York, NY 10005
Attention of Courtney Smith, President
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Stockholders:
MetaSource Systems UK Limited
c/oGeorge Hay & CO
83 Cambridge Street
London SW1V 4PS
UK
12. Successors. This agreement shall be binding upon and inure to the benefit
of the heirs, personal representatives, successors, and assigns of the
parties.
13. Indemnification. The Acquired Company shall save MSS harmless from and
against and shall indemnify MSS for any liability, loss, costs, expenses,
or damages howsoever caused by reason of any injury (whether to body,
property, or personal or business character or reputation) sustained by any
person or to property by reason of any act, neglect, default or omission of
Acquired Company or any of Acquired Company's agents, employees, or other
representatives, committed prior to the subject acquisition, and Acquired
Company shall pay all amounts to be paid or discharged in case of an action
or any such damages or injuries. If MSS is sued in any court for damages by
reason of any of the acts of Acquired Company, Acquired Company or such
other party shall defend the resulting action (or cause same to be
defended) at Acquired Company's expense and shall pay and discharge any
judgment that may be rendered in any such action; if Acquired Company fails
or neglects to so defend in such action, MSS may defend such action and any
expenses, including reasonable attorneys' fees, which MSS may pay or incur
in defending such action and the amount of any judgment which MSS may be
required to pay shall be promptly reimbursed by Acquired Company upon
demand by MSS.
14. Governing Law. This agreement shall be construed and interpreted in
accordance with the laws of the State of New York without regard to its
provisions concerning choice of laws or choice of forum. The parties hereby
irrevocably submit themselves to the non-exclusive jurisdiction of the
state and federal courts sitting in New York and agree and consent that
services of process may be made upon it in any legal proceedings relating
hereto by any means allowed under state or federal law.
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Executed in multiple counterparts, each of which shall be deemed a
duplicate original, as of the date first above written.
MetaSource Systems, Inc.
Corporate seal
Attest: by: /s/ Courtney Smith
------------------------------
Courtney Smith
/s/ Courtney Smith
---------------------
Secretary
Company
Corporate seal
Attest: by: /s/ Jamie Levey
-------------------------------
/s/ Jamie Levey
---------------------
Secretary
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MetaSource Systems UK Limited shares issued
Shareholder Name # shares
Brian Vass 71,012
Chris Webb 14,306
Richard Jackson 8,231
Geoff Hodge 4,120
Louise Gardiner 14,180
David Colegrave Group 25,320
Garth Lawley 450
Trustees of the Colegrave Pension Scheme 200
Graham Davies 200
David Rowe 270
Simon Brewer 400
Care Group AG 70
Ralph Wilms 70
Global Care AG 34,731
Netvest.com plc 70,130
Anisfield Investments Ltd. 375,000
Courtney Smith 151,950
Leonard Sternheim 16,700
Markus H. Kutter 50,100
Beatus von Glenck 16,700
Rahel von Glenck 16,700
Banco di Lugano 78,156
Banco Bipielle 19,566
Rudolf Gygax 8,038
Nana Dontoh 10,000
Total Shares 986,600