SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 19, 2000
SILVER KING RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-26651 650884085
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6025 S Eaton Lane, Littleton, Colorado 80123
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(Address of principal executive office, including Zip code)
Registrant's telephone number including area code: (303) 798-2980
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. Changes in Control of Registrant.
On May 19, 2000, the board of directors and stockholders of the Registrant,
a Delaware corporation ("Silver King"), approved and adopted the Agreement and
Plan of Merger, dated as of March 21, 2000 (the "Agreement"), by and among
Silver King, Silver King Acquisition, Inc. ("Acquisition Corp."), a wholly-owned
subsidiary formed for the purpose of the merger, eNexi Inc. ("eNexi") and the
Principal Stockholders of eNexi Inc. Pursuant to the Agreement, Silver King
issued 6,000,000 shares of its Series A Convertible Preferred Stock ("Series A
Stock") to the historic stockholders of eNexi in exchange for 100% of the
outstanding capital stock of eNexi, which was acquired by Acquisition Corp.
eNexi was incorporated in Delaware in May 1999. It is a development stage
intermediary for online advertising and marketing. eNexi provides free email
accounts through its Web-based email system, www.dollars4mail.com. In order to
become a subscriber to the system, each applicant must provide detailed
information about his or her demographics and interest. eNexi expects to make
this aggregated data available to online advertisers in the future to enable
them to target specific groups within the dollars4mail subscriber base depending
on demographics, interests or both. The advertisers pay eNexi based on the
number of times the advertisements appear on the users' screens or the number of
times users click on the advertisement to view an advertiser's web site. In
turn, eNexi shares its advertising revenue with its dollars4mail subscribers,
who receive cash compensation for referrals to the dollars4mail system and for
visits they and their referrals make to the websites of advertisers on the
system. In addition, through its VirtuallyFreeInternet.com division, eNexi
provides analog Internet access to its subscribers for a monthly fee.
Subscribers to VirtuallyFreeInternet.com can earn cash compensation for
referrals to the Internet access service. VirtuallyFreeInternet.com and
dollars4mail.com are supported by eNexi's patent-pending proprietary software
that permits fully automated online sign-up, authentication of subscribers,
automated credit card billing and processing of multi-tiered referral
compensation.
As a condition to the acquisition, Silver King completed a private offering
of its Series B Convertible Preferred Stock (the "Series B Stock") for gross
proceeds in excess of $5 million (the "Private Offering"). Silver King intends
to use the net proceeds of approximately $4.75 million realized in the offering
as working capital for the eNexi business.
In connection with the merger transaction, Alan Stier, the sole officer and
director of Silver King, resigned his positions with Silver King. The historic
officers and directors of eNexi will assume the following positions with Silver
King:
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<TABLE>
<CAPTION>
<S> <C>
Larry A. Mayle Chief Executive Officer, Secretary and Co-Chairman
Dr. Roger L. Miller President and Co-Chairman
Michael A. Ames Chief Financial Officer and Director
</TABLE>
Following consummation of the Agreement and the Private Offering on May 19,
2000, the historical stockholders of eNexi and Silver King and investors in the
Private Offering each respectively hold a 61.7%, 17.7%, and 20.5% beneficial
interest in Silver King's common stock (assuming automatic conversion of the
Series A Stock and Series B Stock at a rate of 25 shares of Silver King's common
stock for each share of Series A Stock and each share of Series B Stock). More
specifically, the following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the Record Date (as
adjusted to reflect the conversion rights of the Series A and Series B Preferred
Stock, by (i) each person who, to the knowledge of the Company, beneficially
owns more than 5% of the Company's Common Stock; (ii) each director and
executive officer of the Company; and (iii) all executive officers and directors
of the Company following the Merger as a group:
<TABLE>
<CAPTION>
Amount of Percentage of
Name and Address of Beneficial Beneficial
Beneficial Owner Ownership(1)(2) Ownership
<S> <C> <C>
Larry Mayle 68,942,663(3) 25.7%
c/o eNexi Inc.
20 Corporate Park, Suite 110
Irvine, CA 92606
Dr. Roger LeRoy Miller 47,014,271 17.5%
c/o eNexi Inc.
20 Corporate Park, Suite 110
Irvine, CA 92606
Michael Ames 300,897 *
c/o eNexi Inc.
20 Corporate Park, Suite 110
Irvine, CA 92606
Haywood Securities, Inc. 25,000,000(4) 9.3%
400 Burrad Street
Vancouver, BC
Canada V6C 3A6
Millworth Investments, Inc. 22,000,000 8.2%
4960 South Virginia Street
Suite 300
Reno, NV 89502
All Directors and Executive Officers as a 112,655,614 42.1%
Group (3 persons)
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</TABLE>
<PAGE>
o Less than 1%.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in
the rules and regulations promulgated under the Securities Exchange Act
of 1934, as amended, and accordingly, may include securities owned by
and for, among others, the spouse and/or minor children of an
individual and any other relative who has the same home as such
individual, as well as other securities as to which the individual has
or shares voting or investment power or which such person has the right
to acquire within 60 days after the Record Date pursuant to the
conversion of convertible equity, exercise of options, or otherwise.
Beneficial ownership may be disclaimed as to certain of the securities.
(2) Based upon 268,075,000 shares of Common Stock outstanding as of the
Record Date, assuming no other changes in the beneficial ownership of
the Company's securities except the Conversion of Series A and Series B
Preferred Stock and the issuance of 25,000,000 shares of Common Stock
pursuant to the exercise of outstanding warrants.
(3) Includes 601,795 shares owned by Mr. Mayle's wife. Mr. Mayle disclaims
beneficial ownership of such shares.
(4) Issuable upon exercise of presently exercisable options.
The foregoing summary of the merger is qualified in its entirety by
reference to the text of the Agreement, which is attached hereto as Exhibit 2.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of the Businesses Acquired.
The financial statements required by Rule 3-05(b) of Regulation
S-X shall be filed by later amendment of this filing.
(b) Pro Forma Financial Information.
The pro forma financial information required by Article 11 of
Regulation S-X shall be filed by later amendment of this filing.
<PAGE>
(c) Exhibits
Exhibit
Number
<TABLE>
<CAPTION>
<S> <C>
2.1 Agreement and Plan of Merger by and among Silver King Resources, Inc., Silver King Acquisition,
Inc. and eNexi Inc. and Principal Stockholders of eNexi Inc., dated March 21, 2000.
99.1 Financial Statements of Silver King Resources, Inc. (1)
99.2 Pro Forma Financial Information of Silver King Resources, Inc. and eNexi Inc. (1)
</TABLE>
(1) To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SILVER KING RESOURCES, INC.
Registrant
Date: May 24, 2000 By: /s/Larry Mayle
Larry Mayle, Chief Executive Officer
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SILVER KING RESOURCES, INC.,
SILVER KING ACQUISITION, INC.
AND
ENEXI INC.
AND
PRINCIPAL STOCKHOLDERS OF ENEXI INC.
Dated: March 21, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I: MERGER OF NEWCO WITH AND INTO ENEXI AND RELATED MATTERS...............................................1
1.1 The Merger...............................................................................................1
1.2 Conversion of Stock; Conversion of Outstanding Options...................................................2
1.3 Merger Consideration.....................................................................................4
1.4 Additional Rights; Taking of Necessary Action; Further Action............................................4
1.5 No Further Rights or Transfers...........................................................................5
ARTICLE II: THE CLOSING..........................................................................................5
2.1 Closing Date.............................................................................................5
2.2 Closing Transactions.....................................................................................5
ARTICLE III: CERTAIN CORPORATE ACTION............................................................................8
3.1 eNexi Corporate Action; Stockholder Consent..............................................................8
3.2 Acquiror and Newco Corporate Action......................................................................8
ARTICLE IV: REPRESENTATIONS AND WARRANTIES.......................................................................8
4.1 Representations and Warranties of eNexi..................................................................8
4.2 Representations and Warranties of the Principal Stockholders............................................19
4.3 Representations and Warranties of Acquiror and Newco....................................................20
ARTICLE V: AGREEMENTS OF THE PARTIES............................................................................23
5.1 Access to Information...................................................................................23
5.2 Confidentiality; No Solicitation........................................................................23
5.3 Interim Operations......................................................................................25
5.4 Consents................................................................................................28
5.5 Employee Stock Option Plan..............................................................................28
5.6 All Reasonable Efforts..................................................................................28
5.7 Public Announcements....................................................................................28
5.8 Notification of Certain Matters.........................................................................28
5.9 Expenses................................................................................................29
5.10 Lock-Up; Prohibition on Short Sales..................................................................29
5.11 Voting Proxy.........................................................................................29
5.12 Private Placement....................................................................................30
5.13 Registration of Resale of Certain Shares of Common Stock.............................................30
5.14 Documents at Closing.................................................................................31
5.15 Prohibition on Trading in Acquiror Stock.............................................................31
5.16 Reservation of Shares; Post-Closing Amendments to Acquiror's Certificate of
Incorporation.................................................................................................31
<PAGE>
5.17 Indemnification: Directors' and Officers' Insurance..................................................31
5.18 Acknowledgment of Approvals; Approval of eNexi Stockholders..........................................32
5.19 Matters of Corporate Governance......................................................................32
5.20 Disposition of Assets................................................................................33
5.21 Production of Schedules and Exhibits.................................................................34
ARTICLE VI: CONDITIONS TO CONSUMMATION OF THE MERGER............................................................35
6.1 Conditions to Obligations of eNexi......................................................................35
6.2 Conditions to Acquiror's Obligations....................................................................36
ARTICLE VII: INDEMNIFICATION....................................................................................37
7.1 Indemnification.........................................................................................37
ARTICLE VIII: TERMINATION.......................................................................................38
8.1 Termination.............................................................................................38
8.2 Notice and Effect of Termination........................................................................39
8.3 Extension; Waiver.......................................................................................39
8.4 Amendment and Modification..............................................................................39
ARTICLE IX: MISCELLANEOUS.......................................................................................39
9.1 Survival of Certain Representations and Warranties; Remedies............................................39
9.2 Notices.................................................................................................40
9.3 Agreement; Assignment...................................................................................40
9.4 Binding Effect; Benefit.................................................................................41
9.5 Headings................................................................................................41
9.6 Counterparts............................................................................................41
9.7 Governing Law...........................................................................................41
9.8 Arbitration.............................................................................................41
9.9 Severability............................................................................................41
9.10 Release and Discharge................................................................................42
9.11 Certain Definitions..................................................................................42
</TABLE>
<PAGE>
EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit 1.1(c)(v) - Form of Certificate of Merger
Exhibit 1.2(c) - Form of Assumed Warrant
Exhibit 1.3(a) - Certificate of Designation of Series A Convertible Preferred Stock
Exhibit 1.3(b) - Allocation of Merger Consideration
Exhibit 1.3(d) - Form of Investment Letter
Exhibit 2.2(a)(xii) - Employment Agreements
Exhibit 5.5 - Employee Stock Option Plan
Exhibit 5.11 - Form of Voting Proxy
Exhibit 5.13 - Registration Rights Agreement
Exhibit 5.19(a) - Form of Post-Closing Board Resolutions
</TABLE>
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
1.1(c)(vii) Officers and Directors of the Surviving Corporation
1.2(c) Schedule of Option Holders
1.2(c) eNexi Warrant
4.1(a) Articles of Incorporation and Bylaws of eNexi and each Subsidiary
4.1(c) Consents
4.1(d) Capitalization and Share Ownership
4.1(e) Financial Statements
4.1(f)(i) Location of Leased Property
4.1(f)(ii) Written Notice
4.1(g) No Contingent Liabilities
4.1(h) Litigation
4.1(i) Taxes
4.1(j)(i) Employee Benefit Plan
4.1(j)(ii) Employee Benefit Plan (for which eNexi has obligation to contribute)
4.1(j)(iv) Material Employment Arrangements, Contracts, etc.
4.1(k) Insurance Coverage
4.1(o) Intellectual Property
4.1(p) Accounts Receivable
4.1(r)(i) Labor Relations; Employees
4.1(r)(ii) List of Employees
4.1(r)(v) Strikes, grievance proceedings, arbitrations, etc.
4.1(r)(vii) Employment and Benefit Arrangements
4.1(s) Suppliers and Clients
4.1(t) Conflicting Interests
4.1(u) Absence of Certain Changes or Events
4.2(a) Certificate of Incorporation and Bylaws of Acquiror
4.2(e) Acquiror Financial Statements
4.2(g) Contingent Liabilities
4.2(h) Litigation
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of March 21, 2000, by and among SILVER KING RESOURCES, INC., a
Delaware corporation ("Acquiror"), SILVER KING ACQUISITION, INC., a Delaware
corporation and wholly owned subsidiary of Acquiror ("Newco"), ENEXI INC., a
Delaware corporation ("eNexi"), and Dr. Roger LeRoy Miller and Larry Mayle, the
principal stockholders of eNexi (collectively, the "Principal Stockholders").
Recitals
WHEREAS, Acquiror and eNexi have determined that it is in the best
interests of their respective stockholders for Newco to merge with and into
eNexi upon the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, the respective Boards of Directors of Acquiror, eNexi and
Newco have each approved this Agreement and the consummation of the transactions
contemplated hereby and approved the execution and delivery of this Agreement;
and
WHEREAS, for federal income tax purposes, it is intended that the
merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing premises and
representations, warranties and agreements contained herein, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
MERGER OF NEWCO WITH AND INTO ENEXI
AND RELATED MATTERS
1.1 The Merger.
(a) Upon the terms and conditions of this Agreement, at the "Effective
Time" (as defined herein), Newco shall be merged with and into eNexi (the
"Merger") in accordance with the provisions of the General Corporation Law of
the State of Delaware (the "DGCL"), the separate corporate existence of Newco
shall cease and eNexi shall continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Delaware.
(b) The Merger shall become effective upon the filing of a certificate of
merger with the Secretary of State of the State of Delaware (the "Certificate of
Merger") in accordance with the provisions of Section 252 of the DGCL and the
confirmation by the Certificate of Merger that the Merger is effective as of
such filing date. The date and time when the Merger shall become effective is
referred to herein as the "Effective Time."
<PAGE>
(c) At the Effective Time:
(i) eNexi shall continue its existence under the laws of the State of
Delaware as the surviving corporation;
(ii) the separate corporate existence of Newco shall cease;
(iii) all rights, title and interests to all assets, whether tangible
or intangible and any property or property rights owned by Newco or eNexi
shall be allocated to and vested in the Surviving Corporation without
reversion or impairment, without further act or deed, and without any
transfer or assignment having occurred, but subject to any existing liens
or other encumbrances thereon, and all liabilities and obligations of eNexi
or Newco shall be allocated to the Surviving Corporation, which shall be
the primary obligor therefor and, except as otherwise provided by law or
contract, no other party to the Merger, other than the Surviving
Corporation, shall be liable therefor;
(iv) the Certificate of Incorporation of the Surviving Corporation
shall be the Certificate of Incorporation of eNexi as in effect immediately
prior to the consummation of the Merger;
(v) Each of Newco and eNexi shall execute and deliver, and file or
cause to be filed with the Secretary of State of the State of Delaware, a
Certificate of Merger, in form and substance acceptable to all parties
hereto, and in the form attached hereto as Exhibit 1.1(c)(v);
(vi) the Bylaws of the Surviving Corporation shall be the Bylaws of
eNexi as in effect immediately prior to the consummation of the Merger, and
shall continue in full force and effect until thereafter amended as
provided by law and such Bylaws; and
(vii) the officers and directors of eNexi set forth on Schedule
1.1(c)(vii) shall resign upon the Effective Time and the officers and
directors of the Surviving Corporation shall consist of those individuals
identified on Schedule 1.1(c)(vii), and such persons shall serve in such
positions for their respective terms provided by law or in the Bylaws of
the Surviving Corporation and until their respective successors are elected
and qualified.
1.2 Conversion of Stock; Conversion of Outstanding Options.
(a) Conversion of Stock. At the Effective Time:
(i) the shares representing 100% of the issued and outstanding common
stock, $0.01 par value per share, of eNexi ("eNexi Common Stock") as of the
Closing shall, by virtue of the Merger and without any action on the part
of the eNexi Stockholders be converted into and represent the right to
receive, and shall be exchangeable for the merger consideration identified
at Section 1.3 hereafter (the "Merger Consideration");
<PAGE>
(ii) each share of capital stock of eNexi held in treasury as of the
Effective Time shall, by virtue of the Merger, be canceled without payment
of any consideration therefor and without any conversion thereof;
(iii) each share of Common Stock of eNexi outstanding as of the
Effective Time, by virtue of the Merger, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist.
(b) Transfer; Delivery of Certificates after Effective Time. From and after
the Effective Time, there shall be no transfers on the stock transfer books of
eNexi of shares of eNexi Common Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, certificates for shares of
eNexi Common Stock that were outstanding immediately prior to the Effective Time
shall be delivered to eNexi, they shall be canceled and exchanged for the
consideration to be received therefor in connection with the Merger as provided
in this Agreement.
(c) Assumption of Outstanding Warrants. At the Effective Time, each common
stock purchase warrant of eNexi (the "eNexi Warrants") that is outstanding,
shall be assumed by Acquiror and the holder(s) of such warrants shall be
obligated to consent to such assumption. Following the Effective Time, the eNexi
Warrants as assumed by Acquiror (the "Assumed Warrants") shall be exercisable
for that number of shares of Acquiror's Common Stock equal to the number of
shares of eNexi Common Stock issuable upon exercise of the eNexi Warrants
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares, and the per share exercise price for Acquiror's Common Stock issuable
upon exercise of such Assumed Warrants shall be determined by dividing the
exercise price per share of the eNexi Warrants, as in effect as of the date
hereof, by the Exchange Ratio and rounding the resulting exercise price per
share up to the nearest whole cent. All restrictions on the exercise of each
such Assumed Warrant shall continue in full force and effect, and the term,
exercisability, vesting schedule and other provisions of the eNexi Warrants
shall otherwise remain unchanged from the terms of the eNexi Warrants attached
hereto and made a part hereof as Schedule 1.2(c), provided, however: (i) the
Assumed Warrants shall not be exercisable in any event until the capitalization
of Acquiror has been restated in the manner set forth at Section 5.16 hereof and
in a manner which enables the issuance of shares of Acquiror Common Stock
sufficient to cover the exercise and conversion of all derivative securities
outstanding immediately following the Effective Time; and (ii) the Assumed
Warrants shall be subject to further adjustment, as stated therein, to reflect
any stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction effected by Acquiror after the Effective Time. Prior to the
Effective Time, Acquiror will provide each holder of an eNexi Warrant a written
notice setting forth: (x) the number of shares of Acquiror Common Stock subject
to such Assumed Warrants; and (y) the exercise price per share of Acquiror
Common Stock issuable upon exercise of such Assumed Warrants. The form of the
Assumed Warrants shall be in substantially the form attached as Exhibit 1.2(c).
<PAGE>
1.3 Merger Consideration.
(a) Subject to the provisions of Section 1.3(d) and Section 1.4(a)
hereafter, the Merger Consideration, consisting of the total purchase price
payable to the eNexi Stockholders in connection with the acquisition by merger
of eNexi, shall be delivered and shall consist exclusively of newly issued
shares of Series A Convertible Preferred Stock, $.001 par value per share, of
Acquiror (the "Preferred Shares") that convert into that number of shares of
Acquiror Common Stock as are equal to the shares of eNexi Common Stock
outstanding as of the Effective Time multiplied by the Exchange Rate, rounded up
to the nearest whole number of shares. The Preferred Shares shall be convertible
into shares of Common Stock of Acquiror in accordance with the terms of, and the
Preferred Shares shall have those rights, preferences and designations set forth
in, that certain Certificate of Designation, Preferences and Rights of Series A
Convertible Preferred Stock (the "Certificate Of Designation"), a true and
correct copy of which is attached hereto and made a part hereof as Exhibit
1.3(a).
(b) The Merger Consideration shall be allocated among the eNexi
Stockholders in the proportion of their share ownership of the outstanding
shares of eNexi Common Stock at the Closing as set forth on Exhibit 1.3(b). It
is intended that the delivery of the Merger Consideration shall qualify as a
tax-free exchange under the Code.
(c) Subject to Section 1.4, the Preferred Shares to be delivered at the
Closing shall be fully paid and non-assessable and shall be free and clear of
all liens, levies and encumbrances except that such shares shall be "restricted
securities" pursuant to Rule 144, promulgated under the Securities Act of 1933,
as amended (the "Securities Act").
(d) Acquiror shall deliver certificates evidencing the Preferred Shares to
eNexi Stockholders upon (x) the surrender and delivery to Acquiror of
certificates representing all of such stockholder's issued and outstanding
shares of eNexi Common Stock; and (y) the execution and delivery of a copy of an
investment letter in the form attached hereto as Exhibit 1.3(d) (the "Investment
Letter") to comply with applicable federal and state securities laws. In the
event that any one or more eNexi Stockholders have not complied with the terms
identified in subparagraphs (x) or (y) above within six months following the
Effective Time (a "Non-Complying Stockholder"), Acquiror reserves the right in
its sole discretion at any time thereafter to cancel the Merger Consideration
allocable to such Non-Complying Stockholder without notice, by payment to such
Non-Complying Stockholder of the cash amount such Non-Complying Stockholder
would have been entitled to receive had he exercised his right of dissent to the
Merger under Delaware law.
1.4 Additional Rights; Taking of Necessary Action; Further Action.
Each of Acquiror, eNexi and Newco, respectively, shall use their best
efforts to take all such action as may be necessary and appropriate to
effectuate the Merger under the DGCL as promptly as possible, including, without
limitation, the filing of the Certificate of Merger consistent with the terms of
this Agreement. If at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the officers
of such corporations are fully authorized in the name of their corporations or
otherwise, and notwithstanding the Merger, to take, and shall take, all lawful
and necessary action.
<PAGE>
1.5 No Further Rights or Transfers.
At and after the Effective Time, the eNexi capital stock outstanding
immediately prior to the Effective Time shall cease to provide the holder
thereof any rights as a stockholder of eNexi, except for the right to surrender
the certificate or certificates representing such shares and to receive the
Merger Consideration to be received in the Merger as provided in this Agreement.
ARTICLE II
THE CLOSING
2.1 Closing Date.
Subject to satisfaction or waiver of all conditions precedent set forth in
Section 6 of this Agreement, the closing of the Merger (the "Closing") shall
take place at the offices of Buchanan Ingersoll Professional Corporation,
counsel to Acquiror, at Eleven Penn Center, 14th Floor, 1835 Market Street,
Philadelphia, PA 19103 on (a) the later of: (i) the first Business Day following
the day upon which all appropriate Acquiror, Newco and eNexi corporate action
has been taken in accordance with Section 3 of this Agreement; or (ii) the day
on which the last of the conditions precedent set forth in Article 6 of this
Agreement is fulfilled or waived; or (b) at such other time, date and place as
the parties may agree, but in no event shall such date be later than April 30,
2000 unless such date is extended by the mutual agreement of the parties.
2.2 Closing Transactions.
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
(a) eNexi shall deliver, or cause to be delivered, to the Acquiror and
Newco, the following documents and shall take the following actions:
(i) A certificate of the Secretary of eNexi certifying that the eNexi
Stockholders have approved the Merger, this Agreement, and the transactions
contemplated hereby in accordance with the DGCL, eNexi's Certificate of
Incorporation and Bylaws;
(ii) The eNexi Warrants and any certificate or agreement evidencing
the eNexi Warrants shall have been surrendered to eNexi for cancellation in
accordance with Section 1.2(c) hereof and the holders thereof shall have
consented to the assumption of such Warrants by Acquiror;
<PAGE>
(iii) Any outstanding stockholder agreements relating to the eNexi
capital stock shall have been terminated and evidence of such termination
satisfactory to Acquiror shall have been delivered to Acquiror;
(iv) eNexi shall execute and deliver, and file or cause to be filed
with the Secretary of State of the State of Delaware, a Certificate of
Merger with such amendments thereto as the parties hereto shall deem
mutually acceptable;
(v) A certificate shall be executed by an authorized officer of eNexi
to the effect that all representations and warranties made by eNexi in this
Agreement are true and correct on and as of the Closing, as though
originally given to Acquiror and Newco on said date;
(vi) A certificate of good standing shall be delivered by eNexi from
the Secretary of State of the State of Delaware, dated at or about the
Closing, to the effect that such corporation is in good standing under the
laws of said state, similar good standing certificates shall be provided
for each of the Subsidiaries (as that term is defined in Section 4.1(a)(ii)
hereof);
(vii) An incumbency certificate shall be delivered by eNexi signed by
all of the officers thereof dated at or about the Closing;
(viii) The Certificate of Incorporation of eNexi, as amended and
certified by the Secretary of State of the State of Delaware at or about
the Closing Date, and a copy of the Bylaws of eNexi certified by the
Secretary of eNexi dated at or about the Closing shall be delivered by
eNexi; similar Certificates, Bylaws or other governing instruments will be
delivered by each of the Subsidiaries;
(ix) Board and stockholder resolutions shall be delivered by the
Secretary of eNexi dated at or about the Closing authorizing the
transactions contemplated by this Agreement;
(x) A certificate shall be executed by each of the Principal
Stockholders to the effect that all representations and warranties made by
them in this Agreement are true and correct on and as of the Closing, as
though originally given to Acquiror and Newco on said date;
(xi) Voting Proxies in the form attached hereto as Exhibit 5.11 shall
be executed and delivered by each of the Principal Stockholders;
(xii) The employment agreements by and between the Acquiror and each
of the Principal Stockholders in the form attached hereto as Exhibit
2.2(a)(xii) (the "Employment Agreements") shall be executed and delivered
by each of the Principal Stockholders; and
(xiii) Each of the parties to this Agreement shall have otherwise
executed whatever documents and agreements, provided whatever consents or
approvals and taken all such actions as are required under this Agreement.
<PAGE>
(b) Acquiror will deliver, or shall cause to be delivered, to eNexi, the
following documents and shall take the following actions:
(i) Subject to Section 1.4(a) and Section 1.3(d), Acquiror shall
deliver or shall cause to be delivered to the eNexi Stockholders
certificates evidencing the Preferred Shares in payment of the Merger
Consideration;
(ii) Acquiror shall deliver certificates evidencing the Assumed
Warrants to the persons and in the amounts set forth on Schedule 1.2(c);
(iii) Newco shall execute and deliver, and file or cause to be filed
with the Secretary of State of the State of Delaware, the Certificate of
Merger with such amendments thereto as the parties hereto shall deem
mutually acceptable;
(iv) A certificate shall be executed by an authorized officer of
Acquiror to the effect that all representations and warranties of Acquiror
under this Agreement are true and correct as of the Closing, as though
originally given to eNexi on said date;
(v) A certificate shall be executed by an authorized officer of Newco
to the effect that all representations and warranties of Newco under this
Agreement are true and correct as of the Closing, as though originally
given to eNexi on said date;
(vi) A certificate of good standing shall be delivered by Acquiror
from the Secretary of State of the State of Delaware dated at or about the
Closing that Acquiror is in good standing under the laws of said state;
(vii) A certificate of good standing shall be delivered by Newco from
the Secretary of State of the State of Delaware dated at or about the
Closing that Newco is in good standing under the laws of said state;
(viii) An incumbency certificate shall be delivered by Acquiror signed
by all of its officers dated at or about the Closing;
(ix) An incumbency certificate shall be delivered by Newco signed by
all of its officers dated at or about the Closing;
(x) Certificate of Incorporation of Acquiror certified by the
Secretary of State of the State of Delaware at or about the Closing Date
and a copy of the Bylaws of Acquiror certified by the Secretary of Acquiror
dated at or about the Closing;
(xi) Certificate of Incorporation of Newco certified by the Secretary
of State of the State of Delaware at or about the Closing Date and a copy
of the Bylaws of Newco certified by the Secretary of Newco dated at or
about the Closing;
(xii) A certified Board resolution shall be delivered by the Secretary
of Acquiror dated at or about the Closing authorizing the transactions
contemplated by this Agreement;
<PAGE>
(xiii) Certified Board and stockholder resolutions shall be delivered
by the Secretary of Newco dated at or about the Closing authorizing the
transactions contemplated by this Agreement;
(xiv) Each of the officers and directors of Acquiror shall have
tendered their resignation in form and substance satisfactory to eNexi; and
(xv) Each of the parties to this Agreement shall have otherwise
executed whatever documents and agreements, provided whatever consents or
approvals and shall have taken all such actions as are required under this
Agreement.
ARTICLE III
CERTAIN CORPORATE ACTION
3.1 eNexi Corporate Action; Stockholder Consent.
(a) eNexi, acting through its Board of Directors, shall, in accordance with
applicable Delaware law, its Certificate of Incorporation and Bylaws conduct a
special meeting of its stockholders in order to obtain the approval of the eNexi
Stockholders to the transactions contemplated hereby, including the Merger, in
accordance with the DGCL.
(b) eNexi shall cause to occur all other corporate action necessary to
effect the Merger and to consummate the other transactions contemplated hereby.
3.2 Acquiror and Newco Corporate Action.
Acquiror and Newco shall cause to occur all corporate action necessary to
effect the Merger and to consummate the other transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of eNexi
As a material inducement to Acquiror and Newco to execute this Agreement
and consummate the Merger and other transactions contemplated hereby, eNexi
hereby make the following representations and warranties to Acquiror and Newco.
The representations and warranties are true and correct in all material respects
at this date, and will be true and correct in all material respects on the
Closing as though made on and as of such date.
(a) Corporate Existence and Power.
(i) eNexi is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all
corporate powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted, except
where the failure to have any of the foregoing would not have a Material
Adverse Effect. Except as set forth on Schedule 4.1(a), eNexi is duly
qualified to do business as a foreign corporation and is in good standing
<PAGE>
in California and in each other jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure
to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. True, correct and complete copies of the Articles
of Incorporation and Bylaws of eNexi, as amended to date, are attached
hereto as Schedule 4.1(a) and are made a part hereof.
(ii) eNexi owns no interest in any other entity other than those
listed on Schedule 4.1(a)(ii) (collectively the "Subsidiaries" and
individually a "Subsidiary"). Each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the
state or country of its incorporation, and has all corporate powers and all
government licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except where the failure to have
any of the foregoing would not have a Material Adverse Effect. Each
Subsidiary is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such
qualification necessary, except for those jurisdictions where the failure
to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Due Authorization and Requisite Approvals. (i) This Agreement has been
duly authorized, executed and delivered by eNexi and constitutes a valid and
binding agreement of eNexi, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. As of the Closing all corporate action on the part of eNexi required
under applicable law in order to consummate the Merger will have occurred; and
(ii) the Board of Directors of eNexi has approved the execution of this
Agreement and the consummation of the Merger and related actions contemplated
hereby.
(c) No Contravention. The execution and delivery of the Agreement does not,
and the consummation of the transactions contemplated hereby will not: (i)
conflict with or result in any violation of any provision of the Articles of
Incorporation or Bylaws of eNexi or any of the Subsidiaries; or (ii) conflict
with or result in any violation or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of a right or obligation or loss under, any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree, or,
to the best of its knowledge, statute, law, ordinance, rule or regulation
applicable to eNexi, any of the Subsidiaries or the Stockholder, or any of their
respective properties or assets, or result in the creation or imposition of any
mortgage, lien, pledge, charge or security interest of any kind ("Encumbrance")
on any assets of eNexi or the Subsidiaries, except such as is not reasonably
likely to have a Material Adverse Effect or prevent eNexi or the Stockholder
from consummating the transactions contemplated by this Agreement. Except as set
<PAGE>
forth on Schedule 4.1(c), no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by or with respect to eNexi or any Subsidiary in connection
with the execution and delivery of this Agreement by eNexi and the Stockholder
or the consummation by eNexi and the Stockholder of the transactions
contemplated hereby, except the filing of the Articles of Merger and Certificate
of Merger.
(d) Capitalization and Share Ownership. The authorized capital stock of
eNexi consists solely of One Million Two Hundred Thousand (1,200,000) shares of
common stock, $..01 par value per share. There are currently 1,048,868 shares of
eNexi Common Stock outstanding, all of which are owned by the eNexi Stockholders
in the amounts set forth on Schedule 4.1(d) hereof. The outstanding shares of
capital stock of eNexi have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. There are currently
Warrants outstanding which upon exercise permit the issuance of 174,811 shares
of eNexi Common Stock at an exercise price per share of $14.301 (the "eNexi
Warrants"). Except as set forth in this Section 4.1(d) and on Schedule 4.1(d),
there are outstanding (A) no shares of capital stock or other voting securities
of eNexi, (B) no securities of eNexi convertible into or exchangeable for shares
of capital stock or voting securities of eNexi and (C) no options, warrants or
other rights to acquire from eNexi, the eNexi Stockholders or any other person,
and no obligation of eNexi to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of eNexi, and there are no agreements or commitments to do any of the
foregoing. There are no voting trusts or voting agreements applicable to any
shares of capital stock of eNexi. The eNexi Common Stock to be surrendered in
the Merger will be owned of record and beneficially by the eNexi Stockholders,
free and clear of all liens and encumbrances of any kind and nature, and have
not been sold, pledged, assigned or otherwise transferred. There are no
agreements (other than this Agreement) to sell, pledge, assign or otherwise
transfer such securities. Except as set forth on Schedule 4.1(d), all of the
issued and outstanding shares of capital stock of the Subsidiaries are owned by
eNexi.
(e) Financial Statements. eNexi shall prepare and deliver to Acquiror, no
less than five (5) days prior to Closing, copies of (i) unaudited consolidated
financial statements of eNexi and any Subsidiaries for the three-month period
ended March 31, 2000; and (ii) audited consolidated financial statements of
eNexi and any Subsidiaries for the fiscal year ended December 31, 1999
(collectively, the "Financial Statements"). Such Financial Statements will have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods reported upon and will fairly
present in all material respects the financial position of eNexi and its
Subsidiaries as of the dates thereof and the results of operations for the
periods then ended.
(f) Real Properties.
(i) eNexi and the Subsidiaries currently lease real property at those
locations identified on Schedule 4.1(f)(i) hereto pursuant to the true,
correct and complete copies of the lease agreements attached to Schedule
4.1(f)(i). eNexi and the Subsidiaries own or lease no other real estate.
None of the leasehold interests held by eNexi or the Subsidiaries is
subject to any Encumbrance, except (a) liens for ad valorem taxes not yet
<PAGE>
due or being contested in good faith; and (b) contractual or statutory
mechanics or materialmen's liens or other statutory or common law
Encumbrances relating to obligations of eNexi that are not delinquent or
are being contested in good faith. There are no Encumbrances which
materially interfere with the present use of such leasehold interests.
(ii) Except as described on Schedule 4.1(f)(ii) hereto, neither eNexi
nor any Subsidiary has received any written notice from any governmental
entity having jurisdiction over eNexi or the Subsidiaries or over any of
the real property leased by eNexi or the Subsidiaries of any violation by
eNexi or the Subsidiaries of any law, regulation or ordinance relating to
zoning, environmental matters, local building or fire codes or similar
matters relating to any of the real property leased by eNexi or the
Subsidiaries or of any condemnation or eminent domain proceeding.
(iii) All of the buildings leased by eNexi or the Subsidiaries and all
plumbing, HVAC, electrical, mechanical and similar systems are in good
repair and adequate for their current use, ordinary wear and tear excepted.
(iv) Except as described on Schedule 4.1(f)(iv), neither eNexi nor any
Subsidiary is a party to any lease, sublease, lease assignment or other
agreement for the use or occupancy of any of the leasehold premises wherein
eNexi or the Subsidiary is the landlord, sub-landlord or assignor, whether
by name, as successor-in-interest or otherwise. There are no outstanding
agreements with any party to acquire the leasehold premises or any portion
thereof or any interest therein.
(v) All certificates of occupancy and all other licenses, permits,
authorizations, consents, certificates and approvals required by all
governmental authorities having jurisdiction over the leasehold premises
occupied by eNexi or the Subsidiaries have been issued, are fully paid for
and are in full force and effect, will survive the Closing and will not be
invalidated, violated or otherwise adversely affected by the Merger or the
other transactions contemplated by this Agreement.
(g) No Contingent Liabilities. Except contained within the Financial
Statements or otherwise as described on Schedule 4.1(g), at the Closing, eNexi
and the Subsidiaries shall have no material liabilities, whether related to tax
or non-tax matters, known or unknown, due or not yet due, liquidated or
unliquidated, fixed or contingent, determined or determinable in amount or
otherwise, and to the best knowledge of eNexi, after due inquiry, there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, except as and to the extent reflected on
this Agreement or any Schedule or Exhibit hereto or which has been incurred in
the ordinary course of business and as accurately reflected on the books and
records of eNexi or the Subsidiaries.
(h) Litigation. Except as described on Schedule 4.1(h) hereto there is no
action, suit, investigation or proceeding (or, to the knowledge of eNexi, any
basis therefor) pending against, or to the knowledge of eNexi, threatened
against or affecting eNexi or the Subsidiaries or any of their properties before
any court or arbitrator or any governmental body, agency or official that (i) if
<PAGE>
adversely determined against eNexi or the Subsidiaries, would have a Material
Adverse Effect or (ii) in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Merger or any of the other transactions
contemplated by the Agreement.
(i) Taxes. Except as disclosed on Schedule 4.1(i), eNexi and the
Subsidiaries have timely filed all tax returns required to be filed by them, or
will timely file when due all tax returns required to be filed by them between
the date hereof and the Closing. eNexi and the Subsidiaries have paid in a
timely fashion or will pay when due in a timely fashion, all taxes required to
be paid in respect of the periods covered by such returns, and the books and the
financial statements of eNexi reflect, or will reflect, adequate reserves for
all taxes payable by eNexi and the Subsidiaries which have been, or will be,
accrued but are not yet due. Neither eNexi nor any of the Subsidiaries is
delinquent in the payment of any material tax, assessment or governmental
charge. No deficiencies for any taxes have been proposed, asserted or assessed
against eNexi or any Subsidiary. eNexi is not aware of any facts which would
constitute the basis for the proposal or assertion of any such deficiency and
there is no action, suit, proceeding, audit or claim now pending or threatened
against eNexi or the Subsidiaries, asserting any deficiency in the payment of
taxes. All taxes which eNexi or the Subsidiaries are required by law to withhold
and collect have been duly withheld and collected, and have been timely paid
over to the proper authorities to the extent due and payable. For the purposes
of this Agreement, the term "tax" shall include all federal state, local and
foreign income, property, sales, excise and other taxes of any nature
whatsoever. Neither eNexi nor the Subsidiaries nor any member of any affiliated
or combined group of which eNexi is or has been a member has granted any
extension or waiver of the limitation period applicable to any tax returns.
There are no Encumbrances for taxes upon the assets of eNexi or the
Subsidiaries. There are no tax sharing or tax allocation agreements to which
eNexi is now or ever has been a party. eNexi will not be required under Section
481(c) of the Code to include any material adjustment in taxable income for any
period subsequent to the Merger. eNexi (a) has not been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was eNexi) and (b) has no liability for the
taxes of any person (other than eNexi) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise.
(j) ERISA.
(i) Schedule 4.1(j)(i) identifies each "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), that is subject to any provision of ERISA, and
either (i) is maintained, administered or contributed to by eNexi or any
affiliate (as defined below), (ii) covers any employee or former employee
of eNexi or any affiliate or (iii) under which eNexi or any affiliate has
any liability. Copies of such plans and, if applicable, related trust
agreements) and all amendments thereto and any written interpretations
thereof have been furnished to Acquiror, together, if applicable, with (A)
the most recent annual reports (Form 5500 including, if applicable,
Schedule B thereto) prepared in connection with any such plan and (B) the
most recent actuarial valuation report prepared in connection with any such
plan. Such plans are referred to collectively herein as the "Employee
Plans." Any Form 5500 for any plan year of any Employee Plan that has not
been filed, but for which the filing date has passed on the date of this
Agreement, shall be filed prior to the date of the Merger. For purposes of
this Section, "affiliate" of any Person means any other Person which,
together with such Person, would be treated as a single employer for any
purpose under Section 414 of the Code.
<PAGE>
(ii) Schedule 4.1(j)(ii) identifies all Employee Plans to which eNexi
currently has any obligation to contribute. eNexi is not a party to any
multiemployer plan as defined in Section 4001(a) (3) of ERISA
("Multiemployer Plans"), and neither eNexi nor any affiliate has any
outstanding liability to contribute to any Multiemployer Plan, for
delinquent contributions or for withdrawal liability pursuant to Section
4201 of ERISA.
(iii) There are no Employee Plans that are intended to be qualified
plans under Section 401(a) of the Code, except as may have been shown and
identified as such on the list referred to in subparagraphs (i) or (ii)
above. Each Employee Plan has been maintained in compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules
and regulations that are applicable to such Plan, other than any failure to
comply that is not reasonably likely to have a Material Adverse Effect.
(iv) Schedule 4.1(j)(iv) identifies each material employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits
or for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that is not an Employee
Plan and (A) is entered into, maintained or contributed to, as the case may
be by eNexi, any Subsidiary or any of their respective affiliates or (B)
covers any employee or former employee of eNexi, or any Subsidiary or any
of their respective affiliates or (C) under which eNexi, any Subsidiary or
any of their respective affiliates has liability. Such contracts, plans and
arrangements as are described above, copies of all of which have been
furnished previously to Acquiror, are referred to collectively herein as
the "Benefit Arrangements." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations that are applicable
to such Benefit Arrangement other than any failure to comply that is not
reasonably likely to have a Material Adverse Effect.
(v) Neither eNexi nor any affiliate has or maintains nor has
maintained any Employee Plan or Benefit Arrangement providing
post-retirement health or medical benefits in respect of any active or
former employee of eNexi or any affiliate or former affiliate, except as
may be required pursuant to the provisions of COBRA.
(k) Insurance Coverage. Schedule 4.1(k) sets forth a list of all eNexi
key-man life insurance policies and other insurance policies material to the
current and proposed business of eNexi and the Subsidiaries. eNexi and the
Subsidiaries maintain insurance covering their assets, business, equipment,
properties, operations, employees, officers and directors with such coverage, in
such amounts, and with such deductibles and premiums as are consistent with
insurance coverage provided for other companies of comparable size and in
comparable industries. All of such policies are in full force and effect and all
premiums payable have been paid in full and eNexi and the Subsidiaries are in
full compliance with the terms and conditions of such policies. Neither eNexi
<PAGE>
nor any Subsidiary has received any notice from any issuer of such policies of
its intention to cancel or refusal to renew any policy issued by it or of its
intention to renew any such policy based on a material increase in premium rates
other than in the ordinary course of business. None of such policies are subject
to cancellation by virtue of the Merger or the consummation of the other
transactions contemplated by this Agreement. There is no claim by eNexi pending
under any of such policies as to which coverage has been questioned or denied.
(l) Compliance with Laws. To the best of eNexi's knowledge, neither eNexi
nor any Subsidiary is in violation of, nor has any such entity violated, any
applicable provisions of any laws, statues, ordinances or regulations, other
than as would not be reasonably likely to have a Material Adverse Effect.
Without limiting the generality of the foregoing, to the best knowledge of the
Stockholder, eNexi and the Subsidiaries have all licenses, permits, certificates
and authorizations needed or required for the conduct of business of eNexi and
the Subsidiaries as presently conducted and for the use of its properties and
premises occupied by it, except where the failure to obtain a licenses, permit,
certificate or authorization would not have a Material Adverse Effect.
(m) Investment Banking Fees. There is no investment banker, broker, finder
or other similar intermediary which has been retained by, or is authorized by
eNexi to act on its behalf who might be entitled to any fee or commission from
eNexi, Acquiror, Newco or any of their respective affiliates upon consummation
of the transactions contemplated by this Agreement.
(n) Personal Property. eNexi and the Subsidiaries have good and valid title
to all of their personal property, tangible and intangible, reflected on the
Financial Statements and to all other personal property owned by them, free and
clear of any Encumbrance. eNexi and the Subsidiaries are the owner of all of its
personal property now located in or upon their leased premises and of all
personal property which is used in the operation of their business. All such
equipment, furniture and fixtures and other tangible personal property are in
good operating condition and repair and do not require any repairs other than
normal routine maintenance to maintain such property in good operating condition
and repair.
(o) Intellectual Property; Intangible Property. The corporate names of
eNexi and the trade names and service marks listed on Schedule 4.1(o) are the
only names and service marks which are used by eNexi in the operation of its
business (the "Names and Service Marks"). eNexi and the Subsidiaries have not
done business and have not been known by any other name other than by its Names
and Service Marks. Schedule 4.1(o) also includes all patents and patent
applications held by or filed by or on behalf of eNexi (collectively, the
"Patents"). eNexi owns and has the exclusive right within the states and
countries in which it and its Subsidiaries operate, to use all intellectual
property presently in use by it and its Subsidiaries and necessary for the
operation of its businesses as now being conducted, which intellectual property
includes, but is not limited to, the Patents, any trademarks, trade names,
service marks, including the Names and Service Marks, copyrights, trade secrets,
customer lists, inventions, formulas, methods, processes and other proprietary
<PAGE>
information. There are no outstanding licenses or consents granting third
parties the right to use any intellectual property, including any of the
Patents, owned by eNexi or the Subsidiaries. No royalties or fees are payable by
eNexi to any third party by reason of the use of any of its intellectual
property, including, but not limited to, the Patents. Neither eNexi nor any
subsidiary has received notice of any adversely held patent, invention,
trademark, copyright, service mark or tradename of any person, or any claims of
any other person relating to any of the intellectual property subject hereto,
and there is no reasonable basis for any such charge or claim. There is no
presently known or threatened use or encroachment of any such intellectual
property, including any of the Patents.
(p) Accounts Receivable. The accounts receivable of eNexi and its
Subsidiaries referred to within the Financial Statements constitute valid claims
in the full amount thereof against the debtors charged therewith on the books of
eNexi and its Subsidiaries to which each such account is payable and has been
acquired in the ordinary course of business. Except as set forth in Schedule
4.1(p), the accounts receivable are fully collectible to the extent of the face
value thereof (less the amount of the allowance for the doubtful accounts
reflected on the Financial Statements) in the due course of normal commercial
dealings. To the best knowledge of the Stockholder, no account debtor has any
valid setoff, deduction or defense with respect thereto, and no account debtor
has asserted any such setoff, deduction or defense. There are no accounts
receivable which arise pursuant to an agreement with the United States
Government or any agency or instrumentality thereof.
(q) Contracts, Leases, Agreements and Other Commitments. Neither eNexi nor
any Subsidiary is a party to or bound by any oral, written or implied contracts,
agreements, leases, powers of attorney, guaranties, surety arrangements or other
commitments excluding equipment and furniture leases entered into in the
ordinary course of business (which do not exceed $100,000 in liabilities or
commitments in the aggregate), except for the following (which are hereinafter
collectively called the "Material Contracts"):
(i) The leases and agreements described on Schedules 4.1(f), 4.1(j)(i)
and (ii) and 4.1(r)(i); and
(ii) Agreements involving a maximum possible expenditure or obligation
on the part of eNexi or any Subsidiary to expend more than Twenty-Five
Thousand Dollars ($25,000) separately or less than Fifty Thousand Dollars
($50,000) in the aggregate.
The Material Contracts constitute all of the material agreements and
instruments which are necessary and desirable to operate the business as
currently conducted by eNexi and the Subsidiaries. True, correct and complete
copies of each Material Contract described and listed under subsection 4.1(q)
will be made available to Acquiror within ten (10) business days prior to the
Closing Date. The term "Material Contract" excludes purchase orders entered into
in the ordinary course for personal or inventory which may be returned to the
vendor without penalty. All of the Material Contracts are valid, binding and
enforceable against the respective parties thereto in accordance with their
<PAGE>
respective terms. Following the Merger, the Acquiror as the surviving entity
shall become entitled to all rights of eNexi under such of the Material
Contracts as if the Acquiror were the original party to such Material Contracts.
All parties to all of the Material Contracts have performed all obligations
required to be performed to date under such Material Contracts, and neither
eNexi, the Subsidiaries, and, to the best of their knowledge, nor any other
party, is in default or in arrears under the terms thereof, and no condition
exists or event has occurred which, with the giving of notice or lapse of time
or both, would constitute a default thereunder. The consummation of this
Agreement and the Merger will not result in an impairment or termination of any
of the rights of eNexi or the Subsidiaries under any Material Contract. None of
the terms or provisions of any Material Contract materially adversely affects
the business, prospects, financial condition or results of operations of eNexi
or the Subsidiaries.
(r) Labor Relations; Employees.
(i) Set forth on Schedule 4.1(r)(i) is a list of:
(A) All collective bargaining agreements and other agreements
requiring arbitration of employment disputes, and any written
amendments thereto, as well as all arbitration awards decided under
any such agreements, and all oral assurances or modifications, past
practices, and/or arrangements made in relation thereto, to which
eNexi or any Subsidiary is a party or by which it is bound; and
(B) All employment agreements, and all severance agreements which
have not been fully performed, to which eNexi or any Subsidiary is a
party or by which it is bound.
(ii) Set forth on Schedule 4.1(r)(ii) is a list of all key management
employees of eNexi or any Subsidiary, broken down by location, together
with their rate of compensation and title.
(iii) eNexi will deliver to Acquiror true and correct copies of all of
the documents referred to on Schedule 4.1(r)(i) hereof and all of the
personnel policies, employee and/or supervisor handbooks, procedures and
forms of employment applications relating to the employees of eNexi and its
Subsidiaries.
(iv) There is no union representing or purporting to represent any of
the employees of eNexi or any Subsidiary, and neither eNexi nor any
Subsidiary is subject to or currently negotiating any collective bargaining
agreements with any union representing or purporting to represent the
employees of any of the foregoing.
(v) Except as set forth on Schedule 4.1(r)(v) :
(A) There are no strikes, slow downs or other work stoppages,
grievance proceedings, arbitrations, labor disputes or representation
questions pending or, to the best knowledge of eNexi and the
Stockholder, threatened;
(B) eNexi and the Subsidiaries have complied in all material
respects with all laws relating to labor, employment and employment
practices, including without limitation, any provisions thereof
relating to wages, hours and other terms of employment, collective
bargaining, nondiscrimination and the payment of social security,
<PAGE>
unemployment compensation and similar taxes, and neither eNexi nor any
Subsidiary is (1) liable for any arrearages of wages or any taxes or
penalties for failure to comply with any of the foregoing or (2)
delinquent in the payment of any severance, salary, bonus, commission
or other direct or indirect compensation for services performed by any
employee to the date hereof, or any amount required to be reimbursed
to any employee or former employee; and
(C) There are no charges, suits, actions, administrative
proceedings, investigations and/or claims pending or threatened
against eNexi or any Subsidiary, whether domestic or foreign, before
any court, governmental agency, department, board or instrumentality,
or before any arbitrator (collectively "Actions"), concerning or in
any way relating to the employees or employment practices of eNexi or
any Subsidiary, including, without limitation, Actions involving
unfair labor practices, wrongful discharge and/or any other
restrictions on the right of eNexi or any Subsidiary to terminate its
respective employees, employment discrimination, occupational safety
and health, and workers' compensation.
(vi) There are no express or implied agreements, policies, practices,
or procedures, whether written or oral, pursuant to which any employee of
eNexi or any Subsidiary is not terminable at will and except as required by
law, no employee is entitled to any benefit or to participate in any
employee benefit plan of eNexi following such termination of employment.
(vii) Except as set forth in Schedule 4.1(r)(vii), eNexi or any
Subsidiary is not a party to any oral or written (A) agreement with any
executive officer or other key employee of eNexi or any Subsidiary (1) the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving eNexi of the nature
of the transactions contemplated by this Agreement, (2) providing any term
of employment or compensation guarantee extending for a period longer than
one year, or (3) providing severance benefits or other benefits after the
termination of employment of such executive officer or key employee
regardless of the reason for such termination of employment; or (B)
agreement or plan which will remain in effect after the Closing, including,
without limitation, any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement
or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
(viii) eNexi has not taken any action which requires or, taken
together with the transactions contemplated hereby, would require the
giving of any notice under the Worker Adjustment Retraining and
Notification Act or any comparable state or local law or regulation.
(s) Suppliers and Customers. Set forth on Schedule 4.1(s) is a list of the
ten largest customers of eNexi and its Subsidiaries based on the percentage of
revenue represented by those customers for the fiscal year ended December 31,
1999. The relationship of eNexi and its Subsidiaries with their suppliers and
<PAGE>
customers are good commercial working relationships and no material supplier or
customer of eNexi and its Subsidiaries has canceled, curtailed or otherwise
terminated or threatened to cancel or otherwise terminate, his or its
relationship with eNexi or any of its Subsidiaries. eNexi and the Stockholder
have no knowledge, or reason to believe, that the Merger or any other
transaction contemplated hereby would adversely affect any such material
supplier or customer relationship.
(t) Conflicting Interests. Except as set forth on Schedule 4.1(t), neither
the Stockholder nor any director, officer or employee of eNexi nor relative or
affiliate of any of the foregoing (i) sells or purchases goods or services from
eNexi or has any pecuniary interest in any supplier or client of any of the
foregoing or in any other business enterprise with which eNexi conducts business
or with which any of the foregoing is in competition, or (ii) is indebted to
eNexi except for money borrowed and as set forth on the Financial Statements.
(u) Environmental Protection. Neither eNexi nor any Subsidiary has been
notified by any governmental authority, agency or third party, and eNexi and the
Stockholder have no knowledge, of any violation by such person of any
Environmental Statute (as defined below). All registrations by eNexi with,
licenses from or permits issued by governmental agencies pursuant to
environmental, health and safety laws are in full force and effect. The term
"Environmental Statutes" means all statutes, ordinances, regulations, orders and
requirements of common law concerning discharges to the air, soil, surface water
or groundwater and concerning the storage, treatment or disposal of any waste or
hazardous substance. There is no hazardous substance at any premises currently
or previously occupied by eNexi or the Subsidiaries. Neither eNexi nor any
Subsidiary has received any notice or any request for information, notice of
claim, demand or other notification that it may be potentially responsible with
respect to any investigation or clean-up of any threatened or actual release of
hazardous substances. All hazardous wastes and substances have been stored,
treated, disposed of and transported in conformance with all requirements
applicable to such hazardous substances and wastes.
(v) Absence of Certain Changes or Events. Except as and to the extent set
forth on the Financial Statements, to the extent contained in this Agreement, or
as set forth on Schedule 4.1(v), between March 31, 2000 (the date of the most
recent Financial Statements) and the Closing, there will not be (i) any Material
Adverse Change in the business, assets, properties, results of operations,
financial condition or prospects of eNexi or any of its Subsidiaries, (ii) any
entry by eNexi or any of its Subsidiaries into any material commitment or
transaction which is not in the ordinary course of business; (iii) any change by
eNexi or any of its Subsidiaries in accounting principles or methods except
insofar as may be required by a change in generally accepted accounting
principles; (iv) any declaration, payment or setting aside for payment of any
dividends or other distributions (whether in cash, stock or property) in respect
of capital stock of eNexi or any Subsidiary, or any direct or indirect
redemption, purchase or any other type of acquisition by eNexi, or any direct or
indirect redemption, purchase or any other type of acquisition by eNexi of any
shares of its capital stock or any other securities for an aggregate sum not in
excess of $5,000, (v) any agreement by eNexi, whether in writing or otherwise,
to take any action which, if taken prior to the date of this Agreement, would
have made any representation or warranty in this Section 4.1 untrue or
incorrect; (vi) any acquisition of the assets of eNexi, other than in the
ordinary course of business and consistent with past practice and not in excess
of $5,000 in the aggregate; or (vii) any execution of any agreement with any
executive officer of eNexi providing for his or her employment, or any increase
<PAGE>
in the compensation or in severance or termination benefits payable or to become
payable by eNexi to its officers or key employees, or any material increase in
benefits under any collective bargaining agreement or in benefits under any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, insurance or
other plan or arrangement or understanding (whether or not legally binding)
providing benefits to any present or former employee of eNexi. Since the date of
the Financial Statements, there has not been and there is not threatened, any
material adverse change in financial condition, business, results of operations
or prospects of the business or any material physical damage or loss to any of
the properties or assets of the business or to the premises occupied in
connection with the business, whether or not such loss is covered by insurance.
(w) Prospects of eNexi. eNexi has agreements with approximately 6,000
subscribers for VirtuallyFreeInternet.com, and approximately 15,000 subscribers
for dollars4mail.com, representing in the aggregate approximately $20,000 in
revenues for fiscal 1999 and approximately $50,000 in revenues for the three
month period ending March 31, 2000.
(x) Statements And Other Documents Not Misleading. Neither this Agreement,
including all exhibits and schedules and other closing documents, nor any other
financial statement, document or other instrument heretofore or hereafter
furnished by eNexi to Acquiror in connection with the Merger or the other
transactions contemplated hereby, contains or will contain any untrue statement
of any material fact or omit or will omit to state any material fact required to
be stated in order to make such statement, information, document or other
instruments, in light of the circumstances in which they are made, not
misleading. There is no fact known to eNexi which may have a Material Adverse
Effect on the business, prospects, financial condition or results of operations
of eNexi or of any of its properties or assets which has not been set forth in
this Agreement as an exhibit or schedule hereto.
4.2 Representations and Warranties of the Principal Stockholders
As a material inducement to Acquiror and Newco to execute this Agreement
and consummate the Merger and other transactions contemplated hereby, the
Principal Stockholders hereby jointly and severally make the following
representations and warranties to Acquiror and Newco. The representations and
warranties are true and correct in all material respects at this date, and will
be true and correct in all material respects on the Closing as though made on
and as of such date.
(a) The authorized capital stock of eNexi consists solely of One Million
Two Hundred Thousand (1,200,000) shares of common stock, $.01 par value per
share. There are currently 1,048,868 shares of eNexi Common Stock outstanding,
all of which are owned by the eNexi Stockholders in the amounts set forth on
Schedule 4.1(d) hereof. The outstanding shares of capital stock of eNexi have
been duly authorized and validly issued and are fully paid and nonassessable and
<PAGE>
free of preemptive rights. Except as set forth in this Section 4.1(d) and on
Schedule 4.1(d), there are outstanding (A) no shares of capital stock or other
voting securities of eNexi, (B) no securities of eNexi convertible into or
exchangeable for shares of capital stock or voting securities of eNexi and (C)
other than the eNexi Warrants, no options, warrants or other rights to acquire
from eNexi, the eNexi Stockholders or any other person, and no obligation of
eNexi to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of eNexi, and there
are no agreements or commitments to do any of the foregoing. There are no voting
trusts or voting agreements applicable to any shares of capital stock of eNexi.
The eNexi Common Stock to be surrendered in the Merger will be owned of record
and beneficially by the eNexi Stockholders, free and clear of all liens and
encumbrances of any kind and nature, and have not been sold, pledged, assigned
or otherwise transferred. There are no agreements (other than this Agreement) to
sell, pledge, assign or otherwise transfer such securities. Except as set forth
on Schedule 4.1(d), all of the issued and outstanding shares of capital stock of
the Subsidiaries are owned by eNexi.
(b) All consents, approvals, authorizations and orders necessary for the
execution, delivery and performance by each of the Principal Stockholders have
been duly and lawfully obtained. This Agreement has been duly executed and
delivered by each of the Principal Stockholders, and each Principal Stockholder
has, and at the Closing will have, full right, power, authority and capacity to
execute, deliver and perform this Agreement. This Agreement constitutes a valid
and binding agreement of each of the Principal Stockholders, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, and other similar laws relating
to, limiting or affecting the enforcement of creditors rights generally or by
the application of equitable principles.
4.3 Representations and Warranties of Acquiror and Newco.
As a material inducement to eNexi to execute this Agreement and to
consummate the Merger and the other transactions contemplated hereby, Acquiror
and Newco hereby jointly and severally make the following representations and
warranties:
(a) Corporate Existence and Power. Each of Acquiror and Newco is presently
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each of Acquiror and Newco has all corporate
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except where the failure to
have any of the foregoing would not have a Material Adverse Effect. Each of
Acquiror and Newco is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
True, complete and correct copies of the Certificate of Incorporation and Bylaws
of Acquiror and Newco, as amended to date, are attached hereto as Schedule
4.2(a) and are made a part hereof.
<PAGE>
(b) Due Authorization. This Agreement and the other agreements described
herein to which Acquiror or Newco will become a party at the Closing have been,
or as of the Closing will be, duly authorized, executed and delivered by
Acquiror or Newco, as applicable, and constitute, or as of the Closing will
constitute, a valid and binding agreement of Acquiror or Newco, as applicable,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, and other similar laws
relating to, limiting or affecting the enforcement of creditors rights generally
or by the application of equitable principles. As of the Closing all corporate
action on the part of Acquiror and Newco required under applicable law in order
to consummate the Merger will have occurred.
(c) No Contravention. The execution and delivery of the Agreement does not,
and the consummation of the transactions contemplated thereby will not (i)
conflict with or result in any violation of any provision of the Certificate of
Incorporation or Bylaws of Acquiror or Newco or (ii) conflict with or result in
any violation or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any right or obligation or to a loss or a benefit under, any provision of the
Certificate of Incorporation or Bylaws of Acquiror or Newco or any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Acquiror or Newco or
their properties or assets or result in the creation or imposition of any
Encumbrance on any asset of Acquiror or Newco, except, only as to clause (ii)
above: (i) the Right of First Refusal Agreement between the Acquiror and Mark S.
Isaacs dated as of March 19, 1999; (ii) the Joint Venture and Subscription
Agreement by and among Acquiror, International Capri Resources Ltd.,
International Capri Resources S.A. de C.V. ("ICRM"), Alan Stier and Zacualpan
Minerals, LLC dated as of March 19, 1999; (iii) any other agreement related to
or in connection with Acquiror's interest in ICRM or its former mining business
interests; and (iv) such as is not reasonably likely to have a Material Adverse
Effect or prevent Acquiror or Newco from consummating the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by or with respect to Acquiror or Newco in connection with
the execution and delivery of this Agreement or the consummation by them of the
transactions contemplated hereby, except the filing of a Certificate of Merger
with the Secretary of the State of Delaware.
(d) Capitalization. The authorized capital stock of Acquiror consists of
50,000,000 shares of common stock, $.0001 par value per share and 15,000,000
shares of preferred stock, $.0001 par value per share. As of the Closing, the
outstanding capital stock of the Acquiror shall consist solely of 43,075,000
shares of common stock. All shares of capital stock of Acquiror outstanding as
of the Closing, will have been duly authorized and validly issued, fully paid
and nonassessable and free of preemptive rights. Subject to Section 1.4(a), upon
the issuance of the Preferred Shares, such shares will be duly authorized,
validly issued, fully paid and nonassessable shares of preferred stock of
Acquiror. Acquiror does not have a sufficient number of shares of Common Stock
authorized for the full conversion of the Preferred Shares. Except for the
Assumed Warrants and warrants to purchase 2,000,000 shares of common stock,
Acquiror shall as of the Closing, have no outstanding options, warrants or other
convertible securities. The authorized capital stock of Newco consists solely of
1,000 shares of common stock, par value $.0001 per share, of which 1 share is
issued and outstanding and owned of record and beneficially by Acquiror. The
outstanding share of Newco common stock has been duly authorized and validly
issued is fully paid and nonassessable and free of preemptive rights.
<PAGE>
(e) Financial Statements. Acquiror shall deliver to eNexi (I) on or before
March 30, 2000, copies of audited financial statements of Acquiror for the
fiscal year ended December 31, 1999 and December 31, 1998, and (II) on or before
the Closing copies of unaudited financial statements of Acquiror for the
three-month period ended March 31, 2000 (collectively, the "Acquiror Financial
Statements"). Such Acquiror Financial Statements will have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods reported upon and will fairly present in all material
respects the financial position of Acquiror as of the dates thereof and the
results of operations for the periods then ended.
(f) Real Properties. Neither Acquiror nor Newco owns or leases any real
property.
(g) No Contingent Liabilities. Except contained within the Acquiror
Financial Statements or otherwise as described on Schedule 4.2(g) or agreed to
by the parties hereto, at the Closing, Acquiror and Newco shall have no material
liabilities, whether related to tax or non-tax matters, known or unknown, due or
not yet due, liquidated or unliquidated, fixed or contingent, determined or
determinable in amount or otherwise, and to the knowledge of the Acquiror, there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, except as and to the
extent reflected on this Agreement or any Schedule or Exhibit hereto or which
has been incurred in the ordinary course of business and as accurately reflected
on the books and records of Acquiror.
(h) Litigation. Except as described on Schedule 4.2(h) hereto there is no
action, suit, investigation or proceeding (or, to the knowledge of Acquiror or
Newco any basis therefor) pending against, or to the knowledge of Acquiror or
Newco threatened, against or affecting Acquiror, Newco or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official that (i) if adversely determined against Acquiror or Newco,
would have a Material Adverse Effect or (ii) in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the Merger or any of the other
transactions contemplated by the Agreement.
(i) Compliance with Laws. To the knowledge of Acquiror and Newco, neither
Acquiror nor Newco is in violation of, nor has either Acquiror or Newco
violated, any applicable provisions of any laws, statues, ordinances or
regulations, other than as would not be reasonably likely to have a Material
Adverse Effect.
(j) Reporting Company. The Common Stock of Acquiror is eligible for trading
on the OTC Electronic Bulletin Board. Acquiror is a reporting company under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act").
<PAGE>
(k) Investment Banking Fees. Other than with respect to the Private
Placement expected to close during the second quarter of 2000, there is no
investment banker, broker, finder or other similar intermediary which has been
retained by, or is authorized by Acquiror or Newco to act on its behalf who
might be entitled to any fee or commission from Acquiror or Newco or any of
their respective affiliates upon consummation of the transactions contemplated
by this Agreement.
(l) Statements And Other Documents Not Misleading. Neither this Agreement,
including all exhibits and schedules and other closing documents, nor any other
financial statement, document or other instrument heretofore or hereafter
furnished by Acquiror or Newco to eNexi in connection with the Merger or the
other transactions contemplated hereby, or any information furnished by Acquiror
or Newco taken as a whole contains or will contain any untrue statement of any
material fact or omit or will omit to state any material fact required to be
stated in order to make such statement, information, document or other
instruments, in light of the circumstances in which they are made, not
misleading. There is no fact known to Acquiror or Newco taken as a whole which
may have a Material Adverse Effect on the business, prospects, financial
condition or results of operations of Acquiror or Newco taken as a whole or of
any of its properties or assets which has not been set forth in this Agreement
as an exhibit or schedule hereto.
ARTICLE V
AGREEMENTS OF THE PARTIES
5.1 Access to Information.
At all times prior to the Closing or the earlier termination of this
Agreement in accordance with the provisions of Section 8, and in each case
subject to Section 5.2 below, each of the parties hereto shall provide to the
other parties (and the other parties' authorized representatives) full access
during normal business hours and upon reasonable prior notice to the premises,
properties, books, records, assets, liabilities, operations, contracts,
personnel, financial information and other data and information of or relating
to such party (including without limitation all written proprietary and trade
secret information and documents, and other written information and documents
relating to intellectual property rights and matters), and will cooperate with
the other party in conducting its due diligence investigation of such party.
5.2 Confidentiality; No Solicitation.
(a) Confidentiality of eNexi-Related Information. With respect to
information concerning eNexi that is made available to Acquiror pursuant to the
terms of this Agreement, Acquiror agrees that it shall hold such information in
strict confidence, shall not use such information except for the sole purpose of
evaluating the Merger and related transactions and shall not disseminate or
disclose any of such information other than to its directors, officers,
employees, stockholders, affiliates, agents and representatives who need to know
such information for the sole purpose of evaluating the Merger and the related
transactions (each of whom shall be informed in writing by Acquiror or its
<PAGE>
representatives of the confidential nature of such information and directed by
Acquiror in writing to treat such information confidentially). If this Agreement
is terminated pursuant to the provisions of Section 8, Acquiror shall
immediately return all such information, all copies thereof and all information
prepared by Acquiror based upon the same; provided, however, that one copy of
all such material may be retained by Acquiror's outside legal counsel for
purposes only of resolving any disputes under this Agreement. The above
limitations on use, dissemination and disclosure shall not apply to information
that (i) is learned by Acquiror from a third party entitled to disclose it; (ii)
becomes known publicly other than through Acquiror or any party who received the
same through Acquiror, provided that Acquiror has no knowledge that the
disclosing party was subject to an obligation of confidentiality; (iii) is
required by law or court order to be disclosed by Acquiror; or (iv) is disclosed
with the express prior written consent thereto of eNexi. Acquiror shall
undertake all necessary steps to ensure that the secrecy and confidentiality of
such information will be maintained in accordance with the provisions of this
paragraph (a). Notwithstanding anything contained herein to the contrary, in the
event a party is required by court order or subpoena to disclose information
which is otherwise deemed to be confidential or subject to the confidentiality
obligations hereunder, prior to such disclosure, the disclosing party shall: (A)
promptly notify the non-disclosing party and, if having received a court order
or subpoena, deliver a copy of the same to the non-disclosing party; (B)
cooperate with the non-disclosing party, at the expense of the non-disclosing
party in, obtaining a protective or similar order with respect to such
information; and (C) provide only such of the confidential information as the
disclosing party is advised by its counsel is necessary to strictly comply with
such court order or subpoena.
(b) Confidentiality of Acquiror-Related Information. With respect to
information concerning Acquiror that is made available to eNexi pursuant to the
provisions of this Agreement, eNexi agrees that it shall hold such information
in strict confidence, shall not use such information except for the sole purpose
of evaluating the Merger and the related transactions, and shall not disseminate
or disclose any of such information other than to its directors, officers,
employees, stockholders, affiliates, agents and representatives who need to know
such information for the sole purpose of evaluating the Merger and the related
transactions (each of whom shall be informed in writing by eNexi or its
representatives of the confidential nature of such information and directed by
such party in writing to treat such information confidentially). If this
Agreement is terminated pursuant to the provisions of Section 8, eNexi agrees to
return immediately all such information, all copies thereof and all information
prepared by eNexi based upon the same; provided, however, that one copy of all
such material may be retained by eNexi's outside legal counsel for purposes only
of resolving any disputes under this Agreement. The above limitations on use,
dissemination and disclosure shall not apply to information that (i) is learned
by eNexi from a third party entitled to disclose it; (ii) becomes known publicly
other than through eNexi or any party who received the same through eNexi
provided that eNexi has no knowledge that the disclosing party was subject to an
obligation of confidentiality; (iii) is required by law or court order to be
disclosed by eNexi; or (iv) is disclosed with the express prior written consent
thereto of Acquiror. eNexi agrees to undertake all necessary steps to ensure
that the secrecy and confidentiality of such information will be maintained in
accordance with the provisions of this paragraph (b). Notwithstanding anything
contained herein to the contrary, in the event a party is required by court
order or subpoena to disclose information which is otherwise deemed to be
confidential or subject to the confidentiality obligations hereunder, prior to
such disclosure, the disclosing party shall: (i) promptly notify the
non-disclosing party and, if having received a court order or subpoena, deliver
a copy of the same to the non-disclosing party; (ii) cooperate with the
non-disclosing party at the expense of the non-disclosing party in obtaining a
protective or similar order with respect to such information; and (iii) provide
only such of the confidential information as the disclosing party is advised by
its counsel is necessary to strictly comply with such court order or subpoena.
<PAGE>
(c) Nondisclosure. Neither eNexi, Acquiror nor Newco shall disclose to the
public or to any third party the existence of this Agreement or the transactions
contemplated hereby or any other material non-public information concerning or
relating to any other party hereto, other than with the express prior written
consent of the other parties hereto, except as may be required by law or court
order or to enforce the rights of such disclosing party under this Agreement, in
which event the contents of any proposed disclosure shall be discussed with the
other party before release; provided, however, that notwithstanding anything to
the contrary contained in this Agreement, any party hereto may disclose this
Agreement to any of its directors, officers, employees, stockholders,
affiliates, agents and representatives who need to know such information for the
sole purpose of evaluating the Merger, and to any person whose consent is
required in connection with the Merger or this Agreement. The parties anticipate
issuing a mutually acceptable, joint press release announcing the execution of
this Agreement and the consummation of the Merger.
(d) No Solicitation. In consideration of the substantial expenditure of
time, effort and money to be undertaken by Acquiror in connection with the
transactions contemplated by this Agreement, neither eNexi nor any of its
affiliates will, prior to the earlier of the Closing or ninety (90) days after
the termination of this Agreement directly or indirectly, through any officer,
director, agent or otherwise: (i) solicit, initiate or encourage the submission
of inquiries, proposals or offers from any person or entity relating to any
acquisition or purchase of assets of or any equity interest in eNexi or any
affiliate thereof or any tender offer (including a self-tender offer), exchange
offer, merger, consolidation, business combination, sale of a substantial amount
of assets or sale of securities, liquidation, dissolution or similar transaction
involving eNexi or its affiliates (a "Transaction Proposal"); (b) enter into or
participate in any discussions or negotiations regarding a Transaction Proposal,
or furnish to any other person or entity any information with respect to the
business, properties or assets of eNexi or its affiliates in connection with a
Transaction Proposal; or (c) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage any effort or attempt by any other
person to do or seek a Transaction Proposal. eNexi shall promptly notify
Acquiror if any such proposal or offer, or any inquiry or contact with any
person or entity with respect thereto is made.
5.3 Interim Operations.
During the period from the date of this Agreement and continuing until the
earlier of the Closing or the termination of this Agreement:
<PAGE>
(a) Interim Operations of eNexi and Subsidiaries. eNexi agrees (except as
expressly contemplated by this Agreement, including any Exhibits and Schedules
hereto, or to the extent that Acquiror shall otherwise consent in writing) that:
(i) Ordinary Course. eNexi and its Subsidiaries shall carry on their
business in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and, to the extent consistent with such
business, use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their present
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them;
(ii) Dividends; Changes in Stock. eNexi and its Subsidiaries shall not
and shall not propose to (a) declare, set aside or pay any dividend, on, or
make other distributions in respect of, any of their capital stock, (b)
split, combine or reclassify any of their capital stock or issue, authorize
or propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of their capital stock (c) redeem, repurchase
or otherwise acquire any shares of their capital stock or (d) otherwise
change their capitalization.
(iii) Issuance of Securities. Except as contemplated by this
Agreement, eNexi shall not sell, issue, pledge, authorize or propose the
sale or issuance of, pledge or purchase or propose the purchase of, any
shares of its capital stock of any class or securities convertible into, or
rights, warrants or options to acquire, any such shares or other
convertible securities.
(iv) Governing Documents. eNexi shall not amend its Articles of
Incorporation or its Bylaws. None of the Subsidiaries shall amend their
respective corporate charters or governing documents.
(v) No Dispositions. eNexi and its Subsidiaries shall not sell, lease,
pledge, encumber or otherwise dispose of or agree to sell, lease, pledge,
encumber or otherwise dispose of, any of their material assets except in
the ordinary course of business consistent with prior practice and in no
event amounting in the aggregate to more than $20,000 in value of such
assets.
(vi) Indebtedness. eNexi and its Subsidiaries shall not incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities or guarantee any debt securities of others
other than in the ordinary course of business consistent with prior
practice and in no event amounting in the aggregate to more than $20,000.
(vii) Benefit Plans; Etc. eNexi and its Subsidiaries shall not adopt
or amend in any material respect any collective bargaining agreement or
Employee Benefit Plan (as defined herein).
(viii) Executive Compensation. eNexi and its Subsidiaries shall not
grant to any executive officer any increase in compensation or in severance
or termination pay, or enter into any employment agreement with any
executive officer.
<PAGE>
(ix) Acquisitions. eNexi and its Subsidiaries shall not acquire (by
merger, consolidation or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or subdivision
thereof, or make any investment by either purchase of stock or securities,
contributions to capital, property transfer or, except in the ordinary
course of business, purchase of any property or assets, of any other
individual or entity.
(x) Tax Elections. eNexi and its Subsidiaries shall not make any
material tax election or settle or compromise any material federal, state,
local or foreign tax liability.
(xi) Waivers and Releases. eNexi and its Subsidiaries shall not waive,
release, grant or transfer any rights of material value or modify or change
in any material respect any Material Agreement other than in the ordinary
course of business and consistent with past practice.
(xii) Other Actions. eNexi and its Subsidiaries shall not enter into
any agreement or arrangement to do any of the foregoing. eNexi and its
Subsidiaries shall not take any action, or fail to take any action, that is
reasonably likely to result in any of the representations and warranties of
them set forth in this Agreement becoming untrue in any material respect.
(b) Interim Operations of Acquiror and Newco. Acquiror and Newco agree
(except as expressly contemplated by this Agreement, including any Exhibits and
Schedules hereto, or to the extent that eNexi and the Stockholder shall
otherwise consent) that:
(i) Ordinary Course. Other than Acquiror's mining business operated
through ICRM, Acquiror and Newco shall conduct no business activity other
than in connection with the transactions contemplated by this Agreement in
connection with the Merger.
(ii) Dividends; Changes in Stock. Neither Acquiror nor Newco shall
(and neither shall propose to) (a) declare or pay any dividend, on, or make
other distributions in respect of, any of its capital stock, (b) split,
combine or reclassify any of its capital stock or issue, authorize or
propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, (c) repurchase or
otherwise acquire any shares of its capital stock or (d) otherwise change
its capitalization.
(iii) No Dispositions. Other than Acquiror's planned disposition of
its interest in ICRM, neither Acquiror nor Newco shall sell, lease, pledge,
encumber or otherwise dispose of, or agree to sell, lease, pledge, encumber
or otherwise dispose of, any of its assets that are material, or any other
assets except in the ordinary course of business consistent with prior
practice.
(iv) Placement Activities. Prior to the Closing, Acquiror shall have
commenced the Private Placement that as of the Closing yields gross
proceeds of no less than $5,000,000 to Acquiror.
<PAGE>
(v) Other Actions. Acquiror shall take any action, or fail to take any
action, that is reasonably likely to result in any of its representations
and warranties set forth in this Agreement becoming untrue in any material
respect.
5.4 Consents.
Acquiror and eNexi shall cooperate and use their best efforts to obtain,
prior to the Closing, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts as are necessary for the consummation of the transactions
contemplated by this Agreement; provided, however, that no loan agreement or
contract for borrowed monies shall be repaid and no contract shall be amended
materially to increase the amount payable thereunder or otherwise to be
materially more burdensome in order to obtain any such consent, approval or
authorization without first obtaining the written approval of the other parties
hereto.
5.5 Employee Stock Option Plan.
As promptly as practicable following the Effective Date, Acquiror shall
adopt the employee stock option plan attached hereto as Exhibit 5.5 (the
"Plan"), and shall thereafter issue under the Plan that number of options to
purchase Acquiror Common Stock to the persons and pursuant to the terms
identified on Schedule 5.5 hereto. The number of shares of Acquiror Common Stock
authorized for issuance upon the exercise of options granted under the Plan
shall be up to 37,500,000 (or 1,500,000 shares after giving effect to a
contemplated 25:1 reverse stock split).
5.6 All Reasonable Efforts.
Subject to the terms and conditions of this Agreement and to the fiduciary
duties and obligations of the boards of directors of the parties hereto to their
respective stockholders, as advised by their counsel, each of the parties to
this Agreement shall use all reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, or to remove any injunctions or
other impediments or delays, legal or otherwise, as soon as reasonable
practicable, to consummate the Merger and the other transactions contemplated by
this Agreement.
5.7 Public Announcements.
Acquiror, Newco and eNexi shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
Merger, this Agreement or the other transactions contemplated by this Agreement
and shall not issue any other press release or make any other public statement
without prior consent of the other parties, except as may be required by law or,
with respect to Acquiror, by obligations pursuant to rule or regulation of the
Exchange Act, the Securities Act, any rule or regulation promulgated thereunder
or any rule or regulation of the NASD.
<PAGE>
5.8 Notification of Certain Matters.
eNexi shall give prompt notice to Acquiror, and Acquiror shall give prompt
notice to eNexi of (a) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which would cause any of its representations or
warranties in this Agreement to be untrue or inaccurate in any material respect,
as to eNexi, at or prior to the Closing, and, as to Acquiror or Newco, as of the
Closing and (b) any material failure of eNexi, on the one hand, or Acquiror and
Newco, on the other hand, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by them under
this Agreement; provided, however, the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available to the party
receiving such notice under this Agreement as expressly provided in this
Agreement.
5.9 Expenses.
All costs and expenses incurred in connection with the Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated. In the event that the Merger
is consummated, eNexi shall be responsible for legal or other expenses incurred
by itself, but not for those incurred by Acquiror, in connection with the
preparation and negotiation of this Agreement.
5.10 Lock-Up; Prohibition on Short Sales.
(a) During the Restricted Period, the Principal Stockholders may not
transfer, sell, or otherwise dispose of the aggregate number of Preferred Shares
that are equal to one-half of the total number of Preferred Shares issued as
Merger Consideration (the "Lock-Up Shares"). The term "Lock-Up Shares" also
includes the shares of common stock issuable upon conversion of the Preferred
Shares originally constituting the Lock-Up Shares. Certificates representing the
Lock-Up Shares shall bear a legend referencing the restrictions set forth in
this Section 5.19.
(b) The Principal Stockholders may not transfer, sell, or otherwise dispose
of the Preferred Shares issued to them as Merger Consideration that are not
Lock-Up Shares until such transfer or sale may be made in accordance with the
provisions of Rule 144 promulgated under the Securities Act of 1933, as amended.
(c) The eNexi Stockholders shall not make any short sales of Acquiror's
Common Stock during the Restricted Period.
5.11 Voting Proxy.
In the event that the Surviving Corporation has not provided written
evidence satisfactory to the Acquiror Designees (as such term is defined in
Section 5.19(a)) or their designees that the Surviving Corporation has attained,
on or before the date that is two years after the date of Closing, 500,000
subscribers for its Online Communities whose accounts remain current and in
compliance with the subscription standards established by the Surviving
Corporation, then the holders of the Lock-Up Shares shall give the Acquiror
Designees a voting proxy with respect to the Lock-Up Shares in the form attached
hereto as Exhibit 5.11 ("Voting Proxy") until the earlier to occur of: (x) 90
days thereafter; and (y) the date on which the Surviving Corporation provides
written evidence satisfactory to Acquiror's Designees that it has attained
500,000 subscribers for its Online Communities.
<PAGE>
5.12 Private Placement.
After the date hereof, Acquiror shall undertake the Private Placement
offering to accredited, sophisticated and institutional investors which is
intended to yield gross proceeds of no less than $5,000,000 through the sale of
shares of Acquiror's preferred and/or common stock. The closing of at least
$5,000,000 in subscriptions under the Private Placement shall occur concurrently
with the Closing under this Agreement. Acquiror's obligation to complete the
Private Placement is conditioned upon (i) there being no material adverse
change, or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of eNexi or its Subsidiaries,
or the earnings, business affairs, management or business prospects of eNexi or
its Subsidiaries, in the discretion of either the placement agent engaged to
conduct the Private Placement or the Acquiror Designees, whether or not arising
in the ordinary course of business or otherwise; and (ii) there being no pending
material indemnification claim hereunder regarding the breach of any of the
representations, warranties, agreements or covenants of eNexi hereunder on and
as of the date of the closing of the Private Placement. The proceeds of the
Private Placement shall be utilized for working capital purposes of the
Surviving Corporation. The Private Placement may be completed through the use of
a placement agent which is a broker-dealer registered with the Securities and
Exchange Commission ("SEC") and in good standing with the NASD, upon payment of
sales commissions, expenses and warrants which are reasonable and customary in
transactions of this nature.
5.13 Registration of Resale of Certain Shares of Common Stock.
Acquiror shall use best efforts to prepare and file within 120 days
following the Effective Time a registration statement on Form SB-2 or S-1 with
the SEC under the Securities Act in order to register the reoffer and
redistribution of certain shares of Acquiror Common Stock in accordance with the
terms of a registration rights agreement in form and substance to be agreed upon
by the parties thereto in substantially the form attached hereto as Exhibit 5.13
(the "Registration Rights Agreement"). The shares of Acquiror's Common Stock to
be included for public reoffer and redistribution as part of the registration
statement shall include: (i) the shares sold in the Private Placement; (ii) the
25,000,000 shares of Common Stock previously issued by Acquiror as part of the
private placement transactions identified on Schedule 5.13 hereof; (iii) the
shares of Common Stock issuable upon the exercise of the Assumed Warrants; and
(iv) up to 30,000,000 shares of Common Stock issuable upon the conversion of
Preferred Shares that are not Lock-Up Shares. For the purposes hereof, the
number of shares of Acquiror Common Stock to be included in the registration
statement shall be adjusted by a stock split, division or recapitalization that
occurs after the Effective Time.
<PAGE>
5.14 Documents at Closing.
Each party to this Agreement agrees to execute and deliver at the Closing
those documents identified in Section 2.2.
5.15 Prohibition on Trading in Acquiror Stock.
eNexi acknowledges that the United States securities laws prohibit any
person who has received material non-public information concerning the matters
which are the subject matter of this Agreement from purchasing or selling the
securities of the Acquiror, or from communicating such information to any person
under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell securities of the Acquiror. Accordingly, until the
Closing, eNexi agrees that it will not and shall instruct its officers,
directors, employees and representatives not to purchase or sell any securities
of the Acquiror, or communicate such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell securities of the Acquiror, until counsel for Acquiror
believes that any such non-public information has been adequately disseminated
to the public.
5.16 Reservation of Shares; Post-Closing Amendments to Acquiror's Certificate of
Incorporation.
As of the Closing, Acquiror shall have authorized and reserved for issuance
sufficient shares of Preferred Stock to permit the issuance of the Preferred
Shares. Acquiror shall use best efforts to secure approval by its stockholders
as promptly as is practicable following the Effective Date of an amendment to
its Certificate of Incorporation that effectuates (I) a change in its name to
"eNexi Holdings, Inc."; (II) either (x) a reverse split of its shares of Common
Stock; or (y) an increase in the number of shares of Common Stock authorized
thereunder, in each case so as to have authorized and available for issuance a
sufficient number of shares of Acquiror Common Stock to fully cover conversion
of the Preferred Shares, exercise of the Assumed Warrants and exercise of the
Shares covered by the Plan; and (III) ratification of the Plan. Upon securing
such stockholder approval, Acquiror shall promptly file an appropriate amendment
to its Certificate of Incorporation with the Secretary of State of the State of
Delaware.
5.17 Indemnification: Directors' and Officers' Insurance.
(a) Acquiror shall, to the fullest extent permitted under applicable law,
and for six years from and after the Effective Time, to the fullest extent
permitted under applicable law, indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer, director or employee of the Acquiror
(the "Indemnified Parties") from and against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of the Acquiror, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
<PAGE>
hereby, in each case to the full extent permitted under the DGCL. Acquiror will
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law.
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Party (whether
arising before or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them and Acquiror; (ii) Acquiror shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefore are received; (iii) the Acquiror will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that Acquiror shall be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 5.17, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Acquiror (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 5.17 except to the extent such failure prejudices such
party). The Indemnified Parties as a group may retain only one law firm to
represent them with respect to such matter (in addition to local counsel) unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) For a period of six years after the Effective Time, the Acquiror or the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officer's liability insurance maintained by the
Acquiror (provided that Acquiror or the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims or matters
existing or occurring before the Effective Time.
(c) This Section 5.17 shall survive the consummation of the Merger. The
provisions of this Section 5.17 are intended to be for the benefit of, and shall
be enforceable by, each Indemnified Party, his heirs and his representatives.
The rights provided Indemnified Parties shall be in addition to, and not in lieu
of, any rights to indemnity which such parties may have under the Certificate or
By-Laws of the Acquiror or the Surviving Corporation or any other agreements or
otherwise.
5.18 Acknowledgment of Approvals; Approval of eNexi Stockholders.
By virtue of their respective signatures to this Agreement, Acquiror,
Newco, eNexi and the Principal Stockholders acknowledge their approval of this
Agreement and their consent to the consummation of the transactions identified
herein. eNexi shall hold a meeting of its stockholders prior to the Closing to
approve the Merger and this Agreement in accordance with the DGCL.
5.19 Matters of Corporate Governance.
(a) Concurrent with the Closing, members of Acquiror's Board of Directors
shall resign and shall be replaced with a Board of Directors of five (5)
members, consisting of: (i) two designees of Acquiror's Board of Directors
<PAGE>
immediately prior to the Closing (the "Acquiror Designees"); and (ii) three (3)
designees of eNexi's Board of Directors. If the size of Acquiror's Board of
Directors increases or decrease during the Restricted Period, then the
representation on Acquiror's Board of Directors by the Acquiror Designees shall
be at least 40% of the total board representation during the Restricted Period.
Immediately following the Effective Date, Acquiror's Board of Directors shall
execute and deliver to the secretary of Acquiror the form of board resolutions
attached hereto as Exhibit 5.19(a) authorizing the transactions contemplated in
this Agreement.
(b) Each of the Principal Stockholders agrees that, during the Restricted
Period, he will vote all voting securities of Acquiror owned beneficially or of
record by him at every Annual Meeting of Stockholders, at any Special Meeting of
Stockholders called for the purpose of electing members to the Board of
Directors, or will act by written consent or otherwise take such action as is
required to vote for and elect a Board of Directors in the manner identified in
Section 5.19(a). Each of the Principal Stockholders further agrees not to take
any action inconsistent with this Section 5.19, including voting any voting
securities of Acquiror to amend the Certificate of Incorporation or the Bylaws
of the Surviving Corporation or Acquiror.
(c) Each of the Principal Stockholders agrees that, during the Restricted
Period, he will vote all voting securities of Acquiror owned beneficially or of
record by him at every Annual Meeting of Stockholders, at any Special Meeting of
Stockholders, or will act by written consent or otherwise take such action as is
required to vote for a name change, reverse split or amendment to Acquiror's
Certificate of Incorporation to increase the authorized capital stock as
contemplated in Section 5.16.
(d) During the Restricted Period, approval of any of the following
transactions shall require the affirmative vote of 80% of the members of
Acquiror's Board of Directors: (i) any merger, consolidation, sale of all or
substantially all of the assets of Acquiror or recapitalization involving
Acquiror; (ii) transactions between Acquiror or the Surviving Corporation and
any interested party (including all directors, executive officers, employees or
principal (i.e., over 5%) stockholders); (iii) any modification to the terms of
this Agreement or any other agreements entered into upon the Closing; (iv) any
issuance of shares of Acquiror's Common Stock, Preferred Stock or securities
exercisable or convertible into shares of Acquiror's Common Stock or Preferred
Stock, equal to or exceeding 10% of the Acquiror's then outstanding shares of
Common Stock or voting power; (v) any recapitalization of the capital stock of
Acquiror or the Surviving Corporation (other than the reverse split or increase
in the number of authorized shares of Acquiror's Common Stock pursuant to
Section 5.16 hereof); (vi) any borrowing by Acquiror or the Surviving
Corporation in excess of $250,000; and (vii) any amendment to the Acquiror's or
Surviving Corporation's By-laws or Certificate of Incorporation. Notwithstanding
anything contained in this Agreement to the contrary, commencing one year after
the Closing, a super-majority vote of the Acquiror's Board of Directors shall
not be required to approve any transaction except as may be required under
applicable Delaware law.
<PAGE>
5.20 Disposition of Assets
Acquiror shall use best efforts following the Closing to dispose of its
interest in ICRM.
5.21 Production of Schedules and Exhibits.
Each of the parties hereto shall utilize its reasonable best efforts to
produce all Schedules and Exhibits required to be produced by it under this
Agreement upon the execution hereof. In the event that any party has not
produced all Schedules and Exhibits required to be produced by it hereunder upon
the execution of this Agreement, all such Schedules and Exhibits shall be
produced by such party within fifteen (15) business days thereafter but in no
event shall such Schedules and Exhibits be delivered less than five (5) business
days prior to the Closing Date. The Schedules and Exhibits produced subsequent
to the execution of this Agreement, shall be given such force and effect as
though such Schedules and Exhibits which were produced upon execution of this
Agreement.
<PAGE>
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Obligations of eNexi.
The obligations of eNexi to consummate the Merger and the other
transactions contemplated to be consummated by it at the Closing are subject to
the satisfaction (or waiver by eNexi) at or prior to the Closing (or at such
other time prior thereto as may be expressly provided in this Agreement) of each
of the following conditions:
(a) The representations and warranties of Acquiror and Newco set out in
this Agreement shall be true and correct in all material respects at and as of
the time of the Closing as though such representations and warranties were made
at and as of such time.
(b) Acquiror shall have complied in a timely manner and in all material
respects with the respective covenants and agreements set out in this Agreement.
(c) The Merger shall have been approved by Newco in accordance with the
provisions of the DGCL. The Board of Directors of Newco and Acquiror shall have
approved the execution of this Agreement and the Merger thereby.
(d) Acquiror shall deliver certificates evidencing the Asuumed Warrants to
the persons and in the amounts set forth on Schedule 1.2(c);
(e) There shall be delivered to eNexi an officer's certificate of Acquiror
to the effect that all of the representations and warranties of Acquiror set
forth herein are true and complete in all material respects as of the Closing,
and the Acquiror has complied in all material respects with the covenants and
agreements set forth herein that are required to be complied with by the
Closing.
(f) There shall be delivered to eNexi an officer's certificate of Newco to
the effect that all of the representations and warranties of Newco set forth
herein are true and complete in all material respects as of the Closing, and
Newco has complied in all material respects with the covenants and agreements
set forth herein that are required to be complied with by the Closing.
(g) The Private Placement investors shall have deposited in escrow a
minimum of $5,000,000 in subscription funds.
(h) All director, stockholder, lender, lessor and other parties' consents
and approvals, as well as all filings with, and all necessary consents or
approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured.
<PAGE>
(i) No statute, rule, regulation, executive order, decree, injunction or
restraining order shall have been enacted, entered, promulgated or enforced by
any court of competent jurisdiction or governmental authority that prohibits or
restricts the consummation of the Merger or the related transactions.
6.2 Conditions to Acquiror's Obligations.
The obligation of Acquiror to consummate the Merger and the other
transactions contemplated to be consummated by it at the Closing are subject to
the satisfaction (or waiver by Acquiror) at or prior to the Closing (or at such
other time prior thereto as may be expressly provided in this Agreement) of each
of the following conditions:
(a) The representations and warranties of eNexi set out in this Agreement
shall be true and correct in all material respects at and as of the time of the
Closing as though such representations and warranties were made at and as of
such time;
(b) eNexi shall have complied in a timely manner and in all material
respects with its covenants and agreements set out in this Agreement;
(c) There shall be delivered to Acquiror an officer's certificate of eNexi
to the effect that all of the representations and warranties of eNexi set forth
herein are true and complete in all material respects as of the Closing, and
that eNexi has complied in all material respects with the covenants and
agreements set forth herein that it is required to comply with by the Closing;
(d) eNexi shall have secured the approval of its stockholders necessary
under the DGCL, its Certificate of Incorporation and Bylaws to approve the
Merger this Agreement and the transactions contemplated hereby, and shall have
delivered a certificate of an authorized officer of eNexi to this effect;
(e) None of the holders of the eNexi Common Stock issued and outstanding
immediately prior to the Effective Time shall have demanded an appraisal of the
fair market value of their shares under Section 262 of the DGCL;
(f) eNexi shall have paid in full or restructured the terms of any and all
other outstanding indebtedness which is accelerated, in whole or in part upon
consummation of the Merger or any of the transactions contemplated by this
Agreement to the satisfaction of Acquiror;
(g) All director, stockholder, lender, lessor and other parties' consents
and approvals, as well as all filings with, and all necessary consents or
approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured;
<PAGE>
(h) The Acquiror shall have completed a due diligence review of the
business, operations, financial condition and prospects of eNexi and its
Subsidiaries and shall have been satisfied with the results of its due diligence
review in its sole and absolute discretion;
(i) The Board of Directors of eNexi and the eNexi Stockholders shall have
approved the Merger in accordance with the DGCL;
(j) No statute, rule, regulation, executive order, decree, injunction or
restraining order shall have been enacted, entered, promulgated or enforced by
any court of competent jurisdiction or governmental authority that prohibits or
restricts the consummation of the Merger or the related transactions; and
(k) The holder(s) of all eNexi Warrants have consented to the assumption of
such Warrants by Acquiror.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification.
(a) The Principal Stockholders shall jointly and severally indemnify,
defend and hold harmless Acquiror from and against any and all demands, claims,
actions or causes of action, judgments, assessments, losses, liabilities,
damages or penalties and reasonable attorneys' fees and related disbursements
(collectively, "Claims") incurred by Acquiror which arise out of or result from
a misrepresentation or breach of warranty contained in Section 4.2 hereof.
(b) Methods of Asserting Claims for Indemnification. All claims for
indemnification under this Agreement shall be asserted as follows:
(i) Third Party Claims. In the event that any Claim for which a party
(the "Indemnitee") would be entitled to indemnification under this
Agreement is asserted against or sought to be collected from the Indemnitee
by a third party the Indemnitee shall promptly notify the other party (the
"Indemnitor") of such Claim, specifying the nature thereof, the applicable
provision in this Agreement or other instrument under which the Claim
arises, and the amount or the estimated amount thereof (the "Claim
Notice"). The Indemnitor shall have thirty (30) days (or, if shorter, a
period to a date not less than ten (10) days prior to when a responsive
pleading or other document is required to be filed but in no event less
than ten (10) days from delivery or mailing of the Claim Notice) (the
"Notice Period") to notify the Indemnitee (a) whether or not it disputes
the Claim and (b) if liability hereunder is not disputed, whether or not it
desires to defend the Indemnitee. If the Indemnitor elects to defend by
appropriate proceedings, such proceedings shall be promptly settled or
prosecuted to a final conclusion in such a manner as to avoid any risk of
damage to the Indemnitee; and all costs and expenses of such proceedings
and the amount of any judgment shall be paid by the Indemnitor.
<PAGE>
If the Indemnitee desires to participate in, but not control, any such
defense or settlement, it may do so at its sole cost and expense. If the
Indemnitor has disputed the Claim, as provided above, and shall not defend
such Claim, the Indemnitee shall have the right to control the defense or
settlement of such Claim, in its sole discretion, and shall be reimbursed
by the Indemnitor for its reasonable costs and expenses of such defense.
Neither Indemnitee nor Indemnitor shall be liable for any settlement of any
Claim without the prior written consent of the other party.
(c) Non-Third Party Claims. In the event that the Indemnitee should have a
Claim for indemnification hereunder which does not involve a Claim being
asserted against it or sought to be collected by a third party, the Indemnitee
shall promptly send a Claim Notice with respect to such Claim to the Indemnitor.
If the Indemnitor does not notify the Indemnitee within the Notice Period that
it disputes such Claim, the Indemnitor shall pay the amount thereof to the
Indemnitee. If the Indemnitor disputes the amount of such Claim, the controversy
in question shall be submitted to arbitration pursuant to Section 9.8 hereafter.
ARTICLE VIII
TERMINATION
8.1 Termination.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to or at the Closing:
(a) by mutual written consent of Acquiror and eNexi;
(b) by either Acquiror or eNexi:
(i) if the Closing shall not have occurred on or before April 30,
2000, unless otherwise extended in writing by all of the parties hereto;
provided, however, that the right to terminate this Agreement under this
Section 8.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before that date; or
(ii) if any court of competent jurisdiction, or any governmental body,
regulatory or administrative agency or commission having appropriate
jurisdiction shall have issued an order, decree or filing or taken any
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable.
(c) by eNexi if any of the conditions specified in Section 6.1 have not
been met or if satisfaction of such a condition is or becomes impossible (other
than through the failure of eNexi to comply with their respective obligations
under this Agreement) and eNexi has not waived such conditions on or before the
Closing; or
<PAGE>
(d) by Acquiror if any of the conditions specified in Section 6.2 have not
been met or if satisfaction of such a condition is or becomes impossible (other
than through the failure of Acquiror to comply with their respective obligations
under this Agreement) and Acquiror has not waived such condition on or before
the Closing.
8.2 Notice and Effect of Termination.
In the event of the termination and abandonment of this Agreement pursuant
to Section 8.1, written notice thereof shall forthwith be given to the other
party or parties specifying the provision pursuant to which such termination is
made. Upon termination, this Agreement shall forthwith become void and all
obligations of the parties under this Agreement will terminate without any
liability on the part of any party or its directors, officers or stockholders
and none of the parties shall have any claim or action against any other party,
except that the provisions of this Section 8.2 and Sections 5.2, 5.7 and 5.9,
shall survive any termination of this Agreement. Nothing contained in this
Section 8.2 shall relieve any party from any liability for any breach of this
Agreement other than in the event of a termination pursuant to Section 8.1.
8.3 Extension; Waiver.
Any time prior to the Closing, the parties may (a) extend the time for the
performance of any of the obligations or other acts of any other party under or
relating to this Agreement; (b) waive any inaccuracies in the representations or
warranties by any other party or (c) waive compliance with any of the agreements
of any other party or with any conditions to its own obligations. Any agreement
on the part of any other party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
8.4 Amendment and Modification.
This Agreement may be amended by written agreement of Acquiror, Newco and
eNexi.
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Certain Representations and Warranties; Remedies.
All representations and warranties of the Principal Stockholders contained
in or made pursuant to Section 4.2 of this Agreement shall survive the Closing
for a period of twelve (12) months from the Closing Date. The right to
indemnification, payment of damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
<PAGE>
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages, or other remedy based on such representations, warranties, covenants,
and obligations. The rights and remedies of the parties to this Agreement are
cumulative, not alternative. In addition to their respective rights to damages
or other remedies they may have, and without limitation thereof, Acquiror shall
have the right to obtain injunctive relief to restrain any breach or otherwise
to specifically enforce the provisions of this Agreement, it being agreed by the
parties that money damages alone would be inadequate to compensate Acquiror for
such breach or other failure to perform the obligations of eNexi and the eNexi
Stockholders under this Agreement.
The rights and remedies of the parties to this Agreement are cumulative,
not alternative. In addition to their respective rights to damages or other
remedies they may have, and without limitation thereof, Acquiror shall have the
right to obtain injunctive relief to restrain any breach or otherwise to
specifically enforce the provisions of this Agreement, it being agreed by the
parties that money damages alone would be inadequate to compensate Acquiror for
such breach or other failure to perform the obligations of eNexi and the eNexi
Stockholders under this Agreement.
9.2 Notices.
All notices requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given on the date if delivered personally, or upon the
second business day after it shall have been deposited by certified or
registered mail with postage prepaid, or upon the next business day after it
shall have been deposited with a nationally recognized overnight courier such as
federal express, or sent by telex, telegram or telecopier, as follows (or at
such other address or facsimile number for a party as shall be specified by like
notice):
<TABLE>
<CAPTION>
<S> <C> <C>
(a) if to eNexi, to it at: with a copy to:
20 Corporate Circle Gregory Sichenzia, Esquire
Irvine, CA 92601 Sichenzia, Ross & Friedman LLP
Attn: Dr. Roger Miller 135 West 50th Street, 20th Floor
New York, NY 10020
Fax: (212) 664-7329
(b) if to Acquiror or Newco, to it at: with a copy to:
Silver King Resources, Inc. Stephen M. Cohen, Esquire
4372 44B Avenue Buchanan Ingersoll, P.C.
Delta, British Columbia Eleven Penn Center
Canada V4K 1H1 14th Floor
Attn: Alan Stier, President Philadelphia, PA 19103
Fax: (604) 946-4560 Fax: (215) 665-8760
</TABLE>
<PAGE>
9.3 Agreement; Assignment.
This Agreement, including all Exhibits and Schedules hereto, constitutes
the entire Agreement among the parties with respect to its subject matter and
supersedes all prior agreements and understandings, both written and oral, among
the parties or any of them with respect to such subject matter and shall not be
assigned by operation of law or otherwise.
9.4 Binding Effect; Benefit.
This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns. Nothing in this Agreement
is intended to confer on any person other than the parties to this Agreement or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.5 Headings.
The descriptive headings of the sections of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
9.6 Counterparts.
This Agreement may be executed in two or more counterparts and delivered
via facsimile, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
9.7 Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the laws that might otherwise
govern under principles of conflicts of laws applicable thereto.
9.8 Arbitration.
If a dispute arises as to the interpretation of this Agreement, it shall be
decided finally in an arbitration proceeding conforming to the Rules of the
American Arbitration Association applicable to commercial arbitration then in
effect at the time of the dispute. The arbitration shall take place in
Philadelphia, Pennsylvania. The decision of the Arbitrators shall be
conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. The parties
shall share equally the costs of the arbitration.
9.9 Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
<PAGE>
9.10 Release and Discharge.
By virtue of their execution of this Agreement, as of the Closing and
thereafter, each of the eNexi Stockholders hereby agrees to release, remise and
forever discharge eNexi from and against any and all debts, obligations,
liabilities and amounts owing from eNexi to the eNexi Stockholders prior to the
Closing, and eNexi is not obligated to take any action or make any payments to
third parties on behalf of the eNexi Stockholders.
9.11 Certain Definitions.
As used herein:
(a) "Affiliate" shall have the meanings ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended to date (the "Exchange Act");
(b) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which federally chartered financial institutions are not open for
business in the City of Irvine, California.
(c) "Encumbrance" shall mean any lien, encumbrance, pledge, hypothecation,
claim or charge.
(d) "eNexi Stockholders" shall mean the Principal Stockholders, together
with the other stockholders of eNexi.
(e) "Exchange Ratio" shall equal 143.011 shares of Acquiror's Common Stock
for each share of eNexi Common Stock outstanding as of the Effective Time.
(f) "Knowledge" shall mean the actual current knowledge of the party ,
and/or the executive management of the party to this Agreement, as the case may
be, to whom knowledge is ascribed.
(g) "Material Adverse Effect" shall mean any adverse effect on the
business, condition (financial or otherwise) or results of operation of the
relevant party and its subsidiaries, if any, which is material to such party and
its subsidiaries, if any, taken as a whole;
(h) "Online Communities" means the following online websites of eNexi: (i)
VirtuallyFreeInternet.com, which provides internet access services to
subscribers for a monthly fee; and (ii) dollars4mail, which provides subscribers
with free web-based e-mail accounts and derives revenue from selling information
about its subscribers to web advertisers.
(i) "Person" means any individual, corporation, partnership, association,
trust or other entity or organization, including a governmental or political
subdivision or any agency or institution thereof;
<PAGE>
(j) "Private Placement" means the private placement offering of Acquiror's
convertible preferred stock and/or common stock to accredited and/or
sophisticated investors commencing as soon as practicable after the date hereof;
and
(k) "Restricted Period" means the period commencing on the Closing and
ending on the earlier to occur of (x) the date on which the Surviving
Corporation provides written evidence satisfactory to the Acquiror Designees
that the Surviving Corporation has 500,000 subscribers in the aggregate for its
Online Communities whose accounts remain current and in compliance with the
subscription standards established by the Surviving Corporation; and (y) 2 years
and 90 days after the Closing.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has signed or has caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
SILVER KING RESOURCES, INC.,
a Delaware Corporation
By: __________________________________
Name:
Title: President
SILVER KING ACQUISITION, INC.,
a Delaware Corporation
By: _________________________________
Name:
Title: President
ENEXI INC., a Delaware Corporation
By: _________________________________
Name: Roger LeRoy Miller
Title: President
- ---------------------------------
Roger LeRoy Miller
- ---------------------------------
Larry Mayle
