EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of April 20, 2007, by and among MULTI SOLUTIONS, INC., a New Jersey
corporation ("Parent"), MULTI SUB, INC., a New Jersey corporation and a wholly
owned subsidiary of Parent ("Acquisition Sub"), USA REAL NEW TECHNOLOGY, INC., a
New Jersey corporation ("Company"), as the direct parent of SHAANXI REAL NEW
TECHNOLOGY CO. LTD., a limited liability corporation incorporated under the laws
of The People's Republic of China ("Shaanxi") and ROBERT L. FROME ("Frome"), an
individual, BRIDGE VENTURES, INC., a Florida corporation ("Bridge Ventures") and
MICHAEL POTTER, an individual ("Potter")(Frome, Bridge Ventures and Potter are
hereinafter collectively referred to as the "Controlling Shareholders")
WHEREAS, the Controlling Shareholders are the holders of Parent's 6%
Convertible Debentures in the aggregate principal amount of $105,000 (the
"Debentures"), which Debentures convert into an aggregate of 73,839,393 shares
of Parent's common stock, par value $.001 ("Parent Common Stock"); and
WHEREAS, as of the date hereof the Controlling Shareholders have
converted $26,880 of such aggregate principal balance of the Debentures into
18,903,031 shares of Parent Common Stock (the "Converted Shares") or 47.3% of
the issued and outstanding shares of Parent on a fully diluted basis (excluding
the Convertible Debentures) and 54,936,362 shares of Parent Common Stock remain
issuable upon conversion of the remaining principal amount of Debentures (the
"Unconverted Shares"); and
WHEREAS, the respective Boards of Directors of Parent, Acquisition Sub
and Company have determined that a merger of Acquisition Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement, would be fair and in the best interests of their respective
shareholders, and such Boards of Directors have approved such Merger, pursuant
to which (i) the Controlling Shareholders shall sell to the Company's
shareholders, on a pro rata basis, the Converted Shares, (ii) the Controlling
Shareholders shall assign to the Company's shareholders the remaining amounts
due under the Debentures (the "Debenture Assignments") and (iii) Parent shall,
at such time as a Certificate of Amendment (the "Certificate of Amendment") is
filed pursuant to Section 1.03 of this Agreement, issue to the shareholders of
the Company, an aggregate of 9,296,619 additional shares of Parent Common Stock
(or such other number of additional shares requested to be issued by the Company
prior to the Effective Date (the "Additional Shares"), such Additional Shares
being issued on a post Reverse Stock Split basis as contemplated by Section 1.03
of this Agreement and issue the Unconverted Shares upon conversion of the
Debentures on a post Reverse Stock Split basis (the Converted Shares, the
Debenture Assignments and the Additional Shares are hereinafter collectively
referred to as the "Merger Consideration") in exchange for (i) all of the issued
and outstanding shares of common stock of the Company (the "Company Stock") and
$200,000 (the "Cash Consideration"); and
WHEREAS, as a result of the foregoing, immediately after the Merger,
the shareholders of the Company shall own 47.3% of the issued and outstanding
total shares of Parent's Common Stock
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on a fully diluted basis (exclusive of the Debentures), and the stockholders of
the Parent (other than the Controlling Shareholders) shall own 52.7% of the
Parent Common Stock (exclusive of the Debentures); and
WHEREAS, at such time as the Certificate of Amendment is filed and the
Additional Shares and Unconverted Shares (both on a post Reverse Stock Split
basis) are issued, the Controlling Shareholders shall be issued an amount of
shares of Parent Common Stock equal to two percent (2%) of the issued and
outstanding shares of Parent Common Stock on a fully diluted, post Reverse Stock
Split basis (the "2% Shares"); and
WHEREAS, immediately after the issuance of the Unconverted Shares, the
issuance of the Additional Shares and the issuance of the 2% Shares, (i) the
shareholders of the Company shall own approximately 95% of the issued and
outstanding shares of Parent Common Stock on a fully diluted basis, (ii) the
shareholders of the Parent (other than the Controlling Shareholders) shall own
approximately 3% (but not less than 0.4%) of the issued and outstanding shares
of Parent Common Stock on a fully diluted basis and (iii) the Controlling
Shareholders shall own 2% of the issued and outstanding shares of Parent Common
Stock on a fully diluted basis; and
WHEREAS, the parties hereto intend and accordingly designate the Merger
so that the Merger shall qualify as a reorganization for federal income tax
purposes under the provisions of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the New Jersey Business
Corporation Act (the "NJBCA"), Acquisition Sub shall merge with and into Company
at the Effective Time of the Merger (as defined in Section 1.03). Following the
Effective Time, the separate existence of Company shall cease, and Company shall
continue as the surviving corporation ("Surviving Corporation"), and shall
assume all the rights and obligations of Acquisition Sub in accordance with the
NJBCA. As a result of the Merger, Company shall be a wholly owned subsidiary of
the Parent, with Shaanxi as an indi
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SECTION 1.02 The Closing.
(a) The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place in the offices of McLaughlin & Stern, LLP on the
15th day of May 2007, commencing at 10:00am Eastern Daylight Saving Time (the
"Closing Date"), unless another place or time is mutually agreed upon in writing
by the parties; provided, however, that the Closing Date shall be no later than
May 31, 2007.
(b) At the Closing or prior thereto, Parent and Company shall exchange
the various certificates, instruments and such documents referred to in Article
VII of this Agreement.
SECTION 1.03 Effective Time.
(a) Subject to the provisions of this Agreement, as soon as practicable
on or after the Closing Date, Acquisition Sub and Company shall file the
Articles of Merger or other appropriate documents (in any such case, the
"Articles of Merger") executed in accordance with the relevant provisions of the
NJBCA and shall make all other filings or recordings required under the NJBCA in
order to effectuate the Merger and in order to accomplish the proper execution
of Acquisition Sub's and Parent's obligations under this Agreement.
(b) The Merger shall become effective at such time as the Articles of
Merger are duly filed with the New Jersey Secretary of State, or at such other
time as the Parent and the Company shall agree as should be specified in the
Articles of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
(c) Upon the Effective Time, (i) the Controlling Shareholders shall
deliver to the Company's shareholders the certificates evidencing the Converted
Shares, with stock powers duly executed in blank, which shall be subject to the
restrictions thereon as set forth in Section 1.08, and the Debenture Assignments
and original Debentures, (ii) the Board of Directors of the Parent and
shareholders owning a majority of the issued and outstanding shares of Parent
Stock shall deliver to the Company's shareholders written consents (the
"Consents") authorizing (i) the filing of a Certificate of Amendment so as to
increase the Parent's authorized shares of Common Stock to not less than
200,000,000 shares of Common Stock and to authorize the issuance of 5,000,000
shares of "blank check" preferred stock, (ii) the approval of a reverse stock
split of Parent's capital stock (the "Reverse Stock Split") on a one (1) for
sixty four (64) or such other terms determined by the Company provided that the
shareholders of Parent (excluding the Controlling Shareholders) shall own no
less than 0.4% of the issued and outstanding shares of Parent Common Stock on a
fully diluted basis, (iii) the issuance of the Additional Shares, the
Unconverted Shares and the 2% Shares upon effectiveness of the Certificate of
Amendment, (iv) authorization and approval of any such actions as the directors
of Parent may determine are necessary, required or appropriate, including (if
necessary) the approval of this Agreement and the transactions contemplated
herein, and (v) the appointment of new directors as provided in Section 1.06 and
the approval of change in the majority of Parent's Board of Directors.
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(d) Promptly following the Effective Time, Parent shall promptly file
with the Securities and Exchange Commission ("SEC"), pursuant to Regulation 14C
under the Securities and Exchange Act of 1934 (the "Exchange Act"), a
preliminary information statement ("Information Statement") with respect to the
actions taken pursuant to the Consents. Notwithstanding the foregoing, the
parties hereto agree and acknowledge that the issuance of the Additional Shares
and the Unconverted Shares, as well as the Reverse Stock Split shall not be
effective until the Information Statement is circulated and the Certificate of
Amendment is filed.
(e) The Surviving Corporation may, at any time after the Effective
Time, take any action (including executing and delivering any document) in the
name and on behalf of either the Company or the Acquisition Sub in order to
carry out and effectuate the transactions contemplated by this Agreement. From
the Effective Time, the Surviving Corporation shall possess all of the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of Company and Acquisition Sub, all as provided under
the NJBCA.
SECTION 1.04 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the NJBCA.
SECTION 1.05 Articles of Incorporation and Bylaws.
(a) The Articles of Incorporation of Company as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The bylaws of the Company as in effect immediately prior
to the Effective Time shall be the bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06 Directors. At the Closing Date, Jerome Goubeaux
("Goubeaux") and Ken Roberts ("Roberts"), the sole incumbent Directors of Parent
shall stay in office and the Company shall nominate two additional members to
the Board of Directors. Following the Closing, Parent shall distribute to the
Parent's shareholders information with respect to the additional new directors
to be elected to the Board in accordance with the Exchange Act and, following
the expiration of any applicable notice period, and upon conversion of the
Unconverted Shares, the Parent's incumbent directors shall resign, and be
replaced by the Directors chosen by the holders of a majority of the then
outstanding shares of Common Stock of the Parent.
SECTION 1.07 Officers. At the Closing Date, the resignation letters of
Gobeaux, the President of the Parent and Roberts, the Secretary of the Parent
shall become effective, and the new officers of the Company, as determined by
the Company, shall be appointed as officers of the Parent and the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be. With
each resignation, the resigning officers shall confirm in writing that he does
not owe and is not owed anything by Parent.
SECTION 1.08 Shares Not Registered. The Conversion Shares, the
Non-Converted Shares and the Additional Shares, issued or to
be issued by either the Controlling Shareholders and/or the
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Parent to the Company's shareholders, when issued, will not be
registered under the Securities Act of 1933, as amended ("Act"),
or the securities laws of any state or states, but shall be issued in
reliance upon the exemptions from registration provided by Section 4(2) of the
Act and/or Rule 505 or 506 of Regulation D under the Act and under analogous
state securities laws, or upon any other such exemption, on the grounds that the
issuance does not involve any public offering. The Conversion Shares, the
Non-Converted Shares and the Additional Shares issued or to be issued by the
Controlling Shareholders and/or the Parent will be "restricted securities" as
that term is defined in Rule 144(a) of the General Rules and Regulations under
the Act and must be held indefinitely, unless they are subsequently registered
under the Act or an exemption from the Act's registration requirements is
available for their resale. All certificates evidencing the Conversion Shares,
the Non-Converted Shares and the Additional Shares issued or to be issued by the
Controlling Shareholders or Parent shall, unless and until removed in accordance
with law, bear a restrictive legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS
DEFINED IN RULE 144 UNDER THE ACT. THESE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT."
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITALIZATION OF
THE CONSTITUENT ENTITIES
SECTION 2.01 Effect on Capitalization. As of the Effective Time, by
such actions to be taken by the parties' hereto, or otherwise by virtue of the
Merger and without any action on the part of the holders of the Company's Common
Stock or the holder of shares of capital stock of Acquisition Sub or Parent:
(a) Issuance of Conversion Shares; Assignment of Debentures.
Subject to this Section 2.01, and subject to the Parent's capitalization prior
to the execution of the Merger as set forth in Section 4.03, as of the Effective
Time, the Controlling Shareholders shall (i) issue the shareholders of the
Company the Converted Shares and (ii) have assigned the Debentures to the
shareholders of the Company, provided, however, that the conversion of the
Debentures into the Unconverted Shares shall be contingent upon the filing of
the Certificate of Amendment as set forth in Section 1.08. Upon issuance of the
Conversion Shares, the shareholders of the Company will own 47.3% of the issued
and outstanding shares of Parent on a fully diluted basis (excluding the
Convertible Debentures) and the remaining shareholders of the Parent (excluding
the Majority Shareholders) shall own 52.7% of the issued and outstanding shares
of Parent on a fully diluted basis (excluding the Convertible Debentures).
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(b) Additional Shares; Unconverted Shares; 2% Shares. Upon
filing the Certificate of Amendment and upon effectiveness of the Reverse Stock
Split the shareholders of the Company shall be issued the Additional Shares and
shall convert the Debentures into the Unconverted Shares. Furthermore, the
Controlling Shareholders shall be issued the 2% Shares. Immediately following
the foregoing issuances, (i) the shareholders of the Company shall own
approximately 95% of the issued and outstanding shares of Parent Common Stock on
a fully diluted basis, (ii) the shareholders of Parent (other than the
Controlling Shareholders) shall own approximately 3% (not less than 0.4%) of the
issued and outstanding shares of Parent Common Stock on a fully diluted basis
and (iii) the Controlling Shareholders shall own 2% of the issued and
outstanding shares of Parent Common Stock
(c) Cancellation of Company's Common Stock. As of the
Effective Time, the Company's Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and
holders of certificates representing the Company's Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the consummation of the Merger in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Company's Common Stock.
(e) Cancellation of Treasury Stock. As of the Effective Time,
each share of Parent's Common Stock held by the Parent as treasury stock shall
be cancelled, and no payment shall be made with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Company represents and warrants to Parent and Acquisition Sub that the
statements contained in this Article III are true, correct, and complete as of
the date of this Agreement and will be true and correct as of the Closing Date:
SECTION 3.01 Organization. Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the New
Jersey and has all requisite corporate power and authority to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority could not be
reasonably expected to (i) prevent or materially delay the consummation of the
Merger, or (ii) have a material adverse effect on Company. Company is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary.
SECTION 3.02 Subsidiaries. Company directly owns one hundred percent
(100%) of its sole subsidiary, Shaanxi. Except from
Company's ownership as provided above, Company does not
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own, directly or indirectly, any capital stock or other ownership interest in
any corporation, partnership, joint venture or other entity.
SECTION 3.03 Capitalization. As of the date of this Agreement, the
Company's authorized capital is 300,000,000 shares of Common Stock, no par
value, 8,750,000 of which shares are issued and outstanding. The Company's
shares are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of Company having the right to vote (or that are convertible into,
or exchanged for, securities having the right to vote) on any matters on which
members of Company may vote. There are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Company is a party or by which either is bound obligating Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares in Company or obligating Company to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual obligations of
Company to repurchase, redeem or otherwise acquire any shares of the Company.
SECTION 3.04 Authority.
(a) Company has the requisite power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company and no other proceedings on the part of Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated, subject to the filing of the Articles of Merger. This Agreement
has been duly executed and delivered by Company and, assuming this Agreement
constitutes a valid and binding obligation of Parent and Acquisition Sub,
constitutes a valid and binding obligation of Company enforceable against
Company in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally.
(b) The Company's Board of Directors have duly adopted
resolutions (i) approving this Agreement and the Merger, and (ii) determining
that the terms of the Merger are in the best interests of Company.
(c) The holders of the Company's capital stock have executed a
written consent adopting resolutions approving this Agreement and the Merger.
SECTION 3.05 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of the applicable and relevant laws of the laws of
the NJBCA, neither the execution, delivery or performance of this Agreement by
Company nor the consummation by Company of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the Articles
of Incorporation of Company, (ii) require any filing with, or permit,
authorization, consent or approval of, any federal, state or local government or
any court, tribunal, administrative agency or commission or other governmental
or other regulatory authority or agency, domestic, foreign or supranational (a
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"Governmental Entity") (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings could not
reasonably be expected to have a material adverse effect on Company or prevent
or materially delay the consummation of the Merger), (iii) 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 right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Company is a party or by which Company
or its properties or assets may be bound; or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Company or any of
its properties or assets, except in the case of clauses (iii) or (iv) for
violations, breaches or defaults that could not reasonably be expected to have a
material adverse effect on Company or prevent or materially delay the
consummation of the Merger.
SECTION 3.06 Financial Statements. The audited financial statements of
Company as of and for the fiscal year ended December 31, 2005 (the "Balance
Sheet Date") have been prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") with respect thereto throughout the
periods involved as explained in the notes to such financial statements. The
Company's financial statements present fairly, in all material respects, as are
their respective dates the financial position of the Company. The Company did
not have, as of the date of any such financial statements, except as and to the
extent reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected therein in accordance with
GAAP, and all assets reflected therein presents fairly the assets of Company in
accordance with GAAP.
SECTION 3.07 Absence of Certain Changes or Events. Since the Balance
Sheet Date, except as disclosed in the Company's audited financial statements as
of and for the fiscal year ended December 31, 2006 to be provided to Parent
pursuant to Section 5.05 of this Agreement, Company has conducted its business
only in the ordinary course consistent with past practice, and there has not
been any material adverse change (as defined in Section 8.03) with respect to
Company.
SECTION 3.08 No Undisclosed Liabilities. As of the Balance Sheet Date,
except as disclosed in the Company's audited financial statements as of and for
the fiscal year ended December 31, 2006 to be provided to Parent pursuant to
Section 5.05 of this Agreement, to the best knowledge of Company, Company has no
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by GAAP to be reflected on a balance sheet of
Company (including the notes thereto). Since the Balance Sheet Date, except for
liabilities or obligations incurred in the ordinary course of business
consistent with past practice, Company has not incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, that could be
reasonably expected to have a material adverse effect on Company, or would be
required by GAAP to be reflected on a consolidated balance sheet of Company
(including the notes thereto).
SECTION 3.09 Litigation. There is no suit, claim, action, proceeding
pending or threatened against Company, nor is there any investigation against
Company threatened or pending before any Governmental Entity. Company is not
subject to any outstanding order, judgment, writ, injunction or decree.
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SECTION 3.10 Permits; Compliance with Law. Company holds all permits,
licenses, variances, exemptions, orders and approvals of all governmental
entities necessary for the lawful conduct of its business (the "Company
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals that could not reasonably be expected to have a
material adverse effect on Company. Company is in compliance with the terms of
the Company Permits, except where the failure so to comply could not reasonably
be expected to have a material adverse effect on the Company. As of the date of
this Agreement, no investigation, inquiry or review by any Governmental Entity
with respect to Company is pending or, to the best knowledge of Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
any such investigation, inquiry or review.
SECTION 3.11 Tax Matters. Company has filed or shall file as of the
Closing Date all of its tax returns required to be filed since inception. All
such returns and reports are accurate and correct in all material respects.
Company has no liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable as of the Closing Date, and no deficiency
assessment or proposed adjustment of any such tax return is pending, proposed or
contemplated. To the knowledge of Company, none of such income tax returns has
been examined or is currently being examined by the Internal Revenue Service and
no deficiency assessment or proposed adjustment of any such return is pending,
proposed or contemplated. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
Company.
SECTION 3.12 Intellectual Property.
(a) Except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy) could not
reasonably be expected to have a material adverse effect on Company:
(1) Company 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 or
as proposed to be conducted;
(2) no claims are pending or, to the best knowledge
of Company, threatened that Company 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 Company and, to the best knowledge of Company, there are no
valid grounds for any such claims;
(3) to the best knowledge of Company, all patents,
registered trademarks, service marks and copyrights held by Company are valid
and subsisting.
(b) For purposes of this Agreement, "Intellectual Property"
means patents, 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;
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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; licenses,
immunities, covenants not to sue and the like relating to the foregoing; and any
claims or causes of action arising out of or related to any infringement or
misappropriation of any of the foregoing.
SECTION 3.13 Risk Knowledge and Analysis. Each of the Company's
shareholders, alone, or together with his or her adviser(s), has such knowledge
and experience in financial, tax and business matters as to enable each of them
to utilize the information made available by Parent, in connection with the and
issuance of the Merger Consideration shares or any other consideration that may
be involved, to evaluate the merits and risks of acquiring such shares and to
make an informed investment decision with respect thereto. Each of the Company's
shareholders confirms that, in making his or her decision to receive the Merger
Consideration, such he or she has relied upon independent investigations made by
him, or his representatives, including his own professional tax and other
advisers, and that he and such representatives have been given the opportunity
to examine all documents and to ask questions of, and to receive answers from
Parent or any person(s) acting on its behalf concerning the terms and conditions
of this Agreement, and to obtain any additional information or documents, to the
extent Parent possesses such information or can acquire it without unreasonable
effort or expense, necessary to verify the accuracy of the information provided
by Parent.
SECTION 3.14 Employment Controversies. There are no controversies
pending or, to the knowledge of Company, threatened, between Company and any of
its respective employees. The Company is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company.
SECTION 3.15 Title to Property. Company has good and defensible title
to all of its properties and assets, free and clear of all liens, charges and
encumbrances, except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby or
which could not reasonably be expected to have a material adverse effect.
SECTION 3.16 Environmental Matters. Company is not aware of nor has
ever received notice of any past or present violations of any environmental laws
or any event, condition, circumstance, activity, practice, incident, action or
plan which is reasonably likely to interfere with or prevent continued
compliance with or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding
against Company based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, handling, emission,
discharge or release into the environment of any pollutant, contaminant, or
hazardous or toxic material or waste.
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SECTION 3.17 Interested Party Transactions. Since the Balance Sheet
Date, no event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 3.18 Absence of Certain Payments. Neither Company, nor any of
its respective affiliates, officers, directors, employees or agent or other
people acting on behalf of Company have (i) engaged in any activity prohibited
by the United States Foreign Corrupt Practices Act of 1977, or any other similar
law, regulation, decree, directive or order of any other country and (ii)
without limiting the generality of the preceding clause (i), used any corporate
or other funds for unlawful contributions, payments, gifts or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others. Neither Company, nor any of its respective affiliates,
directors, officers, employees or agents of other persons acting on behalf of
any of them, has accepted or received any unlawful contributions, payments,
gifts or expenditures.
SECTION 3.19 Full Disclosure. No statement contained in any certificate
or schedule furnished or to be furnished by Company to Parent and Acquisition
Sub in, or pursuant to the provisions of, this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
SECTION 3.20 Real Property. The Company does not own any real property.
With respect to any lease and sublease to which the Company is a party: (a) the
lease or sublease is legal, valid, binding, enforceable, and in full force and
effect in all material respects in accordance with its terms; and (b) no party
to the lease or sublease is in material breach or material default, and, to
Company's knowledge, no event has occurred which, with notice or lapse of time,
would constitute a material breach or material default or permit termination,
modification, or acceleration.
SECTION 3.21 Brokers. Except for the arrangement described below on
behalf of Parent in Section 4.25 below, Company has not engaged any broker,
investment banker, financial advisor or other person, pursuant to which such
party is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB AND CONTROLLING
SHAREHOLDERS
Each of Parent, Acquisition Sub and Controlling Shareholders, jointly
and severally, represents and warrants to Company that the statements contained
in this Article IV are true, correct, and complete as of the date of this
Agreement and will be true and correct as of the Closing Date:
SECTION 4.01 Organization. Each of Parent and Acquisition Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey, and has all requisite corporate power and authority
to carry on its business as now being conducted or to
have such power and authority could not be reasonably
expected to (i) prevent or materially delay the
11
consummation of the Merger, or (ii) have a material adverse effect on the
Parent or the Acquisition Sub. Each of the Parent and the Acquisition Sub is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such good
standing necessary.
SECTION 4.02 Subsidiaries. In addition to Acquisition Sub, Parent's
subsidiaries are Multi Soft, Inc. ("Multi Soft"), Netcast, Inc. ("Netcast") and
Freetrek, Inc. ("Freetrek"), of which Parent owns respectively 51.3%, 45.8% and
75% of the issued and outstanding stock, on a fully diluted basis of each
entity. All the outstanding shares of capital stock of Acquisition Sub, Netcast
and Freetrek are owned by Parent, free and clear of all liens, and are duly
authorized, validly issued, fully paid and nonassessable. As of January 31,
2007, Parent has transferred all of its shares of Netcast and Freetrek to the
Controlling Shareholders or their designee. As of the Closing Date, the
Controlling Shareholders shall have converted certain convertible debentures
issued by Multi Soft (the "Multi Soft Debentures"), into 47,983,170 shares of
Multi Soft common so that Parent owns 11.4% of the issued and outstanding shares
of Multi Soft on a fully diluted basis. Except for the capital stock of the
Acquisition Sub and 7,032,962 shares of common stock of Multi Soft, neither
Parent nor Acquisition Sub owns, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, joint venture or other
entity
SECTION 4.03 Capitalization. The authorized capitalization of Parent
consists of 40,000,000 shares of Common Stock, $.001 par value, all of which are
issued and outstanding. 18,903,031 Unconverted Shares are owned by the
Controlling Shareholders and the remaining shareholders of Parent own 21,096,969
shares. All issued and outstanding capital stock of Parent are legally issued,
fully paid, and non-assessable and not issued in violation of the preemptive or
other right of any person. There are no dividends or other amounts due or
payable with respect to any of the shares of capital stock of Parent, except as
disclosed in Parent's SEC Documents or in this Agreement. As of the date of this
Agreement and as of the Closing Date, with the exception of the Convertible
Debentures, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require Parent or Acquisition Sub to
purchase, issue, sell, or otherwise cause to become outstanding any of their
capital stock, outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to Parent or Acquisition
Sub, or voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of Parent or Acquisition Sub. There
are no preemptive rights applicable with respect to Parent's Common Stock.
SECTION 4.04 Authorization. Each of Parent and Acquisition Sub has all
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The board of directors of each
of Parent and Acquisition Sub has approved the execution and delivery of this
Agreement and the transactions contemplated by this Agreement including the
Merger in accordance with the applicable New Jersey law and with the NJBCA and
Acquisition Sub's articles of incorporation and bylaws. Parent, as sole
stockholder of Acquisition Sub, has approved the Merger, and no other corporate
proceedings on the part of Parent or Acquisition Sub are necessary to authorize
the execution, delivery, and performance, and the resolutions approving such
Merger are irrevocable. This Agreement has been duly executed and delivered
12
by each of Parent and Acquisition Sub and constitutes their valid and binding
obligations, enforceable against each of them in accordance with its terms.
SECTION 4.05 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under the
NJBCA, and except for the filings required to consummate the Merger and filing
of the Information Statement, and any required Form 8-K, neither the execution,
delivery or performance of this Agreement by Parent and Acquisition Sub nor the
consummation by the Parent and Acquisition Sub of the transactions contemplated
hereby will: (i) conflict with or result in any breach of any provision of the
Articles of Incorporation or bylaws of Parent or Acquisition Sub, (ii) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings could not
reasonably be expected to have a material adverse effect on Parent or
Acquisition Sub or prevent or materially delay the consummation of the Merger),
(iii) 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 right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Parent or
Acquisition Sub is a party or by which the Parent or Acquisition Sub or their
respective properties or assets may be bound; or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or
Acquisition Sub or any of their respective properties or assets, except in the
case of clauses (iii) or (iv) for violations, breaches or defaults that could
not reasonably be expected to have a material adverse effect on Parent or
Acquisition Sub or prevent or materially delay the consummation of the Merger.
SECTION 4.06 Financial Statements / SEC Filings.
(a) Included in the last Form 10-KSB filed by Parent with the
SEC are the audited balance sheet of Parent as of January 31, 2006, and the
related statements of operations, stockholders' equity (deficit), and cash flows
for the fiscal year ended January 31, 2006, including the notes thereto, and the
accompanying report of the company's independent certified public accountant.
(b) The financial statements of Parent for the fiscal year
ended January 31, 2007 have been prepared in accordance with GAAP and in
accordance with the published rules and regulations of the SEC with respect
thereto throughout the periods involved as explained in the notes to such
financial statements. The Parent financial statements present fairly, in all
material respects, as of their respective dates, the financial position of
Parent. Parent did not have, as of the date of any such financial statements,
except as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be reflected
therein in accordance with GAAP, and all assets reflected therein present fairly
the assets of Parent in accordance with GAAP.
(c) With the exception of any filings required to be made
pursuant to Section 16 of the Exchange Act, Parent has made all filings with the
SEC that it has been required to make under the Securities Act
of 1933 and the Securities Exchange Act of 1934. All documents required to
13
be filed as exhibits to the SEC Documents have been so filed, and all material
contracts so filed as exhibits are in full force and effect, except those which
have expired in accordance with their terms. Each of Parent's SEC Documents has
complied in all material respects with the Exchange Act in effect as of their
respective dates. None of Parent's SEC Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.07 Absence of Certain Changes or Events. Since January 31,
2007 Parent has conducted its business only in the ordinary course consistent
with past practice, and there has not been any material adverse change (as
defined in Section 8.03) with respect to Parent.
SECTION 4.08 No Undisclosed Liabilities. As of January 31, 2007, to the
best knowledge of the Parent, neither the Parent nor the Acquisition Sub had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by GAAP to be reflected on a balance sheet of
Parent or Acquisition Sub (including the notes thereto). Since the Most Recent
Filing Date, except for liabilities or obligations incurred in the ordinary
course of business consistent with past practice, neither the Parent nor the
Acquisition Sub has incurred any liabilities of any nature, whether or not
accrued, contingent or otherwise, that could be reasonably expected to have a
material adverse effect on the Parent or the Acquisition Sub, or would be
required by GAAP to be reflected on a consolidated balance sheet of the Parent
or the Acquisition Sub (including the notes thereto).
SECTION 4.09 Benefit Plans. Neither Parent nor Acquisition Sub has
operated any Pension Plan, Welfare Plan, or other plan, arrangement or policy
(written or oral) relating to stock options, stock purchases, compensation,
deferred compensation, bonuses, severance, fringe benefits or other employee
benefits.
SECTION 4.10 Other Compensation Arrangements. Neither the Parent nor
the Acquisition Sub is a party to any oral or written (i) consulting agreement
that is terminable on more than 30 calendar days notice, or union or collective
bargaining agreement, (ii) agreement with any executive officer or other key
employee of Parent or Acquisition Sub, or (iii) agreement or plan, including any
stock option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan.
SECTION 4.11 Litigation. To the knowledge of Parent, there is no suit,
claim, action, proceeding pending or threatened against Parent, Acquisition Sub,
or any of Parent's other subsidiaries nor is there any investigation against
Parent, Acquisition Sub or any of Parent's other subsidiaries, threatened or
pending before any Governmental Entity. Neither the Parent nor the Acquisition
Sub is subject to any outstanding order, judgment, writ, injunction or decree.
SECTION 4.12 Permits; Compliance with Law. Parent and Acquisition Sub
do not hold any permits, licenses, variances, exemptions, orders and approvals
of any Governmental Entities except for their incorporation and active status in
Delaware (the "Parent Permits"). To its knowledge, as of the date of this
Agreement, no investigation, inquiry or review by any Governmental Entity with
respect to the Parent or Acquisition Sub is pending or threatened, nor has
14
any Governmental Entity indicated an intention to conduct any such
investigation, inquiry or review. To its knowledge, Parent is and at all times
has been in full compliance with the Sarbanes-Oxley Act of 2002 to the extent
required.
SECTION 4.13 Tax Matters. Parent has filed or shall file as of the
Closing Date all of its tax returns required to be filed since inception. All
such returns and reports are accurate and correct in all material respects.
Parent has no liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable as of the Closing Date, and no deficiency
assessment or proposed adjustment of any such tax return is pending, proposed or
contemplated. To the knowledge of Parent, none of such income tax returns has
been examined or is currently being examined by the Internal Revenue Service and
no deficiency assessment or proposed adjustment of any such return is pending,
proposed or contemplated. To its knowledge, there are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any tax
return of Parent.
SECTION 4.14 Intellectual Property.
(a) Parent does not own any Intellectual Property;
(b) no claims are pending or, to the best knowledge of Parent,
threatened that Parent is infringing on or otherwise violating the rights of any
person with regard to any Intellectual Property and, to the best knowledge of
the Parent, there are no valid grounds for any such claims.
SECTION 4.15 Knowledge of Risk. Each of the Parent's shareholders and
members of Parent's Board of Directors, alone, or together with his or her
adviser(s), has such knowledge and experience in financial, tax and business
matters as to enable each of them to utilize the information made available by
Company, in connection with the and the issuance of the Merger Consideration
shares or with the receipt of Company's shares as part of the Transaction at
subject, to evaluate the merits and risks of acquiring such shares of Company
and to make an informed investment decision with respect thereto. Each of the
Company's shareholders confirms that, in making his or her decision to sell his
or her shares in Parent, such he or she has relied upon independent
investigations made by him, or his representatives, including his own
professional tax and other advisers, and that he and such representatives have
been given the opportunity to examine all documents and to ask questions of, and
to receive answers from Company or any person(s) acting on its behalf concerning
the terms and conditions of this Agreement, and to obtain any additional
information or documents, to the extent Company possesses such information or
can acquire it without unreasonable effort or expense, necessary to verify the
accuracy of the information provided by Company
SECTION 4.16 Labor Matters. Parent has no employees.
SECTION 4.17 Title to Property. Parent has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances, except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby or
which could not reasonably be expected to have a material adverse effect.
15
SECTION 4.18 Environmental Matters. Parent is not aware of nor to its
knowledge it has ever received notice of any past or present violations of any
environmental laws or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding against Parent based on or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
handling, emission, discharge or release into the environment of any pollutant,
contaminant, or hazardous or toxic material or waste.
SECTION 4.19 Interested Party Transactions. Since the Most Recent
Filing Date, no event has occurred that would be required to be reported by
Parent as a Certain Relationship or Related Transaction, pursuant to Item 404 of
Regulation S-B promulgated by the SEC.
SECTION 4.20 Absence of Certain Payments. To its knowledge, neither the
Parent nor any of its respective affiliates, officers, directors, employees or
agents or other people acting on behalf of any of them have (i) engaged in any
activity prohibited by the United States Foreign Corrupt Practices Act of 1977,
or any other similar law, regulation, decree, directive or order of any other
country and (ii) without limiting the generality of the preceding clause (i),
used any corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others. To its knowledge, neither the Parent nor any
of its respective affiliates, directors, officers, employees or agents of other
persons acting on behalf of any of them, has accepted or received any unlawful
contributions, payments, gifts or expenditures.
SECTION 4.21 Insurance. Parent does not maintain any insurance
policies.
SECTION 4.22 Full Disclosure. No statement contained in any certificate
or schedule furnished or to be furnished by the Parent and Acquisition Sub to
Company, or pursuant to the provisions of, this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
SECTION 4.23 Contracts. Parent and Acquisition Sub are not in default
in any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets, or condition thereof and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which Parent and Acquisition Sub have not taken adequate steps to
prevent such a default from occurring. To its knowledge after reasonable inquiry
Parent is not a party to any agreement (or group of related agreements) that:
(a) provides for payments greater than $5,000 per annum or that extends for more
than one year in excess of $25,000 per annum; (b) concerns a partnership or
joint venture; (c) guarantees any indebtedness; (d) concerns noncompetition; (e)
relates to monies advanced or loaned to any of its directors, officers or
employees; or (f) a default or termination would have a material adverse effect
on the business, financial condition, operations or results of operations of
Parent or Acquisition Sub. Also, there is no valid shareholders agreement in
place.
16
SECTION 4.24 Real Property. Neither Parent nor Acquisition Sub owns or
leases any real property.
SECTION 4.25 Brokers. Parent has engaged Waterville Research Inc. as a
broker. Parent and the Controlling Shareholders, jointly and severally,
acknowledge that it shall be their sole responsibility to pay Waterville any
fees and commissions for which it may be entitled to in connection with the
transactions contemplated by this Agreement. .
SECTION 4.26 Exchange Act Registration; Listing. The Parent Common
Stock is registered pursuant to Section 12(g) of the Exchange Act and is quoted
on the Pink Sheets. Parent has taken no action designed to, or which, to the
knowledge of the Company, may have the effect of, terminating the registration
of the Parent Common Stock under the Exchange Act, and has no knowledge of
whether any or all of the market makers intend to stop quoting the Parent Common
Stock on the Pink Sheets.
SECTION 4.27. Officers and Directors. Goubeaux and Roberts are the
sole officers and directors of the Parent and shall the sole officers and
directors on the Closing Date.
SECTION 4.28. Limitation of Liability of Controlling Shareholders. The
liability of each Controlling Shareholder pursuant to the indemnification
provisions in Section 6.02 or for breach of any warranty, covenant,
representation, or for any other reason, shall be limited to the amount of Cash
Consideration received by such Controlling Shareholder.
ARTICLE V
COVENANTS
SECTION 5.01 Payment of Certain Liabilities. As of the Effective Time,
Parent shall cause all liabilities and obligations of Parent and of Acquisition
Sub (including inter-company loans between Parent and any of its subsidiaries,
legal, accounting and financial advisor fees), other than the Convertible
Debentures, to be satisfied in full.
SECTION 5.02 Registration Rights. The Controlling Shareholders shall
have piggy-back registration rights with respect to the 2% Shares with respect
to any registration statement filed by Parent (i) that registers shares held by
Parent shareholders (other than on Form S-4 or Form S-8 promulgated under the
Act or any successor forms thereto), and (ii) in connection with any financing
transaction ("Financing") entered into by Parent following the Effective Time,
provided, however, in connection with the Financing, (a) the 2% Shares shall
subject to a lockup on re-sale for a period equal to six months from the
effectiveness of such registration statement or, if an underwriter or placement
agent is retained by Parent in connection with a Financing, such other time
period as required by the underwriter or placement agent, and (b) Parent shall
maintain the effectiveness of the registration statement for twelve (12) months
following the expiration of the lockup.
SECTION 5.03 Mutual Use of Best Efforts. The Parties agree as follows
with respect to the period from and after the execution of this Agreement.
17
(a) Each of the parties hereto will use its reasonable best
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement, including
the preparation of an 8-K regarding the Merger and the Information Statement to
be filed after the Effective Date.
(b) Each of the parties hereto will give any notices (and will
cause its subsidiary to give any notices) to third parties, and will use its
reasonable best efforts to obtain (and will cause its subsidiary to use its
reasonable best efforts to obtain) any third party consents, that the other
Parties reasonably may request in connection with this Agreement.
(c) Each of the parties hereto will give any notices to, make
any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters in this Agreement.
(d) Each party hereto will give prompt written notice to the
other of any material adverse development causing a breach of any of its own
representations and warranties in this Agreement. No disclosure by any Party
pursuant to this Section 5.03, however, shall be deemed to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
SECTION 5.04 Conduct of Business of Parent. Until the Effective Time,
or termination of this Agreement, Parent shall not, without the consent of the
shareholders of the Company, do any of the following: (i) enter into any
transaction outside the ordinary course of business; or (ii) enter into, assume
or become bound or obligated by any agreement, contract or commitment or extend
or modify the terms of any presently existing agreement which (a) involves the
payment of greater than $5,000 per annum or that extends for more than one year
and for such agreements in the aggregate such payments shall not exceed $10,000,
except for the renewal of Parent's directors' and officers' insurance policy,
(b) increases the compensation of any employee, (c) involves any payment or
obligation to any affiliate of Parent or (d) involves the sale, assignment or
license of any material assets of Parent or any of its intellectual property; or
(iii) establish any new, or modify any existing, employee benefit, compensation
or stock plan; or (iv) declare or pay any dividends or make any distribution of
assets to its shareholders (except for its subsidiaries) or pay any bonuses or
make any other extraordinary payments to its officers, directors or employees;
or (v) grant any share options or issue any new shares or any other securities;
or (vi) hire any new employees or consultants.
SECTION 5.05 Delivery of Financial Statements of Company as of December
31, 2006. On or prior to the Closing, Company shall have delivered the audited
financial statements of Company as of and for the fiscal year ended December 31,
2006. Such financial statements shall have been prepared in accordance with GAAP
with respect thereto throughout the periods involved as explained in the notes
to such financial statements. These financial statements shall present fairly,
in all material respects, as of the date thereof, the financial position of the
Company. The Company shall not have, as of the date of these financial
statements, except as and to the extent reflected or reserved against therein,
any liabilities or obligations (absolute or contingent) which should be
reflected therein in accordance with GAAP, and all assets reflected therein
presents fairly the assets of Company in accordance with GAAP.
18
SECTION 5.06. Cancellation of Convertible Securities. With the
exception of the Convertible Debentures and the Multi-Soft Debentures, all
outstanding convertible securities issued by the Parent shall be cancelled as of
the Closing Date.
SECTION 5.07. Limitation of Liability of Controlling Shareholders. The
liability of each Controlling Shareholder pursuant to the indemnification
provision in Section 6.02, or for breach of any warranty, covenant,
representation, or for any other reason, shall be limited to the amount of Cash
Consideration received by such Controlling Shareholder.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated by
this Agreement shall be paid as of the Closing Date by the party incurring such
fees or expenses, whether or not the Merger is consummated.
SECTION 6.02 Indemnification.
(a) As of the Effective Time, the Controlling Shareholders
agree that they shall indemnify and hold harmless the shareholders and
officers/directors of the Company for any and all liabilities created or
incurred between April 25, 2005 and the Effective Time. The foregoing
indemnification shall continue in full force and effect for a period of one (1)
year from the Effective Time, provided, however, (i) any claim(s) for
indemnification must, in the cumulative aggregate amount, equal or exceed
$25,000, (ii) that the aggregate liability of the Controlling Shareholders to
indemnify the Company shall not exceed the net Cash Consideration, such amount
being the Cash Consideration less liabilities, not to exceed $50,000, of Parent
to be paid as of the Effective Time, and (iii) that the liability of each
Controlling Shareholder pursuant to the indemnification provision herein, or for
breach of any warranty, covenant, representation, or for any other reason, shall
be limited to the amount of Cash Consideration received by such Controlling
Shareholder.
(b) This Section 6.02 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the shareholders of the
Company and their respective heirs, personal representatives, successors and
assigns.
(c) A party that may be entitled to be indemnified pursuant to
this Section 6.02 (the "Indemnified Party") shall promptly notify the party
liable for such indemnification (the "Indemnifying Party") in writing of any
pending or threatened claim or demand which the Indemnified Party has determined
has given or could give rise to a right of indemnification under this Agreement
(including a pending or threatened claim or demand asserted by a third party
against the Indemnified Party), describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or demand;
provided, however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations under this Section 6.02 except
and only to the extent that the Indemnifying Party is materially prejudiced by
such failure. Subject to any rights to defend in good faith third
party claims as hereinafter provided, the Indemnifying Party
19
shall satisfy its obligations under this Section 6.02 within thirty (30) days
after the receipt of written notice thereof from the Indemnified Party.
(d) The Indemnified Party shall notify the Indemnifying Party
of any claim or demand pursuant to Section 6.02, and if such claim or demand
relates to a pending or threatened claim or demand asserted by a third party
against the Indemnified Party, the Indemnified Party shall have the right to
control the defense of such claim. If the Indemnified Party elects to exercise
such right it shall advise the Indemnifying Party of such exercise in such
notice. If the Indemnifying Party acknowledges that such claim is a claim or
demand for which it must indemnify, defend and hold harmless the Indemnified
Party against or reimburse the Indemnified Party for under this Section 6.02,
the Indemnifying Party shall have the right to defend any claim or demand
asserted by a third party against the Indemnified Party for which the
Indemnified Party does not elect to control the defense. The party controlling
such defense shall have the right to employ counsel (reasonably acceptable to
the other party) to defend such claim or demand. The party not controlling such
defense shall have the right to participate in the defense of any claim or
demand for which it is not controlling the defense, at its own expense. Each
party shall make available to the other party or its agents all records and
other materials in its possession reasonably required by the other party for its
use in defending any third party claim or demand. Whether or not the
Indemnifying Party elects to defend any such claim or demand, the
Indemnified Party shall have no obligations to do so. The Indemnifying Party
shall not settle or compromise any such claim or demand, unless the Indemnified
Party is given a full, complete and unconditional release of any and all
liability by all relevant parties relating thereto.
ARTICLE VII
EXCHANGE OF DOCUMENTS; CONDITIONS PRECEDENT
SECTION 7.01 Prior to or at the Closing, and as a condition precedent
to the obligations of the Company, each of the following documents, which shall
be satisfactory in form and content to Company and its counsel, shall be
delivered to the Company and/or its counsel:
(a) A shareholder list from the transfer agent, and copies of all
written instructions to transfer agent to issue shares, if any;
(b) Resignation letters in forms satisfactory to the Company, effective
as of the Closing from Goubeaux and Roberts and employees (if any)
of the Parent;
(c) A letter from legal counsel for Parent certifying, among other
things, that (i) to his knowledge, after due inquiry, there are no
claims, actions, suits, proceedings, or investigations pending or
threatened against or affecting Parent, its subsidiaries or any of
its properties, at law or in equity, before any court or by or
before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, or before any arbitrator of
any kind, (ii) that to his knowledge, after due inquiry, there are
no judgments, decrees, injunctions, writs orders or
other mandates outstanding to which Parent is a party
or by which Parent is bound or
20
affected, or any default on Parent's or Acquisition Sub's part with
respect to any judgment, order, writ, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality or of any circumstances, (iii) that the
Merger and the transactions contemplated by this Agreement,
including the transfer of the shares of Netcast and Freetrek have
been duly authorized, (iv) the shares of stock of Netcast and
Freetrek have been duly transferred and (v) the tradability under
the Act of the Additional Shares and the Unconverted Shares to be
issued after the Effective Time;
(d) Certificates evidencing the Conversion Shares issued to the
Controlling Shareholders, duly endorsed for transfer with medallion
signature guaranteed, with stock powers duly executed in blank;
(e) Assignments of the Debentures and original Debentures outstanding
as of the Effective Date;
(f) A certificate executed by Parent dated the Closing Date, and signed
by each of the authorized officers of Parent, certifying that the
representations and warranties of Parent contained in this
Agreement are true and correct and that Parent has complied with
all agreements and conditions required by this Agreement to be
performed or complied with by it;
(g) A certificate dated the Closing Date and signed by each of the
authorized officers of Parent to the effect that no litigation,
proceeding, investigation, or inquiry is pending, which might
result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement, or which might result
in any material adverse change in any of the assets, properties,
business, or operations of Parent;
(h) A certified copy of the Articles of Incorporation of Acquisition
Sub;
(i) A copy of the Consents as described in Section 1.03;
(j) A certificate executed by the Secretary of the Parent certifying
(i) as to the resolutions of the Parent authorizing the
transactions contemplated by this Agreement; and (ii) that attached
to such certificate are true, correct and complete copies of the
companies' charter documents and Bylaws;
;
(k) A certificate executed by the Secretary of the Parent
identifying its executive officers, or equivalents thereof and
certifying as to the incumbency of the officers of the Parent;
(l) Evidence of the transfer of the shares of Netcast and Freetrek and
the conversion of the debentures issued from Multi Soft;
(m) General releases from the Controlling Shareholders, officers and
directors of Parent in favor of the Company and it shareholders;
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(n) Evidence of the retention of a transfer agent acceptable to the
Company;
(o) Audited financial statements of the Parent as of January 31, 2007;
and
(p) Any further document as may be reasonably requested by Company's
legal counsel in order to substantiate any of the representations
or warranties of Parent set forth herein.
SECTION 7.02 Prior to or at the Closing, and as a condition precedent
to the obligations of the Parent, each of the following documents, which shall
be satisfactory in form and content to Parent and its counsel, shall be
delivered to the Parent and/or its counsel:
(a) Company shall provide Parent with its audited consolidated
financial statements which shall comply in form and substance with
applicable regulations of the SEC as of December 31, 2005 and December
31, 2006, and such unaudited financial statements and pro forma
financial statements as required by the Information Statement, Form 8-K
and other requirements of the SEC regarding the Merger;
(b) The Cash Consideration, to be paid by wire transfer;
(c) A certificate dated the Closing Date executed by the chief
executive officer of the Company certifying (i) as to the
resolutions of the shareholders and directors of the Company
authorizing the transactions contemplated by this Agreement; (ii)
that attached to such certificate are true, correct and complete
copies of the companies' charter documents and Bylaws; and (iii) as
to the executive officers, or equivalents thereof and certifying as
to the incumbency of the officers of the Company; and
(d) A certificate dated the Closing Date executed by the chief
executive officer of the Company certifying that the
representations and warranties of Company contained in this
Agreement are true and correct and that Company has complied with
all agreements and conditions required by this Agreement to be
performed or complied with by it.
SECTION 7.03. Due Diligence. As a condition precedent to Closing, the
Parent and the Company shall be satisfied with their findings and evaluation in
their due diligence.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger.
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SECTION 8.02 Notices. All notices and other communications hereunder
("Notice") shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed), sent by overnight courier
(providing proof of delivery) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, Robert L. Frome
Acquisition Sub or the c/o Olshan Grundman Frome Rosenzweig & Wolosky
Controlling Shareholders, LLP
to: 65 East 55th Street
New York, NY 10022
Facsimile: (212) 451-2222
with a copy to: Michael H. Freedman, Esq.
Law Offices of Michael H. Freedman, PLLC
11 Bayside Avenue
Port Washington, NY 11050
Facsimile: (516) 767-1631
(b) if to the Company or, 245 Laurel Avenue
Shaanxi to: W. Keansburg, New Jersey 07734-3019
Attn: Wen-Chung Kang
Facsimile: (732) 495-3180
with a copy to: Steven W. Schuster, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
Facsimile: (212) 448-0066
SECTION 8.03 Interpretation. When a reference is made in this Agreement
to an Article or a Section, such reference shall be to an Article or a Section
of this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available. As used in this Agreement, the term "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person, and the term "affiliate" shall have
the meaning set forth in Rule 12b-2 promulgated under the Exchange Act. As used
in this Agreement, "material adverse change" or "material adverse effect" means,
when used in connection with a person, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any change
or effect) that, individually or in the aggregate with any such other changes or
effects, is materially adverse to the business, prospects, assets (including
intangible assets), financial condition or results of operations of such person
and its subsidiaries taken as a whole.
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SECTION 8.04 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when said counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.05 Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
SECTION 8.06 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey and, to the
extent provided herein, the NJBCA, without regard to any applicable conflicts of
law. The Parties hereto irrevocably further consent to the jurisdiction of the
courts of the State of New Jersey and of any Federal court located in New Jersey
in connection with any action or proceeding arising out of or relating to this
Agreement, any document or instrument delivered pursuant to, in connection with
or simultaneously with this Agreement, or a breach of this Agreement or any such
document or instrument.
SECTION 8.07 Publicity. Except as otherwise required by law, for so
long as this Agreement is in effect, neither the Company nor Parent shall, nor
shall Parent permit Acquisition Sub to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
SECTION 8.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 8.09 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement. In addition, each of the parties
hereto (i) consents to submit such party to the personal jurisdiction of any
Federal court located in the State of New Jersey in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iii)
agrees that such party will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court sitting in the State of New Jersey. The prevailing party in any judicial
action shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and court
costs.
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SECTION 8.10 No Remedy in Certain Circumstances. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement to be null, void or unenforceable, or order any party to take any
action inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth in this Agreement shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes this Agreement impossible to perform, in which case this
Agreement shall terminate. Except as otherwise contemplated by this Agreement,
to the extent that a party hereto took an action inconsistent herewith or failed
to take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall incur no
liability or obligation unless such party did not in good faith seek to resist
or object to the imposition or entering of such order or judgment.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
MULTI SOLUTIONS, INC.
By:/s/ Jerome Goubeaux
-------------------------------------------
Jerome Goubeaux, President
MULTI SUB, INC.
By:/s/ Jerome Goubeaux
-------------------------------------------
Jerome Gobeaux, President
USA REAL NEW TECHNOLOGY INC.
By:/s/ Wen-Chung Kang
-------------------------------------------
Wen-Chung Kang, Chief Executive Officer
SHAANXI REAL NEW TECHNOLOGY CO. LTD.
By:/s/ Wen-Chung Kang
-------------------------------------------
Wen-Chung Kang, Chief Executive Officer
BRIDGE VENTURES, INC.
By:/s/ Harris Freedman
-------------------------------------------
Harris Freedman, Secretary
/s/ Robert Frome
----------------------------------------------
ROBERT FROME
/s/ Michael Potter
----------------------------------------------
MICHAEL POTTER
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