Acquisition Agreement
This Acquisition Agreement, dated as of January 17, 2003, , is by and between
MetaSource Group, a Nevada company, hereinafter called "MSGR"; and the Acquired
Company's stockholders, hereinafter called the "Stockholders", as listed in
Appendix A.
1. Acquisition
All Agency Fish Ltd, company number 4022849, (the Acquired Company),
shares shall be acquired by MSGR in exchange solely for an amount of
common stock of MSGR (the "Exchange Shares") as hereinafter defined. As
of the Closing Date, hereinafter defined in Article 5, the Exchange
Shares will be issued to the Stockholders on a pro rata basis of share
ownership of the Acquired Company.
MSGR, the Acquired Company and the Stockholders agree that all of the
Exchange Shares shall be exchanged for the Acquired Company shares based
on the following formula: the average of 5 times Acquired Company net
earnings for the trailing twelve months (defined hereafter) and 5 times
Acquired Company net earnings for the forward twelve months (defined
hereafter), where Acquired Company net earnings for the trailing twelve
months are determined in Schedule A attached to this agreement and
Acquired Company net earnings for the forward twelve months are
calculated in a method acceptable to the MSGR auditor and which do not
expense the repayment of principal to debtholders as listed on schedule B
attached to this agreement, based on the average trading price (defined
hereinafter) of MSGR common stock on the dates beginning December 4, 2002
and ending December 31, 2002. Trailing twelve months shall be defined as
twelve calendar months prior to the date of this acquisition agreement.
Forward twelve months shall be defined as twelve calendar months
following the date of this acquisition agreement. The average trading
price of MSGR shares will be calculated as the average of high and low
prices as reported on finance.yahoo.com. All Exchange Shares will be held
in escrow by MSGR for a period of one year from the Closing Date. Within
60 days following the forward twelve months, additional shares will be
added according to the formula above if Acquired Company net earnings for
the forward twelve months are greater than the Acquired Company earnings
for the trailing twelve months. If Acquired Company net earnings for the
forward twelve months are less than Acquired Company earnings for the
trailing twelve months, the appropriate Exchange Shares will be
subtracted according to the formula above. The Exchange Shares held in
escrow by MSGR will secure and indemnify MSGR against a breach of
warranties detailed hereinafter in Article 3 of this Agreement. In the
event of an alleged breach of the warranties detailed in Article 3,
sections (d) and (g), MSGR will have the option (the Option) to declare
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null and void this Agreement no later than 90 days of the discovery of
such alleged breach. If MSGR does not exercise the Option, and in the
event of an alleged breach of the warranties detailed in Article 3, MSGR
and the Stockholders will negotiate in a timely manner a reduction in the
number of Exchange Shares which are to be issued to Stockholders as
compensation to MSGR for such breach. In the event such negotiations do
not produce an agreed upon reduction in the number of Exchange Shares,
MSGR and the Stockholders agree to submit the dispute to the American
Arbitration Association (AAA) no later than one year from the date the
breach was discovered. Excluding any Exchange Shares used as loan
collateral, at the end of one year from the Closing Date, the
Stockholders will be fully vested in the Exchange Shares less any amount
forfeited, disputed, agreed upon or resolved by the AAA for forfeiture
due to alleged breach of warranties described in Article 3. Resolution of
claims by the AAA will be binding on MSGR, the Acquired Company and the
Stockholders.
2. Delivery of Acquired Company Shares
On the Closing Date, the Stockholders will deliver to MSGR certificates
representing their Acquired Company shares duly endorsed with signatures
guaranteed and with documentary stamps affixed at the Stockholders'
expense so as to make MSGR the sole owner thereof, free and clear of all
claims and encumbrances.
Delivery will be made at 40 Exchange Place, Suite 1607, New York, NY
10005.
3. Representations of Stockholders and the Acquired Company
The Stockholders warrant to MSGR 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 100 of the 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 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.
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d) The financial statements of the Acquired Company, as of October
31, 2002, which are attached as Schedules (A), (B) and (C), show a
true and fair view of the financial condition of the Acquired
Company as of that date in accordance with generally accepted
accounting principles practiced in England; there are no material
liabilities, either fixed or contingent, not reflected in such
financial statements other than contracts of obligations in the
usual course of business; and no such contracts or obligations in
the usual course of business are liens or other liabilities which,
if disclosed, would alter substantially the financial condition of
the Acquired Company as reflected in such financial statements.
e) Since October 31, 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 in the
ordinary course of business.
f) Intellectual Property
i) 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;
ii) The Acquired Company is the legal and beneficial owner of
all its IP Rights;
iii) 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;
iv) 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;
v) 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.
g) The Acquired Company is not involved in any litigation or
governmental investigation or proceeding not reflected in the
Acquired Company's financial statements or otherwise disclosed in
writing to MSGR, and to the knowledge of the Stockholders, no
litigation or governmental investigation or proceeding is
threatened against the Acquired Company.
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h) As of the Closing Date, the Acquired Company will be in good
standing as an English Company.
i) As of the Closing Date, the Acquired Company will have in effect
all fire, casualty and liability and other relevant insurance
policies usual for a company carrying on a similar business.
j) 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.
k) Prior to the Closing Date, the Acquired Company 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.
l) The Stockholders and representatives signing on behalf of Acquired
Company are duly authorized to execute this agreement.
4. Representations of MSGR
MSGR warrants as follows:
a) As of the Closing Date, the Exchange Shares to be delivered to the
Stockholders will constitute valid and legally issued shares of
MSGR, fully paid and non assessable.
b) The officers of MSGR executing this Agreement are duly authorized
to execute this Agreement.
c) MSGR 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, MSGR undertakes to the Stockholders that
it will be in good standing as a Nevada corporation.
5. Closing Date
The Closing Date of this transaction will be no later than 60 days from
the date of this acquisition agreement and is subject to the Conditions
to Closing, defined hereafter. Until such date shares will not be
exchanged.
The Conditions to Closing are defined as:
1. Satisfactory reconciliation of Acquired Company and Fish L&P bank
statements with Schedule A. The Acquired Company represents that it will
provide such documentation no later than 4 weeks prior to the Closing
Date.
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6. Prohibited Acts
From the date this Agreement is executed to the Closing Date, the
Stockholders and principals of Acquired Company will not permit the
Acquired Company 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 MSGR.
7. Delivery of Records
The Stockholders and Acquired Company agree that on or before the Closing
Date they will cause to be delivered to MSGR such corporate records or
other documents as MSGR may reasonably request in order to effectuate the
transaction contemplated by this Agreement.
8. Dilution of Shares
The Stockholders consent and acknowledge that MSGR may authorize and/or
issue additional common shares, preferred shares, or warrants to purchase
common shares of MSGR prior to, at or subsequent to the Closing Date. The
Stockholders acknowledge that Exchange Shares held by the Stockholders
may experience a dilution in their percentage of ownership in MSGR as a
result of issuance by MSGR of additional shares.
9. 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
Exchange Shares issued in this transaction will be issued solely in
exchange for the Acquired Company 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 herein.
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 11, unless
otherwise required by a final and binding judicial or governmental
determination of competent jurisdiction. Neither MSGR 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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10. Good and Marketable Title
After acquiring the Acquired Company, MSGR 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.
11. Acquisition Intent of Shareholders
Stockholders are acquiring the MSGR 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 MSGR 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 MSGR's securities; (ii) is aware of the
limits on resale of the Exchange Shares imposed because of the nature of
the transactions contemplated herein, including, but not limited to,
restrictions specified by Rule 144 promulgated by Regulation S
promulgated by the Securities and Exchange Commission; and (iii) is
receiving the Exchange Shares without registration pursuant to the
Securities Act, in reliance on the exemption from registration specified
in Regulation S promulgated by the Securities and Exchange Commission for
investment, and without any intent to sell, resell, or otherwise
distribute the Exchange Shares in any manner that is in violation of the
Securities Act. The certificates representing the Exchange 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:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION,
(2) BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
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SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE SURVIVING CORPORATION'S RIGHTS PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO THE SURVIVING CORPORATION AND IN THE CASE OF
THE FOREGOING CLAUSE (D), A CERTIFICATE OF TRANSFER (A FORM OF WHICH MAY
BE OBTAINED FROM THE SURVIVING CORPORATION) COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE SURVIVING CORPORATION. HEDGING TRANSACTIONS WITH
REGARD TO THIS SECURITY MAY NOT BE CONDUCTED BY THE HOLDER HEREOF UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Stockholder agrees not to attempt any transfer of any of the MSGR
shares without first complying with the substance of that legend and
agrees that the satisfaction of MSGR may, if MSGR so requests, depend in
part upon an opinion of counsel acceptable in form and substance to MSGR,
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 MSGR shares issued to such
Stockholders.
All Exhange Shares will be subject to the Lockup provision, defined
hereinafter as 50 percent of Exchange Shares available for registration
one year from the date of this acquisition agreement and 50 percent of
Exchange Shares available for registration two years from the date of
this acquisition agreement.
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12. 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 Group, Inc.
40 Exchange Place, Suite 1607
New York, NY 10005
Attention of Courtney Smith, President
Stockholders: c/o
Agency Fish, LTD.
3 The Leathermarket
Weston Street
London SE1 3ER
United Kingdom
If to Acquired Company:
Agency Fish, LTD.
3 The Leathermarket
Weston Street
London SE1 3ER
United Kingdom
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15. Successors
This Agreement shall be binding upon and inure to the benefit of the
heirs, personal representatives, successors, and assigns of the parties.
16. Indemnification
The Stockholders shall save MSGR and MSGR's agents, including its
attorneys, auditors, officers and directors harmless from and against and
shall indemnify MSGR 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 the
Stockholders shall pay all amounts to be paid or discharged in case of an
action or any such damages or injuries. If MSGR is sued in any court for
damages by reason of any of the acts of Acquired Company or its
Stockholders, Stockholders or such other party shall defend the resulting
action (or cause same to be defended) at Stockholder's expense and shall
pay and discharge any judgment that may be rendered in any such action;
if the Stockholders fail or neglect to so defend in such action, MSGR may
defend such action and any expenses, including reasonable attorneys'
fees, which MSGR may pay or incur in defending such action and the amount
of any judgment which MSGR may be required to pay shall be promptly
reimbursed by the Stockholders upon demand by MSGR.
17. Governing Law
This agreement shall be construed and interpreted in accordance with the
laws of England and Wales 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 England and Wales and
agree and consent that services of process may be made upon it in any
legal proceedings relating hereto by any means allowed under English 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 Group, Inc.
by: /S/Courtney Smith
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Courtney Smith
Date: 17 Jan 03
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On Behalf of Agency Fish
By: /S/ Julian Jordan
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Julian Jordan
Date: 17/01/03
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By: /S/ Stephen Peaple
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Stephen Peaple
Date: 17/01/03
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Appendix A
Shares Outstanding of Company: 100
Shares Held in Treasury: 0
Stockholders of Record:
Name: Julian Jordan Shares Owned: 50
Name: Stephen Peaple Shares Owned: 50