<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): April 4, 2000 (April 4, 2000)
--------------
booktech.com, inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nevada 000-26903 88-0409153
- ------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
42 Cummings Park, Woburn, Massachusetts 01801
- ------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (781) 933-5400
---------------
Ebony & Gold Ventures, Inc.
Suite 2000 1177 West Hastings Street, Vancouver,
British Columbia V6E 2K3, Canada
- ------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 1. Change in Control of Registrant.
--------------------------------
On March 31, 2000, EG Acquisitions Corporation, a Nevada corporation
("Merger-Sub"), a wholly owned subsidiary of Ebony & Gold Ventures, Inc., a
Nevada corporation (the "Company"), merged (the "Merger") with and into
booktech.com, inc., a Massachusetts corporation ("booktech"), pursuant to an
Agreement and Plan of Merger dated March 31, 2000 (the "Merger Agreement").
booktech is an Internet based developer and distributor of college coursepack
materials. Following the Merger, the business to be conducted by the Company
will be the business conducted by booktech prior to the Merger. The Merger will
be accounted for as a reverse acquisition. In conjunction with the Merger, the
Company changed its name to "booktech.com, inc."
Pursuant to the terms of the Merger Agreement, the Company issued
7,520,690 shares of its authorized but unissued common stock to the former
holders of booktech common stock in exchange for 21,810 shares of common stock
of booktech ("booktech common stock") issued and outstanding as of the effective
time of the Merger and 1,100,000 shares of the Company's Series B Preferred
Stock based in exchange for 3,190 shares of booktech common stock issued and
outstanding as of the effective time of the Merger.
Pursuant to the Merger, debt and accrued interest ($3,216,171) owed by
booktech to certain investors, was converted into 2,135,301 shares of Series A
Preferred Stock of the Company.
In addition, the Company purchased technology and a related patent
application from Virtuosity Press LLC, a Delaware Limited Liability Company
("Virtuosity"), in exchange for 1,379,310 shares of the Company's $.00042 par
value Common Stock.
The shares issued to the former booktech stockholders represent
approximately 56.8% of the outstanding voting securities (by vote) of the
Company following the Merger.
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
See Item 1 above for a description of the Merger.
Item 5. Other Events.
-------------
In connection with the Merger, the Company changed its name to
"booktech.com, inc." and issued 4,666,667 shares of common stock pursuant to
Section 4(2) of the Securities Act of 1933, as amended, and warrants to purchase
833,333 shares of Common Stock at an exercise price of $1.50 per share for an
aggregate purchase price of $7,000,000.
In connection with the Merger, Barry Romeril, Sherry Turkle, Morris
A. Shepard and Ajmal Khan were appointed by Joel Dumaresq, the sole director, of
the Company as directors to fill vacancies on the Board of Directors, to serve
in such capacity until the next annual meeting of shareholders of the Company or
until their earlier resignation or removal.
<PAGE>
Item 7. Financial Statements and Exhibits.
---------------------------------
Financial Statements of booktech
Audited financial statements for the 5-month period ending
December 31, 1999, and for the years ending July 31, 1998,
and July 31, 1999.
Pro Forma Balance Sheet as of December 31, 1999, Pro Forma
Statement of Operations for the five months ended December 31,
1999 and for the year ended July 31, 1999.
EXHIBIT LIST.
2.1 Agreement and Plan of Merger(1)
2.2 List of Exhibits and Schedules
4.1 Articles of Incorporation of the Company(2)
4.2 Amendment to Articles of Incorporation of Company
authorizing Blank Check Preferred Stock
4.3 Certificate of Designation of Series A Preferred Stock
4.4 Certificate of Designation of Series B Preferred Stock
4.5 Form of Warrant to purchase shares of Company Common Stock
27 Financial Data Schedules
- ------------
1 The Company undertakes to file supplementally a copy of any
schedule to the Agreement and Plan of Merger to the SEC upon
request.
2 The Articles of Incorporation of the Company were previously
filed as Exhibit 3.1 to Form 10SB12G filed on August 2, 1999.
<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 hereunto duly authorized.
booktech.com, inc.
/s/ Morris A. Shepard
---------------------
Name: Morris A. Shepard
Title: President and Chief Executive Officer
Dated: April 4, 2000
<PAGE>
---------------------------------------------
booktech.com, inc.
Balance Sheets as of December 31, 1999 and
July 31, 1999 and 1998 and Statements of
Operations, Shareholders' Deficiency, and
Cash Flows for the Five-Month Period Ended
December 31, 1999 and for the Years Ended
July 31, 1999 and 1998 and Independent
Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
booktech.com, inc.
Woburn, Massachusetts
We have audited the accompanying balance sheets of booktech.com, inc. (the
"Company") as of December 31, 1999 and July 31, 1999 and 1998, and the related
statements of operations, shareholders' deficiency, and cash flows for the
five-month period ended December 31, 1999 and for the years ended July 31, 1999
and 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1999 and July
31, 1999 and 1998, and the results of its operations and its cash flows for the
five-month period ended December 31, 1999 and for the years ended July 31, 1999
and 1998 in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses, negative working capital,
shareholders' deficiencies and noncompliance with provisions contained in
certain of its long-term debt agreements raise substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Deloitte & Touche LLP
Boston, Massachusetts
March 3, 2000
<PAGE>
booktech.com, inc.
BALANCE SHEETS
DECEMBER 31, 1999, JULY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, July 31, July 31,
ASSETS 1999 1999 1998
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 82,753 $ 58,451 $ 32,155
Accounts receivable, less allowance
for returns of $91,732, $13,331 and
$8,887, respectively 228,466 114,107 77,023
Shareholder's advance - 19,267 -
---------- -------- --------
Total current assets 311,219 191,825 109,178
---------- -------- --------
PROPERTY AND EQUIPMENT:
Office and computer equipment 263,241 149,731 124,004
Furniture and fixtures 149,934 9,427 9,427
Leasehold improvements 80,632 56,249 56,249
Computer software 314,491 10,221 -
---------- -------- --------
Total property and equipment 808,298 225,628 189,680
Less accumulated depreciation
and amortization 73,928 124,966 75,865
---------- -------- --------
Property and equipment - net 734,370 100,662 113,815
---------- -------- --------
DEPOSITS 25,200 23,200 -
---------- -------- --------
TOTAL ASSETS $1,070,789 $315,687 $222,993
========== ======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' December 31, July 31, July 31,
DEFICIENCY 1999 1999 1998
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $1,282,385 $ 610,040 $ 352,615
Accrued expense 410,817 67,463 59,155
Accrued interest from related parties 354,130 252,781 88,025
Current portion of loans from related parties 2,953,759 3,202,500 1,713,343
Current portion of long-term debt 437,838 389,657 153,561
---------- ---------- ----------
Total current liabilities 5,438,929 4,522,441 2,366,699
LOANS FROM RELATED PARTIES - 123,996 123,259
LONG-TERM DEBT 591,824 94,818 96,172
OTHER LIABILITIES 146,250 120,000 -
---------- ---------- ----------
6,177,003 4,861,255 2,586,130
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
SHAREHOLDERS' DEFICIENCY:
Common stock, no par value, 200,000 shares
authorized; 28,000 shares issued and 25,000
shares outstanding at December 31, 1999;
23,000 shares issued and 20,000 shares
outstanding at July 31, 1999 and
July 31, 1998 760,000 260,000 260,000
Accumulated deficit (5,678,714) (4,618,068) (2,435,637)
---------- ---------- ----------
(4,918,714) (4,358,068) (2,175,637)
Less treasury stock, 3,000 shares (187,500) (187,500) (187,500)
---------- ---------- ----------
Total shareholders' deficiency (5,106,214) (4,545,568) (2,363,137)
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIENCY $1,070,789 $ 315,687 $ 222,993
========== ========== ==========
</TABLE>
See notes to financial statements.
-2-
<PAGE>
booktech.com, inc.
STATEMENTS OF OPERATIONS
FIVE-MONTH PERIOD ENDED DECEMBER 31, 1999 AND
YEARS ENDED JULY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Five-Month
Period Ended
December 31, Year Ended July 31,
1999 1999 1998
<S> <C> <C> <C>
NET SALES $ 1,024,866 $ 1,328,813 $ 793,178
COST OF SALES 1,027,223 1,578,308 856,559
------------ ------------ ------------
GROSS MARGIN (2,357) (249,495) (63,381)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 919,034 1,718,300 1,025,932
------------ ------------ ------------
LOSS FROM OPERATIONS (921,391) (1,967,795) (1,089,313)
------------ ------------ ------------
INTEREST EXPENSE:
Interest expense from related parties 83,422 209,795 88,363
Other 42,327 4,841 23,937
------------ ------------ ------------
Total interest expense 125,749 214,636 112,300
------------ ------------ ------------
OTHER EXPENSE 13,506 - -
------------ ------------ ------------
NET LOSS $ (1,060,646) $ (2,182,431) $ (1,201,613)
============ ============ ============
NET LOSS PER SHARE (Basic and diluted) $ (46) $ (109) $ (56)
============ ============ ============
SHARES USED IN COMPUTING NET LOSS
PER SHARE 23,007 20,000 21,504
============ ============ ============
</TABLE>
See notes to financial statements.
-3-
<PAGE>
booktech.com, inc.
STATEMENTS OF SHAREHOLDERS' DEFICIENCY
FIVE-MONTH PERIOD ENDED DECEMBER 31, 1999 AND
YEARS ENDED JULY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Treasury Accumulated
Shares Amount Stock Deficit Total
<S> <C> <C> <C> <C> <C>
BALANCE, AUGUST 1, 1997 16,000 $ 260,000 $ -- $ (1,234,024) $ (974,024)
Purchase of treasury stock (3,000) -- (187,500) -- (187,500)
Common stock split 7,000 -- -- -- --
Net loss -- -- -- (1,201,613) (1,201,613)
-------- --------- ---------- ------------ ------------
BALANCE, JULY 31, 1998 20,000 260,000 (187,500) (2,435,637) (2,363,137)
Net loss -- -- -- (2,182,431) (2,182,431)
-------- --------- ---------- ------------ ------------
BALANCE, JULY 31, 1999 20,000 260,000 (187,500) (4,618,068) (4,545,568)
Related-party loans converted into
common stock 5,000 500,000 -- -- 500,000
Net loss -- -- -- (1,060,646) (1,060,646)
-------- --------- ---------- ------------ ------------
BALANCE, DECEMBER 31, 1999 25,000 $ 760,000 $ (187,500) $ (5,678,714) $ (5,106,214)
======== ========= ========== ============ ============
</TABLE>
See notes to financial statements.
-4-
<PAGE>
booktech.com, inc.
STATEMENTS OF CASH FLOWS
FIVE-MONTH PERIOD ENDED DECEMBER 31, 1999 AND
YEARS ENDED JULY 31, 1999 AND 1998
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<TABLE>
<CAPTION>
Five-Month
Period Ended
December 31, Year Ended July 31,
1999 1999 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,060,646) $(2,182,431) $(1,201,613)
----------- ----------- -----------
Adjustments to reconcile net loss to cash used for
operating activities:
Depreciation and amortization 23,515 49,101 41,858
Loss on disposal of property and equipment 12,869 -- --
(Decrease) increase in cash from:
Accounts receivable, net (114,359) (37,084) (77,023)
Shareholder's advance 19,267 (19,267) --
Deposits (2,000) (23,200) --
Accounts payable 368,075 663,939 173,501
Accrued expense 234,605 8,308 (3,366)
Accrued interest on loans from related parties 101,348 164,756 77,215
Other liabilities 60,000 120,000 --
----------- ----------- -----------
Total adjustments 703,320 926,553 212,185
----------- ----------- -----------
Cash used for operating activities (357,326) (1,255,878) (989,428)
----------- ----------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES - Purchases of
property and equipment (181,699) (35,948) (33,942)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans from related parties 150,000 1,510,000 1,190,000
Payments from loans from related parties (22,707) (20,106) (19,970)
Proceeds from long-term debt 595,539 100,000 149,265
Payment of long-term debt (159,505) (271,772) (102,232)
Purchase of treasury stock -- -- (187,500)
----------- ----------- -----------
Cash provided by financing activities 563,327 1,318,122 1,029,563
----------- ----------- -----------
INCREASE IN CASH 24,302 26,296 6,193
CASH, BEGINNING OF YEAR 58,451 32,155 25,962
----------- ----------- -----------
CASH, END OF YEAR $ 82,753 $ 58,451 $ 32,155
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid for interest $ 16,548 $ 53,721 $ 30,989
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Property and equipment in accounts payable $ 304,270 $ -- $ --
=========== =========== ===========
Property and equipment in accrued expense $ 75,000 $ -- $ --
=========== =========== ===========
Equipment acquired through capital leases $ 109,123 $ -- $ --
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Conversion of related-party loans into common stock $ 500,000 $ -- $ --
=========== =========== ===========
Conversion of accounts payable into long-term debt $ -- $ 406,514 $ --
=========== =========== ===========
</TABLE>
See notes to financial statements.
-5-
<PAGE>
booktech.com, inc.
NOTES TO FINANCIAL STATEMENTS
FIVE-MONTH PERIOD ENDED DECEMBER 31, 1999 AND
YEARS ENDED JULY 31, 1999 AND 1998
- ------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business - booktech.com, inc. (the "Company") is a digital and
on-demand publisher of custom textbooks, also known as coursepacks, which
are distributed primarily through college bookstores.
Basis of Presentation - The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As
shown in the financial statements, the Company incurred net losses of
$1,060,646, $2,182,431 and $1,201,613 for the five-month period ended
December 31, 1999 and for the years ended July 31, 1999 and 1998,
respectively. At December 31, 1999, the Company has working capital and
stockholders' deficiencies each aggregating $5.1 million. The Company's
operating losses and working capital needs have been funded principally by
loans from its shareholders. The Company's shareholders have not committed
to continue funding the losses of the Company on a long-term basis. These
factors, among others, may indicate that the Company will be unable to
continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the Company
be unable to continue as a going concern. As described in Note 5, at
December 31, 1999, the Company was in default on certain provisions of its
lending agreements. The Company's continuation as a going concern is
dependent upon its ability to generate sufficient cash flow through
increased net sales to meet its obligations on a timely basis, comply with
the terms and covenants of its financing agreements, obtain additional
financing or refinancing as may be required, and ultimately to attain
successful operations. Management is continuing its efforts to increase net
sales and obtain additional funds so that the Company can meet its
obligations and sustain operations. Subsequent to December 31, 1999, the
Company received additional financing of $1,500,000 and signed a letter of
intent to enter into a merger agreement (Note 9).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Revenue is recognized at the time of shipment. The
Company has established programs which, under specified conditions, enable
customers to return products. The Company provides an allowance for
estimated sales returns based upon historical data.
Concentration of Credit Risk and Major Customer Information - Financial
instruments that potentially expose the Company to concentrations of credit
risk include cash and accounts receivable. The Company performs ongoing
credit evaluations of its customers and does not require collateral. In
addition, the Company maintains allowances for potential credit losses, and
such losses, in the aggregate, have not exceeded management expectations.
One customer accounted for 70%, 75% and 57% of net sales for the five-month
period ended December 31, 1999 and for the years ended July 31, 1999 and
1998, respectively. This same customer accounted for 77%, 41% and 54% of
accounts receivable at December 31, 1999, July 31, 1999 and July 31, 1998,
respectively.
-6-
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment - Property and equipment are recorded at cost.
Expenditures for maintenance and repairs are charged to expense as incurred.
Depreciation and amortization are provided using the straight-line method
over the estimated useful lives of the various classes of assets or lease
terms, whichever is shorter. Ranges of useful lives are as follows:
Years
Furniture and fixtures 7
Office and computer equipment 5
Leasehold improvements 1-5
Computer software 3
The cost and related accumulated amortization of leased office and computer
equipment, which have been capitalized, aggregate $109,000 and $1,000 at
December 31, 1999, respectively.
Impairment of Long-Lived Assets - Recoverability of long-lived assets is
determined periodically by comparing the forecasted, undiscounted net cash
flows of the operations to which the assets relate to their carrying
amounts, including associated intangible assets of such operations.
Advertising - Advertising costs are expensed as incurred. Total marketing
material and advertising expenses for the five-month period ended December
31, 1999 and for years ended July 31, 1999 and 1998 aggregated $1,200,
$21,700 and $26,100, respectively.
Income Taxes - In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences and carryforwards are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
The Company records a valuation allowance against net deferred tax assets
if, based upon the available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of
future taxable income and when temporary differences become deductible. The
Company considers, among other available information, uncertainties
surrounding the recoverability of deferred tax assets, scheduled reversals
of deferred tax liabilities, projected future taxable income, and other
matters in making this assessment.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Some of the areas where estimates are
utilized include allowances for doubtful accounts and returns, certain
accrued expenses, and the valuation allowance on deferred tax assets. Actual
results could differ from those estimates.
-7-
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based Compensation - The Company accounts for stock options to
employees using the intrinsic value method in accordance with Accounting
Principles Board Opinion ("APB") No. 25 and for stock options to
nonemployees using the fair value method in accordance with SFAS No. 123.
Comprehensive Income - On August 1, 1997, the Company adopted the provisions
of SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires the
Company to report in the financial statements, in addition to net income
(loss), comprehensive income and its components including all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. The Company had no components of comprehensive
income.
Segment Information - On August 1, 1997, the Company adopted the provisions
of SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." This statement establishes standards for reporting information
about operating segments in annual financial statements consistent with the
way that management organizes and evaluates financial information internally
for making operating decisions and assessing performance. The Company
currently operates in a single segment.
Earnings Per Share - The Company has adopted the provisions of SFAS No. 128,
"Earnings Per Share." SFAS No. 128 requires the disclosure of basic and
diluted earnings per share. Basic earnings per share is computed using the
weighted-average number of common shares outstanding during each year. The
weighted-average number of common shares outstanding for the period ending
July 31, 1998 has been computed assuming that the common stock split which
occurred during that period, occurred on August 1, 1997. Diluted earnings
per common share reflect the effect of the Company's outstanding common
stock option except where such item would be antidilutive. Due to the net
loss for the five-month period ended December 31, 1999 and for the years
ended July 31, 1999 and 1998, basic and diluted per share amounts are the
same. For the five-month period ended December 31, 1999 and the year ended
July 31, 1999, potential common shares are not included in the per share
calculations for diluted EPS, because the effect of their inclusions would
be antidilutive.
New Accounting Guidance - In June 1998, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which the Company is required to adopt effective
January 1, 2001. SFAS No. 133 will require the Company to record all
derivatives on the balance sheets at fair value. The impact of SFAS No. 133
on the Company's financial statements will depend on a variety of factors,
including future interpretative guidance from the FASB and the future level
of derivative instruments and hedging activities. The Company is currently
evaluating the effects from adopting SFAS No. 133 to its financial
statements.
-8-
<PAGE>
3. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999 1999
<S> <C> <C> <C>
Accrued professional fees $ 149,000 $ 10,000 $ 12,459
Accrued salaries and benefits 91,830 55,672 41,064
Accrued interest 9,643 1,791 5,632
Accrued vacation 51,594 - -
Accrued construction 75,000 - -
Deferred service contract expense 33,750 - -
--------- -------- --------
Total $ 410,817 $ 67,463 $ 59,155
========= ======== ========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities and certain equipment under
noncancelable operating leases expiring at various dates through 2004. At
December 31, 1999, future minimum lease payments are as follows:
Capital Operating
Lease Leases
2000 $ 24,418 $ 154,664
2001 31,148 156,400
2002 31,148 152,237
2003 29,674 150,156
2004 13,462 116,487
-------- ---------
Total 129,850 $ 729,944
=========
Less amounts representing interest (21,799)
--------
Present value of minimum lease payments $108,051
========
Rental expense charged to operations approximated $52,700, $75,600 and
$50,000 for the five-month period ended December 31, 1999 and for the years
ended July 31, 1999 and 1998, respectively.
-9-
<PAGE>
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Services Agreement - In March 1999, the Company entered into an agreement
with a service provider to provide reproduction services. The term of the
agreement is 60 months and includes base payment increases over the term of
the agreement. The total amount of the base service payments is being
charged to expense using the straight-line method over the term of the
agreement. The Company has recorded a deferred credit to reflect the excess
of services expense over cash payments since the inception of the agreement.
Deferred credits of $180,000 and $120,000 are recorded within the balance
sheets at December 31, 1999 and July 31, 1999, respectively. Future minimum
payments under the service agreement are as follows:
2000 $ 973,329
2001 984,576
2002 984,576
2003 984,576
2004 246,144
----------
Total $4,173,201
==========
Litigation - The Company is a party in various legal proceedings and
potential claims arising in the normal course of business. While the
ultimate outcome of these claims cannot be predicted, management does not
believe, after consultation with counsel, the ultimate resolution of these
claims will have a material effect on the Company's financial position,
results of operations or cash flows.
5. LONG-TERM DEBT
Long-term debt consisted of the following at:
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999 1998
<S> <C> <C> <C>
Advances under line of credit $ 95,539 $ 100,000 $ 99,265
Term loans - 12,500 50,000
Small Business Administration loans 94,818 96,114 100,468
Supplier equipment promissory note 231,254 275,861 -
Capital lease obligation (Note 4) 108,051 - -
Verus Capital notes payable 500,000 - -
---------- --------- ---------
1,029,662 484,475 249,733
Less current portion (437,838) (389,657) (153,561)
---------- --------- ---------
Long-term debt $ 591,824 $ 94,818 $ 96,172
========== ========= =========
</TABLE>
Line of Credit - The Company has a revolving line of credit which allows
borrowings up to $100,000. Interest is charged at the bank's prime rate
(8.5%, 8.0% and 8.5% at December 31, 1999, July 31, 1999 and 1998,
respectively) plus 2%, and borrowings outstanding are collateralized by
substantially all of the Company's tangible assets. The line of credit
expires December 4, 2000. Available credit under the line of credit was
$4,461, $0 and $735 at December 31, 1999, July 31, 1999 and 1998,
respectively.
-10-
<PAGE>
5. LONG-TERM DEBT (CONTINUED)
Term Loans - On March 27, 1997, the Company entered into two term loans with
a bank in the amounts of $25,000 each, which were due May 27, 1997. Interest
was charged at the bank's prime rate plus 2% and borrowings outstanding were
collateralized by substantially all of the Company's assets and guaranteed
by a shareholder of Company (subordinated to the line of credit). At July
31, 1998, the Company was in default of the term loans which aggregated
$50,000. The Company's lending bank waived the default, and, at July 31,
1998, the interest rate on the term loans was 10%. The Company and the bank
entered into an agreement to extend the maturity date to October 23, 1998,
whereby all accrued interest and unpaid principal would be due. In October
1998, the Company refinanced the term loans with another term loan in the
amount of $50,000 due October 31, 1999. Interest on the $50,000 term loan
was charged at the bank's prime rate (8.5% at July 31, 1999) plus 2% and
borrowings outstanding were collateralized by substantially all of the
Company's assets. The outstanding balance at July 31, 1999 was $12,500 and
the term loans were paid in full during the five-month period ended December
31, 1999.
Small Business Administration Loans - On December 14, 1996, the Company
obtained three Small Business Administration ("SBA") loans in the amounts of
$30,200, $30,200 and $42,300, which are due on December 14, 2011 and have
monthly payments of $231, $231 and $323, respectively, including interest at
4%, collateralized by the assets of the Company and guaranteed by a Company
shareholder (subordinated to the line of credit and term loans).
The SBA loans prohibit the Company, without prior written consent from the
SBA, from repurchasing capital stock, declaring or paying any dividends or
consolidating or merging with another company. The Company did not obtain
SBA approval prior to its purchase of treasury stock during the year ended
July 31, 1998 and, as such, is in violation of the terms of the SBA loans.
Accordingly, such loans have been classified and are included within current
portion of long-term debt on the balance sheets at December 31, 1999, July
31, 1999 and July 31, 1998.
Equipment Supplier Promissory Note - On April 15, 1999, the Company
converted $406,514 of amounts due to an equipment supplier into a promissory
note due December 15, 1999. Monthly payments are $47,940, which includes
interest at 14.5%. The promissory note is collateralized by substantially
all of the assets of the Company (subordinated to the line of credit and
term loans). At December 31, 1999, the Company was in default of the
promissory note as the Company had not made payments within the prescribed
time frame. The note has been classified as a current liability in the
accompanying 1999 balance sheets.
Verus Capital Notes Payable - On December 3, and 20, 1999, the Company
obtained two promissory notes from Verus Capital Corp. in the amounts of
$250,000, each bearing an annual interest rate of 8%. The principal and
interest will convert into approximately 333,333 shares of common stock of
the combined company upon completion of the pending merger of the Company
(see Note 9). In the event that the merger does not occur, the note and
interest due will convert into approximately 1,667 shares of the Company's
common stock. Accordingly, the note has been classified as a long-term
liability.
-11-
<PAGE>
5. LONG-TERM DEBT (CONTINUED)
Future principal maturities of the Company's debt obligations, exclusive of
the Verus Capital Corp. notes payable, at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Equipment
Line of Supplier SBA Capital
Credit Note Loans Leases Total
<S> <C> <C> <C> <C> <C>
2000 $ 95,539 $ 231,254 $ 94,818 $ 16,227 $ 437,838
2001 - - - 24,695 24,695
2002 - - - 26,774 26,774
2003 - - - 27,492 27,492
2004 - - - 12,863 12,863
-------- --------- -------- --------- ---------
Total $ 95,539 $ 231,254 $ 94,818 $ 108,051 $ 529,662
======== ========= ======== ========= =========
</TABLE>
6. RELATED PARTIES
Loans From Related Parties - Loans from related parties consist of the
following at:
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999 1998
<S> <C> <C> <C>
Shareholders' notes payable $ 2,953,759 $ 3,316,466 $ 1,826,602
Employee notes payable - 10,000 10,000
---------- ----------- -----------
2,953,759 3,326,466 1,836,602
Less current portion (2,953,759) (3,202,500) (1,713,343)
---------- ----------- -----------
Long-term debt $ - $ 123,966 $ 123,259
========== =========== ===========
</TABLE>
-12-
<PAGE>
6. RELATED PARTIES (CONTINUED)
Shareholders' Notes Payable - The Company has been financed principally by
loans from shareholders. At August 1, 1997, approximately $667,000 was owed
to shareholders through the issuance of notes payable. During the year ended
July 31, 1998, the Company obtained $1,190,000 by issuing promissory notes
to seven shareholders. The promissory notes carried an annual interest rate
ranging from 8% to 8.25%, and the principal and accrued interest were
payable six months from the time the line was issued. Unpaid principal is
converted into a new loan agreement, extending the original loan an
additional six months, bearing the original interest rate. During the year
ended July 31, 1998, the Company obtained an additional $1,510,000 by
issuing promissory notes to eight shareholders. During the five-month period
ended December 31, 1999, the Company obtained $150,000 by issuing promissory
notes to three shareholders. On September 30, 1999, seven shareholders
converted $500,000 of outstanding notes payable into 5,000 shares of common
shares at $100 per share. At December 31, 1999, the shareholders' notes
payable totaling $2,953,759 mature at various dates through June 2000.
Employee Note Payable - In 1997, the Company issued a $10,000 promissory
note to an employee of the Company. The promissory note carried an annual
interest rate of 8%, and the principal and accrued interest were payable six
months from the time the note was issued. At the maturity date, unpaid
principal was converted into a new loan agreement, extending the original
loan an additional six months, bearing the original interest rate. During
the five-month period ended December 31, 1999, the employee note payable was
paid in full.
7. INCOME TAXES
The Company's net deferred tax assets consisted of the following:
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999 1998
<S> <C> <C> <C>
Deferred tax assets/liabilities:
Net operating losses $ 2,091,000 $ 1,742,000 $ 940,000
Accounts receivable 37,000 5,000 4,000
Fixed assets (8,000) 8,000 4,000
Accrued interest 146,000 102,000 37,000
Accrued vacation 14,000 - -
----------- ----------- ---------
2,280,000 1,857,000 985,000
Less valuation allowance (2,280,000) (1,857,000) (985,000)
----------- ----------- ---------
Deferred tax assets, net $ - $ - $ -
=========== =========== =========
</TABLE>
The future availability of the Company's deferred tax assets may be
significantly limited as a result of changes in Company ownership. In
addition, because of the Company's limited operating history and losses
incurred to date, management has provided a 100% allowance against the
Company's net deferred tax assets. The increase in the Company's valuation
allowance for the periods presented results principally from the increase to
the Company's deferred tax assets related to the operating losses. The
federal net operating loss carryforwards of approximately $5,200,000 expires
at various dates between 2011 and 2020.
-13-
<PAGE>
8. SHAREHOLDERS' DEFICIENCY
Treasury Stock - On January 30, 1998, the Company purchased 3,000 shares of
the Company's common stock at $62.50 per share in the aggregate amount of
$187,500.
Stock Split - On May 28, 1998, the Board of Directors (the "Board") and the
shareholders of the Company approved the issuance of an additional 153,846
shares for each existing share of common stock in the form of a stock
dividend. The number of additional shares issued was 7,000 common shares.
All share and share data reflect the stock split.
Stock Option Grant - In June 1999, the Company granted a nonqualified stock
option to an executive of the Company which permits the executive to
purchase up to 1,000 shares of common stock at a per share price of $100.
The option vested over six months and expires in 36 months. At December 31,
1999, the option is fully vested and exercisable and has a remaining
contractual life of 2.37 years.
Pro Forma Disclosures - As discussed in Note 1, the Company accounts for its
stock-based awards to employees using the intrinsic value method in
accordance with APB No. 25, "Accounting for Stock Issued to Employees," and
its related interpretations. Accordingly, no compensation expense has been
recognized in the financial statements for employee stock arrangements.
SFAS No. 123, "Accounting for Stock-Based Compensation," requires the
disclosure of pro forma information had the Company adopted the fair value
method. For purposes of the pro forma disclosures, the Company estimated the
fair value of option on the grant date using the Black-Scholes option
pricing model with the following weighted-average assumptions: expected life
of three years; risk-free interest rates of 5.47% in 1999; expected
volatility of 40.7% in 1999 and no dividends during the expected term. The
Company's calculations are based on a single option valuation approach, and
forfeitures are recognized as they occur. The estimated fair value of the
award was $33.61 per share. If the computed fair value of the 1999 award had
been amortized to expense over the vesting period of the award, pro forma
net loss would have been as follows for the five-month period ended December
31, 1999 and the year ended July 31, 1999, respectively.
Five-Month
Period Ended Year Ended
December 31, 1999 July 31, 1999
Net loss:
As reported $ (1,000,646) $ (2,182,431)
Pro forma (1,025,854) (2,190,833)
Loss per share (basic and diluted):
As reported (46) (109)
Pro forma (47) (110)
-14-
<PAGE>
9. SUBSEQUENT EVENT
On January 18, 2000, the Company signed a letter of intent to enter into a
merger agreement with a company controlled by Verus International Ltd. (the
"Acquiror"). Pursuant to the letter of intent, the shareholders of the
Company will receive shares of the Acquiror in return for 100% of the common
stock of the Company. The Acquiror is a "shell" corporation with no
substantial operations, and simultaneous with the merger, the Acquiror will
be capitalized with $7,000,000 in the form of cash and notes receivable from
the Company. In the event that the merger does not occur, the Verus Capital
Corp. note payable (Note 5) will convert into common stock of the Company.
In anticipation of the expected merger, Verus Capital Corp. has funded the
Company an additional $1,500,000 through the issuance of notes subsequent to
December 31, 1999. Pursuant to the letter of intent, fees totaling $85,000
will be payable by the Company if the Company terminates the letter of
intent for reasons other than nonperformance of other parties.
* * * * * *
-15-
<PAGE>
PRO FORMA FINANCIAL INFORMATION
EBONY & GOLD VENTURES, INC. AND BOOKTECH.COM, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
INTRODUCTION TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Effective March , 2000 E&G Acquisitions Corporation, a Nevada corporation
("Merger-Sub"), a wholly owned subsidiary of Ebony & Gold Ventures, Inc., a
Nevada corporation (the "Company"), merged (the "Merger") with and into
booktech.com, inc. a Massachusetts corporation ("booktech"), pursuant to an
agreement and plan of merger dated March , 2000 (the "Merger Agreement").
Following the Merger, the business to be conducted by the Company will be the
business conducted by booktech prior to the Merger. In conjunction with the
Merger, the Company changed its name to booktech.com, inc. In connection with
the Merger, in March 2000, the Company sold 4,666,667 additional $.00042 par
value shares of common stock to investors in a private placement transaction,
generating net proceeds of approximately $7.0 million. The accompanying
unaudited pro forma balance sheet as of December 31, 1999, presents the
financial position of the Company and booktech, assuming the Merger had been at
that date. The unaudited pro forma statement of operations for the five months
ending December 31, 1999 and for the year ended July 31, 1999, reflects the
Merger as if it had been consummated on August 1, 1998.
The Company acquired 100% of the outstanding shares of booktech through the
issuance of 7,520,690 $.00042 par value shares of its authorized but unissued
common stock, in exchange for 21,810 shares of booktech's common stock and
1,100,000 shares of the Company's $.00042 par value Series B Preferred Stock in
exchange for 3,190 shares of booktech's common stock. Pursuant to the Merger,
$3,216,171 of related party notes owed by booktech to certain investors, was
converted into 2,135,301 shares of $.00042 par value, Series A Preferred stock
of the Company. In addition, the Company acquired technology and a patent
application Virtuosity Press LLC, a Delaware Limited Liability company
("Virtuosity"), through the issuance of 1,379,310 shares of $.01 par value
common Stock. As a result of the Merger, the former booktech stockholders
collectively acquired approximately 53.4% of the outstanding voting securities
(by vote) of the Company following the Merger.
The pro forma financial information does not purport to be indicative of the
results which would have actually have been obtained had such transactions been
completed as of the assumed dates and for the periods presented or which may be
obtained in the future.
<PAGE>
BASIS OF PRESENTATION
In the Merger, the Company acquired all of the outstanding shares of booktech
through the issuance of 7,520,690 shares of the Company's $.00042 par value
common stock in exchange for 21,810 shares of booktech's common stock and the
issuance of 1,100,000 shares of the Company's $.00042 par value Series B
Preferred Stock in exchange for 3,190 shares of booktech's common stock. The
Merger will be accounted for as a reverse acquisition. The historical results of
booktech will become the historical results of the Company. The shares issued by
the Company in the Merger are valued at $1.50 per share, the value of the common
shares sold in the private placement transaction consummated in connection with
the Merger.
The unaudited pro forma balance sheet combines the balance sheets of the Company
and booktech as of December 31, 1999, assuming that the Merger had been
completed at that date. In the period from December 31, 1999 to the merger date,
the value of the amounts owed to related parties increased due to the accruing
of interest. The unaudited pro forma balance sheet assumes that the value of the
amounts owed to related parties at December 31, 1999 was converted at the date
of the merger. The unaudited pro forma balance sheet further assumes that the
Series A Preferred Stock shares issued at the time of the merger were issued at
December 31, 1999.
The unaudited pro forma statement of operations for the five-month period ended
December 31, 1999 and the twelve-month year ending July 31, 1999 reflect the
merger. The unaudited pro form statements of operations do not include any pro
forma adjustments relating to the amortization of the acquired technology
and patent application. If the patent application is approved by the U.S. Patent
Office, the patent will be amortized over five years.
The historical balance sheets and statements of operations as of and for the
year ended December 31, 1999, used in the preparation of the pro forma financial
statements have been derived from the respective audited financial statements of
the Company and booktech.
<PAGE>
BOOKTECH.COM,INC. AND EBONY & GOLD VENTURES INC
UNAUDITED PRO FORMA BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
booktech.com,inc. Ebony & Gold Pro Forma
12/31/99 12/31/99 Adjustments Combined
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash and equivalents $ 82,753 $ -- (a) $ 6,500,000 $ 6,260,723
(e) (322,030)
Accounts receivable 228,466 -- -- 228,466
------------ -------- ------------ ------------
Total current assets 311,219 -- 6,177,970 6,489,189
Property and equipment - net 734,370 -- -- 734,370
Acquired technology and patent application -- -- (c) 2,068,965 2,068,965
Deposits 25,200 -- -- 25,200
------------ -------- ------------ ------------
Total $ 1,070,789 $ -- $ 8,246,935 $ 9,317,724
============ ======== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Short-term debt to related parties $ 2,953,759 $ -- (d) $ (2,815,000) $ 15,500
(e) (123,259)
Accrued expenses to related parties 354,130 (d) (344,556) 9,574
Accounts payable 1,282,385 -- -- 1,282,385
Accrued expenses 410,817 -- (e) (8,415) 402,402
Accrued merger expenses -- (i) 200,000 200,000
Current portion of long-term debt 437,838 17,564 (f) (17,564) 247,482
------------ --------- ------------
(e) (190,356)
------------
Total current liabilities 5,438,929 17,564 (3,108,794) 2,157,343
LONG TERM DEBT 591,824 (a) (500,000) 91,824
OTHER LIABILITIES 146,250 146,250
TOTAL LIABILITIES $ 6,177,003 (3,608,794) 2,568,209
Common stock $ 760,000 2,100 (a) 1,960 7,798
(b) (756,841)
(c) 579
Series A Preferred (d) 21,353 21,353
Series B Preferred (b) 462 462
Additional paid-in capital -- -- (a) 6,998,040 12,771,411
(b) 756,379
(e) 2,068,386
(d) 3,138,206
(f) 17,564
(g) (187,500)
(h) (19,664)
--
Treasury stock (187,500) (g) 187,500 --
Accumulated Deficit (5,678,714) (19,664) (h) 19,664 (5,878,714)
------------ ------- ------------
(i) (200,000)
Total stockholders' equity (deficiency) (5,106,214) (17,564) 12,046,085 6,922,307
------------ ------- ------------ ------------
Total liabilities and stockholders'
equity (deficiency) $ 1,070,789 $ -- $ 8,437,291 $ 9,317,724
============ ======== ============ ============
</TABLE>
<PAGE>
Series A Dividends
<PAGE>
BALANCE SHEET ADJUSTMENTS
(a) Reflects the Company's receipt of $6,500,000 of proceeds from a private
placement and the conversion of $500,000 of advances into 4,666,667 shares
of $.00042 par value common stock in March 2000.
(b) Issuance of 7,520,690 shares of the Company's $.00042 par value common
stock and 1,100,000 shares of the Company's $.00042 par value Series B
preferred stock for booktech common stock
(c) Reflects the purchase of the acquired technology and patent application by
the Company by issuing 1,379,310 shares of $.00042 common stock.
(d) Reflects the conversion of short-term debt, and accrued interest, to
related parties in exchange for 2,135,301 shares of $.01 Series A
Preferred stock of the Company.
(e) Reflects the payment of related party and other obligations, including
accrued interest, at the time of merger.
(f) To eliminate the amounts owed to Ebony & Gold officers
(g) Adjustment to eliminate Treasury Stock.
(h) To eliminate Ebony & Gold's deficit accumulated during development stage.
(i) To reflect estimated merger costs.
<PAGE>
BOOKTECH.COM, INC. AND EBONY & GOLD VENTURES, INC.
--------------------------------------------------
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
-------------------------------------------
FOR THE FIVE-MONTHS PERIOD ENDED DECEMBER 31, 1999
--------------------------------------------------
<TABLE>
<CAPTION>
Ebony & Gold Pro Forma
booktech.com, inc. Ventures, Inc. Adjustments Pro Forma
<S> <C> <C> <C> <C>
NET SALES $ 1,024,866 $ - $ - $1,024,866
COST OF SALES 1,027,223 - - 1,027,223
------------- ------------- ---------- -----------
GROSS MARGIN (2,357) - - (2,357)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 919,034 17,214 936,248
-------------- ------------- ---------- -----------
LOSS FROM OPERATIONS (921,391) (17,214) - (938,605)
-------------- ------------- ---------- -----------
INTEREST EXPENSE:
Interest expense from related parties 83,422 - (82,705) {p} 717
Other 42,327 - (1,513) {p} 40,814
-------------- ------------- ---------- -----------
Total interest expense 125,749 - (84,218) 41,531
OTHER EXPENSE 13,506 - - 13,506
-------------- ------------- ---------- -----------
NET LOSS $ (1,060,646) $ (17,214) $ 84,218 $ (993,642)
============== ============= ========== ===========
NET LOSS PER SHARE (Basic and diluted) $ (46.10) $ (0.01) $ (0.05)
============== ============= ===========
SHARES USED IN COMPUTING NET LOSS
PER SHARE 23,007 2,100,000 16,443,660 18,566,667
============== ============= ========== ===========
</TABLE>
<PAGE>
BOOKTECH.COM, INC. AND EBONY & GOLD VENTURES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1999
<TABLE>
<CAPTION>
Ebony & Gold Pro Forma
booktech.com, inc. Ventures, Inc. Adjustments Pro Forma
<S> <C> <C> <C> <C>
NET SALES $ 1,328,813 $ -- $ -- $ 1,328,813
COST OF SALES 1,578,308 -- -- 1,578,308
------------ ------------ ------------ ------------
GROSS MARGIN (249,495) -- -- (249,495)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,718,300 350 1,718,650
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (1,967,795) (350) -- (1,968,145)
------------ ------------ ------------ ------------
INTEREST EXPENSE:
Interest expense from related parties 209,795 -- (207,305) {p} 2,490
Other 4,841 -- (3,792) {p} 1,049
------------ ------------ ------------ ------------
Total interest expense 214,636 -- (211,097) 3,539
OTHER EXPENSE -- -- -- --
------------ ------------ ------------ ------------
NET LOSS $ (2,182,431) $ (350) $ 211,097 $ (1,971,684)
============ ============ ============ ============
NET LOSS PER SHARE (Basic and diluted) $ (109.12) $ (0.00) $ (0.11)
============ ============ ============
SHARES USED IN COMPUTING NET LOSS
PER SHARE 20,000 2,100,000 16,446,667 18,566,667
============ ============ ============ ============
</TABLE>
INCOME STATEMENT ADJUSTMENTS
Reflects the business combination accounted for as a reverse merger, which
is in effect a restatement of historical income statements as if the
combination had been consummated on August 1, 1998. The unaudited pro
forma income statements do not include any pro forma adjustments relating
to the amortization of the acquired technology and patent application.
(p) To adjust for interest expense owed on related party and other
obligations for the year ended July 31, 1999 and the five months
period ended December 31, 1999 converted to preferred stock pursuant
to the merger agreement.
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EBONY & GOLD VENTURES, INC.,
EG ACQUISITIONS CORPORATION
AND
booktech.com, inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
I. THE MERGER.................................................................................................2
ss.1.01 The Merger......................................................................................2
ss.1.02 Effective Time..................................................................................2
ss.1.03 Closing.........................................................................................3
ss.1.04 Articles of Organization and By-Laws............................................................3
ss.1.05 Conversion of Securities........................................................................3
ss.1.06 Closing Deliveries..............................................................................4
ss.1.07 Surrender of Shares.............................................................................4
II. OTHER AGREEMENTS...........................................................................................5
ss.2.01 Tax Free Exchange...............................................................................5
ss.2.02 Stock Option Plan...............................................................................5
ss.2.03 Financing.......................................................................................6
ss.2.04 Conversion of Advances..........................................................................6
ss.2.05 Cash On Hand of Parent..........................................................................7
ss.2.06 Capital Structure...............................................................................7
(a) Authorized Shares........................................................................7
(b) Issued and Outstanding Shares............................................................7
(c) Issued and Outstanding Options and Warrants..............................................8
ss.2.07 Registration Rights.............................................................................9
ss.2.08 Consulting Agreement...........................................................................11
ss.2.09 Board of Directors.............................................................................11
ss.2.10 Hershey Loan...................................................................................11
ss.2.11 Shepard Debt...................................................................................11
ss.2.12 Change of Name.................................................................................12
ss.2.13 Employment Agreements..........................................................................12
ss.2.13 Use of Proceeds................................................................................12
III. REPRESENTATIONS AND WARRANTIES............................................................................12
ss.3.01 Representations and Warranties of Parent and Merger-Sub........................................12
(a) Organization and Qualification..........................................................13
(b) Organizational Documents; Capital Stock.................................................13
(c) Authority Relative to this Agreement....................................................14
(d) Non-Contravention; Approvals and Consents...............................................15
(e) Financial Statements....................................................................17
(f) NASD Report.............................................................................18
(g) Absence of Certain Changes or Events....................................................19
(h) Absence of Undisclosed Liabilities.....................................................19
(i) Legal Proceedings.......................................................................20
(j) Information Supplied....................................................................20
(k) Compliance with Laws and Orders.........................................................21
(l) Compliance with Agreements; Certain Agreements..........................................21
(m) Employee Benefit Plans..................................................................22
(n) Patents, Trademarks, Et Cetera..........................................................22
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(o) Insurance...............................................................................22
(p) Labor Matters...........................................................................22
(q) Tangible Property, Business, Assets, etc................................................23
(r) Tax Matters.............................................................................23
(s) Brokers.................................................................................25
(t) Consents Without Any Condition..........................................................25
(u) Present Intention Not to Sell...........................................................25
(v) Subsidiaries............................................................................25
(w) No Material Adverse Change..............................................................26
(x) Leases..................................................................................26
(y) Contracts...............................................................................26
(z) Powers of Attorney......................................................................26
(aa) Insurance and Risk Management...........................................................27
(bb) Environment, Health, and Safety.........................................................28
(cc) Affiliated Transaction..................................................................35
(dd) Government Contracts....................................................................35
(ee) No Illegal Payments, Etc................................................................35
(ff) Books and Records.......................................................................36
(gg) Consents................................................................................36
(hh) Disclosure..............................................................................36
(ii) Accuracy of Information.................................................................36
(jj) Tax Free Transaction....................................................................37
ss.3.02 Representations and Warranties of booktech.....................................................37
(a) Organization and Qualification..........................................................37
(b) Organizational Documents; Capital Stock.................................................38
(c) Authority Relative to this Agreement....................................................39
(d) Non-Contravention; Approvals and Consents...............................................40
(e) Patents, Trademarks, Intangibles........................................................41
(f) Financial Statements....................................................................42
(g) Absence of Certain Changes or Events....................................................42
(h) Absence of Undisclosed Liabilities......................................................43
(i) Legal Proceedings.......................................................................43
(j) Information Supplied....................................................................43
(k) Compliance with Laws and Orders.........................................................44
(l) Compliance with Agreements..............................................................44
(m) Brokers.................................................................................45
(n) Consents Without Any Condition..........................................................45
(o) Tax Matters.............................................................................45
(p) Employee Benefit Plans..................................................................46
(q) Intangibles.............................................................................47
(r) Insurance...............................................................................47
(s) Labor Matters...........................................................................47
(t) Tangible Property, Business, Assets, etc................................................48
(x) Present Intention Not to Sell...........................................................48
(y) Subsidiaries............................................................................48
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(z) No Material Adverse Change..............................................................49
(aa) Leases..................................................................................49
(bb) Contracts...............................................................................49
(cc) Powers of Attorney......................................................................49
(dd) Insurance and Risk Management...........................................................49
(ee) Environment, Health, and Safety.........................................................50
(ff) Affiliated Transaction..................................................................57
(gg) Government Contracts....................................................................57
(hh) No Illegal Payments, Etc................................................................57
(ii) Books and Records.......................................................................58
(jj) Consents................................................................................58
IV. COVENANTS.................................................................................................58
ss.4.01 Covenants of Parent and Merger-Sub.............................................................58
(a) Articles of Incorporation and By-Laws...................................................58
(b) Shares, Options and Warrants............................................................58
(c) Dividends and Purchases of Stock........................................................59
(d) Borrowing of Money; Working Capital.....................................................59
(e) Access..................................................................................59
(f) Conduct of Business.....................................................................60
(g) Advice of Changes.......................................................................60
(h) Public Statements.......................................................................61
(i) Other Proposals.........................................................................61
(j) Consents Without Any Condition..........................................................62
(k) Transfer Taxes..........................................................................62
(l) Issuance of Stock.......................................................................63
(m) Directors' and Officers' Insurance......................................................63
(n) OTCBB Listing...........................................................................64
(o) Approval of Board of Directors..........................................................64
(p) SEC Filings.............................................................................64
(q) Reputable Investor......................................................................64
(r) AMEX Listing............................................................................65
(s) Notices and Consents....................................................................65
(t) Written Consent of Sole Stockholder.....................................................65
(u) Confidentiality.........................................................................65
(v) General.................................................................................66
ss.4.02 Covenants of booktech..........................................................................66
(a) Articles of Organization and By-Laws....................................................66
(b) Shares, Options and Warrants............................................................67
(c) Borrowing of Money; Working Capital.....................................................67
(d) Access..................................................................................67
(e) Conduct of Business.....................................................................68
(f) Advice of Changes.......................................................................68
(g) Public Statements.......................................................................68
(h) Securities Law Exemption................................................................69
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
(i) Approval of Board of Directors..........................................................69
(j) Break-Up Fee............................................................................69
(k) Stockholders Meeting....................................................................69
(l) Confidentiality.........................................................................70
(m) General.................................................................................70
V. CONDITIONS................................................................................................71
ss.5.01 Conditions to Each Party's Obligation to Effect the Merger.....................................71
(a) Stockholder Approval....................................................................71
(b) State Securities Laws...................................................................71
(c) No Injunctions or Restraints............................................................71
(d) Consents and Approvals..................................................................71
(e) Customary Documents.....................................................................72
ss.5.02 Conditions to Obligation of Parent and Merger-Sub to Effect the Merger.........................72
(a) Representations and Warranties..........................................................72
(b) Performance of Obligations..............................................................73
(c) Other Closing Documents.................................................................73
(d) Review of Proceedings...................................................................73
(e) Legal Action............................................................................73
(f) Certificates............................................................................74
(g) Opinion.................................................................................74
ss.5.03 Conditions to Obligation of booktech to Effect the Merger......................................74
(a) Representations and Warranties..........................................................74
(b) Performance of Obligations..............................................................74
(c) Other Closing Documents.................................................................75
(d) Review of Proceedings...................................................................75
(e) Legal Action............................................................................75
(f) NASD Bulletin Board Listing.............................................................75
(g) Tax-Free Exchanges......................................................................76
(h) Capital.................................................................................76
(i) Consents................................................................................76
(j) Certificates............................................................................76
(k) Opinion.................................................................................76
(l) Due Diligence...........................................................................76
(m) No Material Adverse Change..............................................................77
VI. TERMINATION...............................................................................................77
ss.6.01 Termination....................................................................................77
ss.6.02 Effect of Termination..........................................................................78
VII. INDEMNIFICATION...........................................................................................79
ss.7.01 Indemnification by Parent......................................................................79
ss.7.02 Indemnification by booktech....................................................................79
ss.7.03 Third Party Claims.............................................................................80
</TABLE>
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<CAPTION>
<S> <C>
VIII. MISCELLANEOUS.............................................................................................82
ss.8.01 Further Actions................................................................................82
ss.8.02 Availability of Equitable Remedies.............................................................82
ss.8.03 Survival.......................................................................................82
ss.8.04 Modification...................................................................................83
ss.8.05 Notices........................................................................................83
ss.8.06 Waiver ........................................................................................84
ss.8.07 Binding Effect.................................................................................84
ss.8.08 No Third-Party Beneficiaries...................................................................85
ss.8.09 Severability...................................................................................85
ss.8.10 Merger; Assignability..........................................................................85
ss.8.11 Headings.......................................................................................85
ss.8.12 Counterparts; Governing Law; Jurisdiction......................................................85
ss.8.13 Waiver of Jury Trial...........................................................................87
ss.8.14 Expenses ......................................................................................87
ss.8.15 Incorporation of Exhibits and Schedules........................................................87
ss.8.16 Specific Performance...........................................................................87
</TABLE>
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EBONY & GOLD VENTURES, INC.,
EG ACQUISITIONS CORPORATION
AND
booktech.com, inc.
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated
as of March 31st, 2000, by and among Ebony & Gold Ventures, Inc., a Nevada
corporation, whose address is c/o Verus International Ltd., Hanger 5, 4360 Agar
Drive, Richmond, British Columbia V7B 1A3 ("Parent"), EG Acquisitions
Corporation, a Nevada corporation, whose address is c/o Verus International
Ltd., Hanger 5, 4360 Agar Drive, Richmond, British Columbia V7B 1A3
("Merger-Sub") and booktech.com, inc., a Massachusetts corporation, whose
address is 42 Cummings Park, Woburn, Massachusetts 01801 ("booktech").
Merger-Sub is a wholly owned subsidiary of Parent. booktech shall be the
surviving entity of the proposed merger between Merger-Sub and booktech and, in
such capacity, booktech shall sometimes be referred to herein as the "Surviving
Corporation." Merger-Sub and booktech are collectively referred to herein as the
"Constituent Entities."
W I T N E S S E T H:
WHEREAS, the Board of Directors of booktech and the Boards of
Directors of Parent and Merger-Sub have determined that it is advisable and in
the best interests of their respective stockholders to consummate the business
combination transaction provided for herein, in which Merger-Sub would merge
with and into booktech (the "Merger"); and
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WHEREAS, Parent, Merger-Sub and booktech intend that the
Merger constitute a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as a series of
transactions qualifying under Section 351 of the Code, and that this agreement
shall constitute a plan for purposes of Sections 351 and 368 of the Code.
WHEREAS, Parent, Merger-Sub and booktech desire to make
certain agreements in connection with the Merger;
NOW, THEREFORE, in consideration of the mutual premises,
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I. THE MERGER.
ss.1.01 The Merger
At the Effective Time (as defined in Section 1.02), upon the
terms and subject to the conditions set forth in this Agreement, and in
accordance with the provisions of the Massachusetts Business Corporation Law
(the "MBCL"), and the Nevada Mergers & Acquisitions Law (the "NMAL"), Merger-Sub
shall be merged with and into booktech. booktech shall be the surviving entity
in the Merger, and shall succeed to and assume all the rights and obligations of
Merger-Sub in accordance with the MBCL and the NMAL. The name of the Surviving
Corporation shall be booktech.com, inc. (Massachusetts).
ss.1.02 Effective Time.
On or after the Closing (as defined in Section 1.03), the
parties shall file two (2) certificates of merger (the "Certificates of Merger")
one each with the Secretaries of State of Massachusetts and Nevada as provided
in the MBCL and NMAL, respectively. The Merger
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shall become effective as soon as the Certificates of Merger have been filed
(the time when the Merger becomes effective being hereinafter referred to as the
"Effective Time").
ss.1.03 Closing.
(a) Subject to the provisions of Section 2.03 hereof, the
closing of the Merger (the "Closing") shall take place at the offices of Camhy
Karlinsky & Stein LLP, 1740 Broadway, New York, New York 10019-4315 at 5.00
p.m.. on or before March 31, 2000 (the "Closing Date").
(b) The Closing will be effective as of the Effective Time.
ss.1.04 Articles of Organization and By-Laws.
The Amended and Restated Articles of Organization and Amended
By-Laws attached hereto as Exhibit 1.04(a) and 1.04(b), respectively (the
"Articles of Organization" and "By-Laws") shall become the Articles of
Organization and By-Laws of the Surviving Corporation, in each case until
thereafter changed or amended as provided therein or by applicable law.
ss.1.05 Conversion of Securities.
(a) At the Effective Time, each share of Merger-Sub
outstanding immediately prior to the Closing date shall, by virtue of the Merger
and without any further action on the part of the holders thereof, be converted
into one (1) share of common stock of booktech.
(b) At the Effective Time, 21,810 shares of common stock of
booktech outstanding immediately prior to the Closing Date shall, by virtue of
the Merger and without any further action on the part of the holders thereof, be
canceled and converted into 7,520,690 shares of common stock, par value $.00042
per share, of Parent (the "Common Stock") and 3,190 shares of common stock of
booktech shall be converted into 1,100,000 shares of Series B
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Preferred Stock par value $.00042 per share of Parent (the "Series B Preferred
Stock"), for an aggregate of 7,520,690 shares of Common Stock and 1,100,000
shares of Series B Preferred Stock, (the "Merger Consideration").
(c) At the Effective Time, the separate existence of
Merger-Sub shall cease. The Surviving Corporation shall continue its corporate
existence under the laws of the Commonwealth of Massachusetts, and Parent shall
be the holder of all the issued and outstanding shares of the Surviving
Corporation capital stock.
(d) At the Effective Time, each outstanding option to purchase
shares of common stock of booktech held by Ted Bernhardt ("Mr. Bernhardt"),
whether or not then exercisable, shall be canceled and converted into an option
to purchase 344.8275862 shares of Common Stock (the "Option"), for an aggregate
of 344,828 shares of Parent Common Stock at an exercise price of $0.29 per
share.
ss.1.06 Closing Deliveries.
At the Closing, there shall be delivered to booktech, Parent
and Merger-Sub the certificates and other documents and instruments required to
be delivered under Article V.
ss.1.07 Surrender of Shares.
(a) Promptly after the Effective Time, Parent shall cause to
be mailed to each individual, partnership, corporation, association, joint stock
company, trust, joint venture, unincorporated organization, or governmental
entity (a "Person") who was, at the Effective Time, a holder of record of shares
entitled to receive the Merger Consideration pursuant to Section 1.05, a form of
letter of transmittal which shall specify (i) that delivery shall be effected,
and risk of loss and title to the certificates evidencing such shares (the
"Certificates") shall pass, only upon proper delivery of the Certificates to
Parent and (ii) shall include instructions for use
4
<PAGE>
in effecting the surrender of the Certificates. Upon surrender of a Certificate
to Parent, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other documents
as may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each share formerly evidenced by such Certificate, payable to such holder in
accordance with the provisions of Sections 1.05 hereof and such Certificate
shall then be canceled. If payment of the Merger Consideration is to be made to
a Person other than the Person in whose name the surrendered Certificate is
registered on the stock transfer books of booktech, it shall be a condition of
payment that the Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer.
(b) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
conditions as the Board of Directors of Parent may impose, Parent shall issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance herewith.
II. OTHER AGREEMENTS.
ss.2.01 Tax Free Exchange.
The parties will seek to accomplish the Merger and the related
transactions as tax-free exchanges by the holders of the shares of booktech.
ss.2.02 Stock Option Plan.
As of the Closing Date, the 2000 Stock Option Plan attached
hereto as Exhibit 2.02 (the "Stock Option Plan") shall have been adopted by
Parent, pursuant to which options to purchase an aggregate of 5,000,000 shares
of Common Stock shall be reserved for issuance.
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<PAGE>
ss.2.03 Financing.
On or before the Closing Date, and as a condition to the
Closing, Parent, pursuant to Regulation S or Rule 506 of Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), shall have issued and
sold 4,666,667 shares of Common Stock for a total aggregate sale price of
$7,000,000 (the "Financing"), provided that, in lieu of cash, a portion of such
amount may be evidenced by the assignment by Verus International Ltd., a
Barbados corporation ("Verus") or its assignees, to Parent, of its right to
repayment of advances (the "Advances") made to booktech, in the aggregate amount
of $2,000,000. In connection with the Financing the purchasers shall receive
warrants to purchase in the aggregate 833,333 shares of Common Stock (the
"Warrants"), at an exercise price of $1.50 per share. The Warrants shall be
exercisable beginning 180 days following the Closing and shall terminate on the
second anniversary of the Closing.
ss.2.04 Conversion of Advances.
If the Closing does not occur on or before March 31, 2000, all
Advances outstanding on March 31, 2000, or on the earlier date of termination of
this Agreement pursuant to Sections 2.03 and Article VI (other than termination
by booktech pursuant to Section 6.01(d)) shall automatically be converted into
equity of booktech based on a pre-money valuation of $7,500,000 of booktech, and
this agreement shall be terminated. In the event booktech terminates the
Agreement pursuant to Section 6.01(d) hereof, the Advances then outstanding
shall at booktech's option, either be converted into equity of booktech as set
forth in this Section 2.04 or shall be paid in full in immediately available
funds, together with all accrued and unpaid interest thereon.
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<PAGE>
ss.2.05 Cash On Hand of Parent.
As of the Closing Date, and as of the Effective Time, Parent
shall have cash on hand of not less than $7,000,000 less (i) the amount of any
portion of the Advances contributed to Parent in exchange for the issuance of
Common Stock and Warrants; (ii) the reasonable fees and expenses incurred by
Verus and/or Parent and in connection with the transactions contemplated hereby,
which shall not exceed $100,000, (iii) the reasonable fees and expenses paid to
Camhy Karlinsky & Stein LLP in connection with the Merger and the related
transactions and (iv) the reasonable fees and expenses incurred by booktech in
connection with transactions contemplated hereby.
ss.2.06 Capital Structure.
As of the Closing Date, and as of the Effective Time, Parent
shall have the following capital structure:
(a) Authorized Shares.
59,523,810 shares of capital stock, consisting of (i)
54,523,810 shares of Common Stock and (ii) 5,000,000 shares of blank check
convertible preferred stock; and
(b) Issued and Outstanding Shares.
(i) 4,666,667 shares of Common Stock, issued to the
purchasers of the Common Stock pursuant to the Financing with
the names of such purchasers and the amount of Common Stock
owned as set forth on Schedule 2.06(b)(i) (the "Purchasers");
7
<PAGE>
(ii) 5,000,000 shares of authorized issued and
outstanding shares of Common Stock owned of record and
beneficially by the existing shareholders of Parent listed on
Schedule 2.06(b)(ii) attached hereto;
(iii) 1,379,310 shares of Common Stock, issued to the
holders of membership interests of Virtuosity, in exchange for
property of Virtuosity contributed to Parent pursuant to the
Contribution Agreement by and among Virtuosity and Parent in
the form attached hereto as Exhibit 2.06(b)(iii) (the
"Contribution Agreement");
(iv) 7,520,690 shares of Common Stock, and 1,100,000
shares of Series B Preferred Stock issued to the former
holders of common stock of booktech, in exchange for all their
capital stock in booktech; and
(v) 2,135,301 shares of Series A Preferred Stock of
the Parent (the "Series A Preferred Stock"), issued to the
former holders of $2,815,000 principal amount of notes of
booktech (the "Hershey Notes"), in exchange for all such
Hershey Notes and accrued interest thereon. Parent shall
reserve the aggregate number of shares of Common Stock
underlying the Series A Preferred Stock for fulfillment
thereof in the event such Series A Preferred Stock is
converted.
(c) Issued and Outstanding Options and Warrants.
(i) Warrants in the form attached hereto as Exhibit
2.06(c) to purchase 833,333 shares of Common Stock at an
exercise price of $1.50 per share, issued to the Purchasers of
Common Stock pursuant to the Financing. Parent shall reserve
the aggregate number of shares of Common Stock underlying the
Warrants for issuance upon exercise of such Warrants; and
8
<PAGE>
(ii) the Option to purchase 344,828 shares of Common
Stock at an exercise price of $0.29 per share, issued to Ted
Bernhardt.
ss.2.07 Registration Rights.
(a) Subject to the completion of an audit and the preparation
and delivery to Parent of all required audited financial statements by the
Surviving Corporation's Auditors, Parent shall use its best efforts to file and
effect a registration statement (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") and any other governmental
requirements or regulations), within ninety (90) days from the date of the
Closing, but in no event later than one hundred twenty (120) days from the date
of the Closing, with the Securities and Exchange Commission (the "SEC") relating
to (i) 4,666,667 shares of Common Stock issued pursuant to the Financing; (ii)
an aggregate of 327,586 shares of Common Stock, representing five percent (5%)
of Common Stock and the Common Stock underlying the Series B Preferred Stock
held by the former holders of equity of booktech and Virtuosity, excluding the
shares of Common Stock held by the officers of Parent and their immediate family
members, (the "Affiliates"), on a pro rata basis; and (iii) an aggregate of
21,353 shares of Common Stock representing five percent (5%) of the Common Stock
underlying the Series A Preferred Stock.
(b) Parent shall use its best efforts to file and effect a
registration statement with the SEC (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Exchange Act
and any
9
<PAGE>
other governmental requirements or regulations), within thirty (30) days after
the exercise of the Warrants in part or in whole (but not for less than 333,333
shares of common stock) or within six (6) months of the effective date of the
registration statement filed pursuant to Section 2.07(a) above, whichever is
sooner, relating to (i) the shares of Common Stock underlying the Warrants; (ii)
an aggregate of 655,172 shares of Common Stock, representing ten percent (10%)
of Common Stock and the Common Stock underlying the Series B Preferred Stock
held by the former holders of equity of booktech and Virtuosity, excluding the
shares of Common Stock held by the Affiliates, on a pro rata basis; (iii) an
aggregate of 344,827 shares of Common Stock, representing ten percent (10%) of
the shares of Common Stock held by the Affiliates, on a pro rata basis; provided
that as a condition to inclusion of any Affiliates shares in such registration,
each Affiliate shall agree to execute a lock-up agreement substantially in the
form of Exhibit 2.07(b) hereto (the "Lock-Up Agreement"), pursuant to which each
such Affiliate shall agree not to sell or otherwise dispose of the shares of
Common Stock or any direct or indirect interest therein for a period of one (1)
year following the Closing; (iv) an aggregate of 42,706 shares of Common Stock
representing ten percent (10%) of the Common Stock underlying the Series A
Preferred Stock; and (v) an aggregate of 34,482 shares of Common Stock,
representing ten percent (10%) of Common Stock underlying Mr. Bernhardt's
Options; provided that as a condition to inclusion of his shares in such
registration, Mr. Bernhardt agrees to execute a Lock-Up Agreement, pursuant to
which he shall agree not to sell or otherwise dispose of Common Stock or any
direct or indirect interest therein for a period of one year following the
Closing. Parent shall use its best efforts to have each such registration
statement declared effective within seventy-five (75) days after filing with the
SEC.
10
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ss.2.08 Consulting Agreement.
At the Closing, Parent and Verus shall enter into a consulting
agreement (the "Consulting Agreement"), for a term of two (2) years, which shall
provide that, for services rendered in connection with such agreement, Verus
shall be paid $15,000 per month. The form of Consulting Agreement is attached
hereto as Exhibit 2.08.
ss.2.09 Board of Directors.
The Board of Directors of Parent and the Surviving Corporation
shall consist of seven (7) persons, three (3) of whom shall be selected by
Verus, four (4) of whom shall be selected by the former equity holders of
booktech. Directors nominated at the 2000 Annual Meeting of Parent shall consist
of seven (7) persons, three (3) of whom shall be nominated by Verus, four (4) of
whom shall be nominated by the former equity holders of booktech.
ss.2.10 Hershey Loan.
Frank Challant, Bonnie Hershey, Dennis Hershey, Julie A.
Hershey Trust, Noah B. Hershey Trust, Aaron M. Hershey Trust, Morris A. Shepard
and Ruth Anne Shepard (together, the "Hershey Investors") have loaned an
aggregate of $2,815,000 to booktech (the "Hershey Loan"). At the Closing, the
Hershey Loan, including all accrued but unpaid interest, which together with the
Hershey Loan equals approximately $3,216,171, will be contributed to Parent in
exchange for an aggregate of 2,135,301 shares of Series A Preferred Stock.
ss.2.11 Shepard Debt.
All outstanding obligations of Morris A. Shepard incurred on
behalf of booktech, not to exceed $325,000, shall be paid by Surviving
Corporation upon the Closing.
11
<PAGE>
ss.2.12 Change of Name.
Contemporaneously with the Merger the name of Parent shall be
changed to booktech.com, inc. and the name of booktech shall be changed to
booktech.com, inc. (Massachusetts).
ss.2.13 Employment Agreement.
At the Closing, Parent shall enter into an employment
agreement with Morris A. Shepard, Ph.D. ("Dr. Shepard"), attached hereto as
Exhibit 2.13(a) pursuant to which Dr. Shepard shall serve as President and Chief
Executive Officer of Parent and Surviving Corporation, and on such other terms
and conditions as shall be reasonably acceptable to Parent and Dr. Shepard (the
"Shepard Employment Agreement").
ss.2.14 Use of Proceeds.
Attached hereto as Exhibit 2.14 is a description of the
projected use of proceeds of the Financing (the "Use of Proceeds") by booktech
for its 2000 fiscal year. Following the Closing, Parent and booktech shall not
make any expenditure or incur any liability not expressly contemplated by the
Use of Proceeds without the prior approval of the Board of Directors. The Use of
Proceeds may be amended from time to time upon the unanimous vote of the Board
of Directors.
III. REPRESENTATIONS AND WARRANTIES.
ss.3.01 Representations and Warranties of Parent and
Merger-Sub.
Parent and Merger-Sub represent and warrant to booktech as
follows:
12
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(a) Organization and Qualification.
Parent and Merger-Sub are corporations duly organized, validly
existing and in good standing under the laws of the State of Nevada and have
full corporate power and authority to conduct their businesses as and to the
extent now conducted and to own, use and lease their assets and properties. As
of the Closing date, Parent and Merger-Sub will be duly qualified, licensed or
admitted to do business and are in good standing in each jurisdiction where the
nature of the activities conducted by it or the character of the property owned,
leased or operated by it make such qualification necessary or appropriate.
Except for Parent's ownership of Merger-Sub, Parent and Merger-Sub do not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity. Other than Parent's ownership of Merger-Sub, Parent and
Merger-Sub have no subsidiaries and own no interest either directly or
indirectly in any subsidiaries.
(b) Organizational Documents; Capital Stock.
(i) Attached hereto as Exhibits 3.01(b)(i)(A) and
3.01(b)(i)(B) are true and complete copies of the articles of
incorporation and by-laws of Parent and of Merger-Sub,
respectively, as in effect on the date hereof.
(ii) Attached as Schedule 3.01(b)(ii) are true and
complete tables of all stockholders of Parent and of
Merger-Sub as of the date hereof.
(iii) As of the Closing Date, the authorized capital
stock of Parent will consist solely of 54,523,810 shares of
Common Stock and 5,000,000 shares of Preferred Stock.
Immediately prior to the Closing, 5,000,000 shares of Common
13
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Stock will be issued and outstanding, free and clear of any
Liens (as defined in Section 3.01(d)). No shares are held as
treasury stock. There are no outstanding options warrants,
calls, subscriptions, rights, agreements or other commitments
of any character obligating Parent to issue or sell any shares
of capital stock of Parent, or to grant, extend or enter into
any option with respect thereto. The shares of Common Stock
and Preferred Stock issuable to the holders of booktech shares
and the Hershey Investors, respectively, pursuant to Article I
hereof, will be, when issued in accordance with this
Agreement, duly authorized, validly issued, fully paid and
non-assessable. The outstanding shares of Common Stock are
eligible for quotation on the Over-the-Counter Bulletin Board
(the "OTCBB") of the National Association of Securities
Dealers, Inc. (the "NASD").
(iv) There are no outstanding contractual obligations
of Parent or Merger-Sub to repurchase, redeem or otherwise
acquire any shares of Common Stock or Merger-Sub common stock
respectively.
(v) There are no debt obligations of Parent or
Merger-Sub of any nature whatsoever, and as of the Closing
Date, neither Parent nor Merger-Sub will have any debt,
liabilities, obligations, or contingent obligations of any
nature whatsoever, except as set forth on Schedule 3.01(b)(v).
Neither Parent nor Merger-Sub are guarantors or otherwise
liable for any liability or obligation of any other person.
(c) Authority Relative to this Agreement.
Parent and Merger-Sub have full corporate power and authority
to enter into this Agreement and to perform their respective obligations
hereunder and to consummate the
14
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transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Merger-Sub and the consummation by Parent and
Merger-Sub of the Merger and the transactions contemplated hereby have been duly
and validly approved by the respective Boards of Directors of Parent and
Merger-Sub and, prior to the Closing, will have been duly and validly approved
by the sole stockholder of Merger-Sub, and no other corporate proceedings on the
part of Parent or Merger-Sub are necessary to authorize the execution, delivery
and performance of this Agreement by Parent and Merger-Sub and the consummation
by Parent and Merger-Sub of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Parent and Merger-Sub, and
constitutes a legal, valid and binding obligation of Parent and Merger-Sub
enforceable against Parent and Merger-Sub in accordance with its terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer or similar laws affecting the enforcement of
creditors rights generally and general principles of equity (whether considered
in a proceeding at law or in equity.
(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement by
Parent and Merger-Sub does not, and the performance by Parent
and Merger-Sub of their obligations hereunder and the
consummation of the transactions contemplated hereby will not,
conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default
under, result in, or give to any person any right of payment
or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of
any lien, claim, mortgage, encumbrance, pledge, security
interest equity or change of any
15
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kind (any of the foregoing, a "Lien") on any of the assets or
properties of Parent or Merger-Sub under any of the terms,
conditions or provisions of (x) the articles of incorporation
or by-laws of Parent or Merger-Sub; (y) any statute, law,
rule, regulation or ordinance (collectively, "Laws"), or any
judgement, decree, order, writ, permit or license
(collectively, "Orders"), of any court, tribunal, arbitrator,
authority, agency, commission, official or other
instrumentality of the United States, any foreign country, or
any domestic or foreign state, country, city or other
political subdivision (a "Governmental or Regulatory
Authority"), applicable to Parent or Merger-Sub or any of
their respective assets or properties; or (z) any note, bond,
mortgage, security agreement, indenture, license, franchise,
permit, concession, contract, lease (capital or operating) or
other instrument, obligation or agreement of any kind
(collectively, "Contracts") to which either Parent or
Merger-Sub is a party or by which Parent or Merger-Sub or any
of its assets or properties are bound, excluding from the
foregoing clauses (y) and (z) conflicts, violations, breaches,
defaults, terminations, modifications, accelerations and
creations and impositions of Liens, which individually or in
the aggregate, could not be reasonably expected to have a
Material Adverse Effect (as defined in Section 3.02(a)) on
Parent or Merger-Sub or on their ability to consummate the
transactions contemplated by this Agreement.
(ii) Except for (x) filings with various state
authorities that are required in connection with the
transactions contemplated under this Agreement, (y) the filing
of the Certificates of Merger and other appropriate merger
documents as required by the MBCL with the Secretary of State
of Massachusetts and as
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required by the NMAL with the Secretary of State of Nevada,
and appropriate documents with the relevant authorities of
other states in which the Constituent Entities are qualified
to do business, and (z) matters disclosed in Schedule
3.01(d)(ii), no consent, approval, or action of, filing with
or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under
any of the terms, conditions or provisions of any Law or Order
of any Governmental or Regulatory Authority or any Contract to
which Parent or Merger-Sub is a party or by which Parent or
Merger-Sub or any of their respective assets or properties is
bound for the execution and delivery of this Agreement by
Parent or Merger-Sub, the performance by Parent or Merger-Sub
of their respective obligations hereunder or the consummation
of the transactions contemplated hereby, except for such
consents, approvals or actions of, filing with or notices to
any Governmental or Regulatory Authority or other public or
private third party, the failure of which to make or obtain
could not reasonably be expected to have a Material Adverse
Effect on Parent or Merger-Sub or on Parent's and Merger-Sub's
ability to consummate the transactions contemplated by this
Agreement.
(e) Financial Statements.
Parent has delivered to booktech true, correct and complete
copies of the following: the audited balance sheet of Parent as of December 31,
1998 and December 31, 1999 (the "Parent Balance Sheets"); the audited statement
of operations of Parent for the fiscal years ended December 31, 1998 December
31, 1999; the
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audited statement of stockholders' equity of Parent for the fiscal years ended
January 1, 1998 to December 31, 1998 and the unaudited statements of
stockholders' equity of Parent for the period January 1, 1999 to January 31,
2000; and the audited statement of cash flows of Parent for the period January
1, 1998 to December 31, 1998 and the unaudited statement of cash flows of Parent
for the period January 1, 1999 to January 31, 2000 (together the "Parent
Financial Statements"). The Parent Financial Statements were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto), and are correct, complete and fairly present in all
material respects the financial condition, assets, liabilities, stockholders
equity and results of operations of Parent for the periods indicated and are
consistent with the books and records of Parent, subject to normal and recurring
year end adjustments.
(f) NASD Report.
(i) Parent has delivered to booktech a true, correct
and complete copy of Parent's information report filed with
the OTCBB pursuant to Rule 6740 (the "Rule"), as promulgated
by the NASD, together with all amendments thereof and
supplements thereto (as such document has since the time of
its filing been amended or supplemented), the ("NASD Report"),
which is the only document (other than preliminary material)
that Parent was required to file with the NASD since such
date. As of its date, the NASD Report (i) complied as to form
in all material respects with the requirements of the Rule,
and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be
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stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(ii) As of the date hereof, Common Stock is eligible
for quotation on the OTCBB and Parent is current in all of its
reporting requirements under the Securities Exchange Act of
1934.
(iii) No quotation is being submitted or published,
directly or indirectly, on behalf of Parent or any director or
officer, or any person, directly or indirectly, who is the
beneficial owner of more than ten percent (10%) of the
outstanding shares of any equity security of Parent.
(g) Absence of Certain Changes or Events.
Except as set forth in Schedule 3.01(g) hereto, (i) since
December 31, 1999, no change, event or development or combination of changes or
developments (including any worsening of any condition currently existing) has
occurred or is reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent and Merger-Sub, and (ii) between such date and
the date hereof Parent and Merger-Sub have not conducted any material operating
business.
(h) Absence of Undisclosed Liabilities.
Except for matters reflected or reserved against in the Parent
Balance Sheets included in the Parent Financial Statements or as otherwise set
forth on Schedule 3.01(h), neither Parent nor Merger-Sub had at such date and
have not incurred since that date, any material liabilities or obligations
(whether absolute, accrued, contingent, fixed or otherwise, or whether due or to
become due) of any nature, except liabilities or obligations which were incurred
in
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connection with this Agreement or in the ordinary course of business consistent
with past practice.
(i) Legal Proceedings.
Except as set forth on Schedule 3.01(i), there are no actions,
suits, arbitrations or proceedings pending or, to the knowledge of Parent or
Merger-Sub, threatened against, relating to or affecting, nor to the knowledge
of Parent or Merger-Sub, are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, Parent or Merger-Sub, any of their officers, directors, assets or
properties which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on Parent or Merger-Sub or on the ability of
Parent or Merger-Sub to consummate the transactions contemplated by this
Agreement. Neither Parent nor Merger-Sub is subject to any judgment, decree,
court order or writ of any Governmental or Regulatory Authority.
(j) Information Supplied.
Nothing in this Agreement or any schedule, annex, certificate,
document or statement in writing which has been supplied by or on behalf of
Parent or Merger-Sub, in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact, or omits any statement of a
material fact required to be stated or necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to Parent or
Merger-Sub which materially and adversely affects Parent or Merger-Sub, which
has not been set forth in this Agreement or in the schedules, exhibits, annexes,
certificates, documents or statements in writing furnished by Parent or
Merger-Sub in connection with the transactions contemplated by this Agreement.
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(k) Compliance with Laws and Orders.
Parent and Merger-Sub hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental and Regulatory Authorities
necessary for the lawful conduct of their businesses (the "Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, do not and are not reasonably
expected to have a Material Adverse Effect on Parent or Merger-Sub. Parent and
Merger-Sub are in compliance with the terms of the Permits, except failures so
to comply which, individually or in the aggregate, do not have and are not
reasonably expected to have a Material Adverse Effect on Parent or Merger-Sub.
Parent and Merger-Sub are not in violation of, or in default under, any Law or
Order of any Governmental or Regulatory Authority except for violations which,
individually or in the aggregate, do not and are not reasonably expected to have
a Material Adverse Effect on Parent or Merger-Sub.
(l) Compliance with Agreements; Certain Agreements.
Neither Parent nor Merger-Sub, nor to the knowledge of Parent
or Merger-Sub, any other party thereto, is in breach or violation of, or in
default in the performance or observance of any term or provision of and no
event has occurred which, with notice or lapse of time or both, is reasonably
expected to result in a default under, (x) the articles of incorporation or
by-laws of Parent or Merger-Sub; or (y) any material Contract to which Parent or
Merger-Sub is a party or by which Parent or Merger-Sub or any of their assets or
properties are bound, except in the case of clause (y) for breaches, violations
and defaults which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect on Parent or Merger-Sub.
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(m) Employee Benefit Plans.
Neither Parent nor Merger-Sub has or contributes to any
pension, profit-sharing, option, other incentive plan, or any other type of
employee benefit plan, or has any obligation to or customary arrangement with
employees for bonuses, incentive compensation, vacations, severance pay, sick
pay, sick leave, insurance, service award, relocation, disability, tuition
refund or other benefits, whether oral or written.
(n) Patents, Trademarks, Et Cetera.
Neither Parent nor Merger-Sub has any Intangibles (as defined
in ss.3.02(e) hereof).
(o) Insurance.
Neither Parent nor Merger-Sub has key-person life insurance or
any directors' and officers' liability or other insurance policies that insure
the business, operations, properties, or assets of Parent or Merger-Sub, except
as otherwise disclosed herein.
(p) Labor Matters.
Parent has no employees. Merger-Sub has no employees. The
positions and salaries of all employees of Parent and Merger-Sub are set forth
on Schedule 3.01(p)(i). To the knowledge of Parent and Merger-Sub, no executive,
key employee, or group of employees has any plans to terminate employment with
either Parent or Merger-Sub. Parent and Merger-Sub have not experienced any
labor disputes or work stoppage due to labor disagreements. Parent and
Merger-Sub are in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours and
have not been and are not engaged in any unfair labor practice as defined in the
National Labor Relations
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Act, as amended, the violation of which could have a Material Adverse Effect.
There is no unfair labor practice charge or complaint against either Parent or
Merger-Sub pending or threatened before the National Labor Relations Board. No
grievance which might have a Material Adverse Effect nor any arbitration
proceeding arising out of or under any collective bargaining agreement is
pending and no pending claims therefore have been made. Except as disclosed in
Schedule 3.01(p)(ii), no collective bargaining agreement of Parent and
Merger-Sub restricts Parent or Merger-Sub from relocating, closing or
subcontracting any of its operations.
(q) Tangible Property, Business, Assets, etc.
Except as set forth in Schedule 3.01(q) and except as
contemplated by this Agreement, neither Parent nor Merger-Sub has, from the date
of its respective inception, ever owned any material property (both real and
personal), conducted any material business, owned any material assets, conducted
any operations, or incurred any material liabilities.
(r) Tax Matters.
(i) Except as set forth in Schedule 3.01(r), Parent
and Merger-Sub have filed all tax returns to be filed by
applicable law prior to the Closing. All tax returns were
(and, as to tax returns not filed as of the date hereof, will
be) true, complete and correct and filed on a timely basis.
Parent and Merger-Sub (x) have paid all taxes due, or claimed
or asserted in writing by any taxing authority to be due, for
the periods covered by such tax returns or (y) have duly and
fully provided reserves (in accordance with GAAP, adequate to
reflect all such taxes.
(ii) Parent and Merger-Sub have established (and
until the Closing will maintain) on their books and records
reserves in accordance with GAAP adequate
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to reflect all material taxes not yet due and payable. Parent
has made available to booktech complete and accurate copies of
all work papers associated with the calculation of Parent's
and the Merger Sub's tax reserves.
(iii) There are no tax liens upon the assets of
Parent and Merger-Sub.
(iv) Parent and Merger-Sub have not requested (and no
request has been made on their behalf) any extension of time
within which to file any material tax return.
(v) (A) No income tax returns have been examined by
any taxing authorities for any periods; and (B) no deficiency
for any material taxes has been suggested, proposed, asserted,
or assessed against Parent or Merger-Sub that has not been
resolved and paid in full.
(vi) No audits or other administrative proceedings or
court proceedings are presently pending with regard to any
taxes or tax returns of Parent or Merger-Sub.
(vii) To the extent requested by booktech, Parent has
made available to booktech (or, in the case of tax returns to
be filed on or before the Closing, will make available)
complete and accurate copies of all tax returns and associated
work papers filed by or on behalf of Parent or Merger-Sub for
all taxable years ending on or prior to the Closing.
(viii) No agreements relating to allocating or
sharing of any taxes have been entered into by Parent or
Merger-Sub.
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(ix) Parent or Merger-Sub have not entered into any
transactions that could give rise to an understatement of any
tax.
(s) Brokers.
All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Parent and Merger-Sub
and their affiliates directly with booktech, without the intervention of any
person on behalf of Parent or Merger-Sub and their affiliates in such manner as
not to give rise to any valid claim by any person against Parent, Merger-Sub,
booktech or the Surviving Corporation for a finder's fee, brokerage commission
or similar payment, except as specifically set forth in Schedule 3.01(s).
(t) Consents Without Any Condition.
Parent and Merger-Sub have not made any agreement or reached
any understanding not approved by booktech as a condition for obtaining any
consent, authorization, approval, order, license, certificate or permit required
for the consummation of the transactions contemplated by this Agreement.
(u) Present Intention Not to Sell.
To the best of Parent's knowledge, none of the Purchasers of
Common Stock and Warrants has a present intention to sell their Common Stock or
Warrants, as the case may be.
(v) Subsidiaries.
Except for Merger-Sub, Parent does not have any Subsidiaries.
Merger-Sub does not have any Subsidiaries. For purposes of this Section 3.01(v),
"Subsidiary" shall mean: (i) any corporation at least a majority of whose
outstanding voting stock is owned, directly or indirectly, by such Person or by
one or more of its Subsidiaries, or by such Person and one or
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more of its Subsidiaries, (ii) any general partnership, joint venture or similar
entity, at least a majority of whose outstanding partnership or similar
interests shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii)
any limited partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, "voting stock" means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having such
power only by reason of contingency.
(w) Reserved
(x) Leases.
Neither Parent nor Merger-Sub leases or subleases any real
property.
(y) Contracts.
Neither Parent or Merger-Sub is a party to any material
contract or agreement with any third party except as contemplated by this
Agreement.
(z) Powers of Attorney.
There are no outstanding powers of attorney executed on behalf
of either Parent or Merger-Sub in respect of Parent or Merger-Sub, their assets,
liabilities or business or their shares of capital stock.
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(aa) Insurance and Risk Management.
Schedule 3.01(aa) sets forth the following information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which the business operations of Parent or Merger-Sub have been
a party, a named insured, or otherwise the beneficiary of coverage from the
period from December 31, 1998 to the date hereof:
(i) the name , address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number, the period of coverage and
premium; and
(iv) a description of any retrospective premium
adjustments or other loss-sensitive premium arrangements.
With respect to each such insurance policy: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect; (ii) the transactions
contemplated hereby will not result in the cancellation or modification of such
policies; (iii) neither Parent nor Merger-Sub nor any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; (iv) Parent has delivered true
and complete copies of all policies and related indemnity or premium payment
agreements to booktech; (v) the policy has not been amended or modified and no
riders have been issued in respect of such policies referred to in (iv) above
without the consent of booktech; and (vi) no party to the policy has repudiated
any provision
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thereof. Schedule 3.01(aa) describes any self-insurance arrangements affecting
either Parent or Merger-Sub.
(bb) Environment, Health, and Safety.
(i) Except as disclosed in Schedule 3.01(bb):
1. Parent and Merger-Sub are and have been
in compliance with all applicable Environmental Laws
and Safety Laws;
2. Parent and Merger-Sub have obtained, and
are and have been in material compliance with the
conditions of, all Environmental Permits required for
the continued conduct of the business of Parent and
Merger-Sub in the manner now conducted and presently
proposed to be conducted;
3. Parent and Merger-Sub have filed all
required applications, notices and other documents
necessary to effect the timely renewal or issuance of
all Environmental Permits for the continued conduct
of the business of Parent and Merger-Sub in the
manner now conducted and presently proposed to be
conducted;
4. there are no past or present events,
conditions or circumstances, including, without
limitation, to the knowledge of Parent and
Merger-Sub, pending changes in any Environmental Law
or Permit or Safety Laws, that are likely to
interfere with or otherwise affect the business of
Parent and Merger-Sub's business in the manner now
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conducted or which would interfere with compliance
with any Environmental Law or Permit or Safety Law;
5. there are no circumstances or conditions
present at or arising out of the present or former
assets, properties, leaseholds, businesses or
operations of Parent or Merger-Sub in respect of
off-site storage, transportation or disposal of, or
any off-site Release of, a Chemical Substance which
reasonably may be expected to give rise to any
Environmental Liabilities and costs;
6. there are no circumstances or conditions
present at or arising out of the present or former
assets, properties, leaseholds, businesses or
operations of Parent and Merger-Sub, including but
not limited to any on-site Storage, use, disposal or
Release of a Chemical Substance, which reasonably may
be expected to give rise to any Environmental
Liabilities and Costs or Safety Liability and Costs;
7. none of Parent or Merger-Sub or the
present or past assets, properties, businesses,
leaseholds or operations of Parent or Merger-Sub has
received or is subject to, or within the past three
years has been subject to, any outstanding order,
decree, judgment, complaint, agreement, claim,
citation, or notice or is subject to any ongoing
judicial or administrative proceeding indicating that
Parent and Merger-Sub, or the past and present assets
of Parent or Merger-Sub are or may be: (A) in
violation of any Environmental Law; (B) in violation
of any Safety Laws; (C) responsible for the on-site
or off-site storage or Release of any Chemical
Substance;
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or, (D) liable for any Environmental Liabilities and
Costs or Safety Liabilities and Costs;
8. none of Parent or Merger-Sub have any
reason to believe that Parent or Merger-Sub will
become subject to a matter identified in subsection
(7); and, no investigation or review with respect to
such matters is pending or, to the knowledge of
Parent or Merger-Sub, is threatened, nor has any
authority or other third-party indicated an intention
to conduct the same;
9. neither the business of Parent nor
Merger-Sub nor any of their properties or assets is
subject to, or as a result of the transactions
contemplated by this Agreement will be subject to,
the requirements of any Environmental Laws which
require notice, disclosure, cleanup or approval prior
to transfer of the shares pursuant to the Merger or
the business of Parent or Merger-Sub or which will
impose Liens on any such asset or property or
otherwise interfere with or affect the business of
Parent and Merger-Sub;
10. Schedule 3.01(bb)(10) lists all property
presently or previously leased, owned or operated by
Parent and Merger-Sub and identifies all such
property (and the area within that property) that has
been used by Parent or Merger-Sub or by any other
Person (including a prior owner or operator) for the
storage or disposal of Chemical Substances;
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11. Schedule 3.01(bb)(11) lists all off-site
locations, including, without limitation, commercial
waste disposal facilities or municipal landfills, to
which or at which Chemical Substances originating
from Parent or Merger-Sub, or their assets,
properties or business have been sent (or otherwise
have come to be located) in amounts that would
require a waste manifest under the Resource
Conservation and Recovery Act of 1976 as now in
effect for treatment, storage, disposal, reuse or
recycling;
12. Schedule 3.01(bb)(12) sets forth a list
of all underground storage tanks owned or operated at
any time by Parent or Merger-Sub and, except as
disclosed in Schedule 3.01(bb)(12), no such tank is
leaking or has leaked at any time in the past, and
there is no pollution or contamination of the
Environment caused by or contributed to or threatened
by a Release of a Chemical Substance from any such
tank; and
13. Schedule 3.01(bb)(13) lists all
environmental audits, inspections, assessments,
investigations or similar reports in Parent's or
Merger Sub's possession or of which Parent and
Merger-Sub are aware relating to Parent or
Merger-Sub's assets, properties or business or the
compliance of the same with applicable Environmental
Laws and Safety Laws.
(ii) For purposes of this Section only, all
references to the "Parent" or the "Merger-Sub" are intended to
include any and all other entities to which Parent or
Merger-Sub may be considered a successor under applicable
Environmental Laws. The representations and warranties in this
section are the
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only representations and warranties with respect to
Environmental Laws or Environmental Liabilities and Costs, or
Safety Laws or Safety Liabilities and Costs notwithstanding
any other language in this Agreement of general applicability.
(iii) For purposes of this Section 3.01(bb):
1. "Chemical Substance" means any chemical
substance, including but not limited to any: (i)
pollutant, contaminant, irritant, chemical, raw
material, intermediate, product, by-product, slag,
construction debris; (ii) industrial, solid, liquid
or gaseous toxic or hazardous substance, material or
waste; (iii) petroleum or any fraction thereof; (iv)
asbestos or asbestos-containing material; (v)
polychlorinated biphenyl; (vi) chlorofluorocarbons;
and, (vii) any other substance, material or waste,
which is identified or regulated under any
Environmental Law or Safety Law, as now and
hereinafter in effect, or other comparable laws.
2. "Environment" means soil, land surface or
subsurface strata, real property, surface waters
(including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands), groundwater,
water body sediments, drinking water supply, stream
sediments, ambient air (including indoor air), plant
and animal life and any other environmental medium or
natural resource.
3. "Environmental Laws" mean the
Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and
Recovery Act, and the Clean Air Act, the Clean Water
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Act, each, as amended or hereinafter in effect, and
any other law or legal requirement, as now or
hereinafter in effect, relating to: (a) the Release,
containment, removal, remediation, response, cleanup
or abatement of any sort of any Chemical Substance;
(b) the manufacture, generation, formulation,
processing, labeling, distribution, introduction into
commerce, use, treatment, handling, storage,
recycling, disposal or transportation of any Chemical
Substance; (c) exposure of persons, including
employees, to any Chemical Substance; (d) the
physical structure, use or condition of a building,
facility, fixture or other structure, including,
without limitation, those relating to the management,
use, storage, disposal, cleanup or removal of
asbestos, asbestos-containing materials,
polychlorinated biphenyls or any other Chemical
Substance; (e) the pollution, protection or clean up
of the Environment; or (f) noise.
4. "Environmental Liabilities and Costs"
means all Losses incurred: (i) to comply with any
Environmental Law; (ii) as a result of a Release of
any Chemical Substance; or (iii) as a result of any
environmental conditions present at, created by or
arising out of the past or present operations of
Parent or Merger-Sub through the Closing Date or of
any prior owner or operator of a facility or site at
which Parent or Merger-Sub now operate or have
previously operated.
5. "Environmental Permit" means any permit
or authorization from any governmental authority
required under, issued pursuant to, or authorized by
any Environmental Law.
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6. "Release" means any actual, threatened or
alleged spilling, leaking, pumping, pouring,
emitting, dispersing, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing
of any Chemical Substance into the Environment that
may cause an Environmental Liability and Cost
(including the disposal or abandonment of barrels,
containers, tanks or other receptacles containing or
previously containing any Chemical Substance).
7. "Safety Laws" means the Occupational
Safety and Health Act and any other federal, state,
local and foreign law, regulation or legal
requirement relating to health or safety, each as now
or hereinafter in effect, including any such law,
regulation or legal requirement relating to the (a)
exposure of employees to any Chemical Substance, air
quality or working conditions or noise or (b) the
physical structure, use or condition of a building,
facility, fixture or other structure, including,
without limitation, those relating to equipment or
manufacturing processes, or the management, use,
storage, disposal, cleanup or removal of any Chemical
Substances, air quality or working conditions.
8. "Safety Liabilities and Costs" means all
Losses incurred to comply with any Safety Law or as a
result of any health or safety conditions present at,
created by or arising out of the past or present
operations of the Company through the Closing Date.
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(cc) Affiliated Transaction.
Except as contemplated by this Agreement, neither Parent nor
Merger-Sub is a party to or bound by any contract, commitment or understanding
with any of the stockholders, directors or officers of Parent or Merger-Sub or
any of their affiliates or any member of their family and none of the
stockholders, directors or officers of Parent or Merger-Sub or affiliates or any
member of their family owns or otherwise has any rights to or interests in any
asset, tangible or intangible, which is used in the business of Parent or
Merger-Sub.
(dd) Government Contracts.
Neither Parent nor Merger-Sub has been nor are they a party to
any contract or arrangement with any federal, state or local government agency.
(ee) No Illegal Payments, Etc.
Neither Parent nor Merger-Sub, nor any of the directors,
officers, employees or agents of Parent or Merger-Sub, has (a) directly or
indirectly given or agreed to give any illegal gift, contribution, payment or
similar benefit to any supplier, customer, governmental official or employee or
other person who was, is or may be in a position to help or hinder Parent or
Merger-Sub (or assist in connection with any actual or proposed transaction) or
made or agreed to make any illegal contribution, or reimbursed any illegal
political gift or contribution made by any other person, to any candidate for
federal, state, local or foreign public office (i) which might subject Parent or
Merger-Sub to any damage or penalty in any civil, criminal or governmental
litigation or proceeding or (ii) the non-continuation of which has had or might
have, individually or in the aggregate, a Material Adverse Effect or (b)
established or maintained any unrecorded fund or asset or made any false entries
on any books or records for any purpose.
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(ff) Books and Records.
The books and all corporate (including minute books and stock
record books) and financial records of Parent and Merger-Sub are complete and
correct in all material respects and have been maintained in accordance with
applicable sound business practices, laws and other requirements.
(gg) Consents.
Schedule 3.01(gg) sets forth a true, correct and complete list
of any Person whose consent or approval is required and the matter, agreement or
contract to which such consent relates in connection with the transactions
contemplated by this Agreement.
(hh) Disclosure.
The representations and warranties contained in this Section 3
(including the schedules and exhibits required to be delivered by Parent and
Merger-Sub pursuant to this Agreement) and any certificate furnished or to be
furnished by Parent and Merger-Sub to booktech do not contain and will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Section 3 not misleading. To the knowledge of Parent and Merger-Sub, there is no
material fact relating to Parent and Merger-Sub or their assets, properties or
business which may materially adversely affect the same which has not been
disclosed in writing in this Agreement to booktech.
(ii) Accuracy of Information.
Parent has made with the SEC all filings required by the
Exchange Act (all such filings and any future filings made thereunder are
collectively, the "Exchange Act Filings").
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None of the Exchange Act Filings contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Parent has not been required to make any filings under the
Securities Act of 1933.
(jj) Tax Free Transaction
Parent represents and warrants that as regards booktech and
its shareholders the Merger qualifies as a tax free transaction. The Parent does
not represent or warrant that the accrued interest on the Hershey Loan being
converted into equity is or is not subject to tax liability.
ss.3.02 Representations and Warranties of booktech.
booktech represents and warrants to Parent and Merger-Sub as
follows:
(a) Organization and Qualification.
booktech is a corporation duly organized, validly existing and
in good standing under the laws of the State of Massachusetts and has full power
and authority to conduct its business as and to the extent now conducted and to
own, use and lease its assets and properties, except for such failures to have
such power and authority which, individually or in the aggregate, do not and are
not reasonably expected to have a Material Adverse Effect on booktech. booktech
is duly qualified, licensed or admitted to do business and is in good standing
in each jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business makes such qualification,
licensing or admission necessary, except for such failures to be so qualified,
licensed or admitted and in good standing which, individually or in the
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aggregate, do not and are not reasonably expected to have a Material Adverse
Effect on booktech. As used in this Agreement, a "Material Adverse Effect" shall
mean a material adverse effect on the businesses, properties, assets,
liabilities, condition (financial or otherwise) or results of operations of an
entity (or group of entities taken as a whole). Notwithstanding the foregoing, a
Material Adverse Effect shall not include any change in political or economic
matters of general applicability. booktech does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
(b) Organizational Documents; Capital Stock.
Attached hereto as Exhibit 3.02(b) are true and complete
copies of the Articles of Organization and By-Laws of booktech as in effect on
the date hereof.
Attached as Schedule 3.02(b)(i) is a true and complete table
of all stockholders of booktech as of the date hereof.
As of the Closing Date, the authorized capital stock of
booktech will consist solely of 200,000 shares of common stock. Immediately
prior to the Closing, 25,000 shares of common stock will be issued and
outstanding, free and clear of any Liens (as defined in Section 3.01(d)). No
shares are held as treasury stock except 3,000 shares at $62.50 a share and
except as contemplated by this Agreement, there are no outstanding options,
warrants, calls, subscriptions, rights, agreements or other commitments of any
character obligating booktech to issue or sell any shares of its capital stock
or to grant, extend or enter into any option with respect thereto.
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There are no outstanding contractual obligations of booktech
to repurchase, redeem or otherwise acquire any shares of booktech.
There are no debt obligations of booktech of any nature
whatsoever, and as of the Closing Date, booktech will not have any debt,
liabilities, obligations, or contingent obligations of any nature whatsoever,
except as set forth on Schedule 3.02(b)(ii). booktech is not a guarantor nor is
it otherwise liable for any liability or obligation of any other person.
(c) Authority Relative to this Agreement.
booktech has full power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by booktech and the consummation by booktech of the Merger and
the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of booktech and its stockholders, and no other proceedings on
the part of booktech are necessary to authorize the execution, delivery and
performance of this Agreement by booktech and the consummation by booktech of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by booktech, constitutes the legal, valid and binding
obligation of booktech enforceable against booktech in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer or similar laws affecting the
enforcement of creditors rights generally and general principles of equity
(whether considered in a proceeding at law or in equity.
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(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement by
booktech does not, and the performance by booktech of its
obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to
any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in
the creation or imposition of any Lien upon any of the assets
or properties of booktech under any of the terms, conditions
or provisions of (x) the Articles of Organization or By-Laws
of booktech, (y) any Laws or Orders of any Governmental or
Regulatory Authority, applicable to booktech or any of its
assets or properties, or (z) any Contracts to which booktech
is a party or by which booktech or any of its assets or
properties is bound, excluding from the foregoing clauses (y)
and (z) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse
Effect on booktech or on its ability to consummate the
transactions contemplated by this Agreement.
(ii) Except (x) for the filing of the Certificate of
Merger and other appropriate merger documents required by the
MBCL with the Secretary of State of Massachusetts, and by the
NMAL with the Secretary of the State of Nevada, no consent,
approval, or action of, filing with, or notice to any
Governmental or Regulatory Authority or other public or
private third party is necessary or required
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under any of the terms, conditions or provisions of any Law or
Order of any Governmental or Regulatory Authority or any
Contract to which booktech is a party or by which booktech or
any of its assets or properties is bound for the execution and
delivery of this Agreement by booktech, the performance by
booktech of its obligations hereunder or the consummation of
the transactions contemplated hereby, except for such
consents, approvals, or actions of, filings with or notices to
any Governmental or Regulatory Authority or other public or
private third party the failure of which to make or obtain
could not reasonably be expected to have a Material Adverse
Effect on Parent, booktech, the Surviving Corporation, or on
booktech's ability to consummate the transactions contemplated
by this Agreement.
(e) Patents, Trademarks, Intangibles.
booktech has all right, title and interest in, or a valid and
binding license to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
franchises, trade secrets, computer programs (in object or source code form), or
other intangible property or asset (collectively, "Intangibles") which are
individually or in the aggregate material to the conduct of its business.
Attached as Exhibit 3.02(e) is a true and complete list of all Intangibles of
booktech. booktech is not in default (or with the giving of notice or lapse of
time or both, would be in default) in any material respect under any license to
use such Intangibles. To booktech's knowledge, no such Intangibles are being
infringed by any third party, and booktech is not infringing any Intangible of
any third party, except for such defaults and infringements which, individually
or in the aggregate, do not
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and are not reasonably expected to have a Material Adverse Effect on Parent,
booktech or the Surviving Corporation.
(f) Financial Statements.
booktech has delivered to Parent true, correct and complete
copies of the following: the audited balance sheets of booktech as of July 31,
1998 as of July 31, 1999 and December 31, 1999, (the "booktech Balance Sheets");
an unaudited balance sheet of booktech as of February 28, 2000; the audited
statements of operations of booktech as of July 31, 1998 and July 31, 1999 and
December 31, 1999; the audited statements of stockholders' equity of booktech
for the period January 1, 1998 to December 31, 1999; and the audited statement
of cash flows of booktech for the period January 1, 1998 to December 31, 1999
(together the "booktech Financial Statements"). The booktech Financial
Statements were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto and except with respect to unaudited statements), and are correct,
complete and fairly present in all material respects the financial condition,
assets, liabilities, stockholders equity and results of operations of booktech
for the periods indicated and are consistent with the books and records of
booktech, subject to normal and recurring year end adjustments and in the case
of the unaudited financial statements, the absence of notes.
(g) Absence of Certain Changes or Events.
Since February 28, 2000, no change, event or development or
combination of changes or developments (including any worsening of any condition
currently existing) has
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occurred or is reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on booktech.
(h) Absence of Undisclosed Liabilities.
Except for matters reflected or reserved against in the
booktech Balance Sheets, booktech did not have at such date and has not incurred
since that date, any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any nature,
except liabilities or obligations which were incurred in connection with this
Agreement and the transactions contemplated hereby in the ordinary course of
business consistent with past practice.
(i) Legal Proceedings.
There are no actions, suits, arbitrations, investigations,
audits or proceedings pending or to the knowledge of booktech, threatened
against, relating to or affecting, nor to the knowledge of booktech, are there
any Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, booktech or any of its assets and
properties which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on booktech or on the ability of booktech to
consummate the transactions contemplated by this Agreement. booktech is not
subject to any judgment, decree, court order or writ of any Governmental or
Regulatory Authority.
(j) Information Supplied.
Nothing in this Agreement or any schedule, exhibits,
certificate, document or statement in writing which has been supplied by or on
behalf of booktech, in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact, or omits any
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statement of a material fact required to be stated or necessary in order to make
the statements contained herein or therein not misleading. There is no fact
known to booktech which materially and adversely affects booktech, which has not
been set forth in this Agreement or in the schedules, exhibits, certificates,
documents or statements in writing furnished by booktech in connection with the
transactions contemplated by this Agreement.
(k) Compliance with Laws and Orders.
booktech holds all permits, licenses, variances, exemptions,
orders and approvals of all Governmental and Regulatory Authorities necessary
for the lawful conduct of its business (the "booktech Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, do not and are not reasonably
expected to have a Material Adverse Effect on booktech. booktech is in
compliance with the terms of the booktech Permits, except failures so to comply
which, individually or in the aggregate, do not have and are not reasonably
expected to have a Material Adverse Effect on booktech. booktech is not in
violation of, or in default under, any Law or Order of any Governmental or
Regulatory Authority, except for violations which, individually or in the
aggregate, do not and are not reasonably expected to have a Material Adverse
Effect on booktech.
(l) Compliance with Agreements.
Neither booktech, nor to the knowledge of booktech, any other
party thereto, is in breach or violation of, or in default in the performance or
observance of any term or provision of, and no event has occurred which, with
notice or lapse of time or both, is reasonably expected to result in a default
under, (x) the Articles of Organization or By-Laws of booktech or (y) any
material Contract to which booktech is a party or by which booktech or any of
its assets or
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properties is bound, except in the case of clause (y) for breaches, violations
and defaults which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect on booktech.
(m) Brokers.
All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by booktech and its
affiliates directly with Parent and Merger-Sub, without the intervention of any
person on behalf of booktech and its affiliates in such manner as to not give
rise to any valid claim by any person against booktech, Parent, Merger-Sub or
the Surviving Corporation for a finder's fee, brokerage commission or similar
payment, except as specifically set forth on Schedule 3.02(m).
(n) Consents Without Any Condition.
booktech has not made any agreement or reached any
understanding not approved by Parent and Merger-Sub as a condition for obtaining
any consent, authorization, approval, order, license, certificate or permit
required for the consummation of the transactions contemplated by this
Agreement.
(o) Tax Matters.
Except as set forth in Schedule 3.02(o) hereto:
(i) booktech has filed all tax returns required to be
filed by applicable law prior to the Closing. All tax returns
were (and, as to tax returns not yet required to be filed as
of the date hereof, will be) true complete and correct and
filed on a timely basis. booktech has withheld and paid over
to the appropriate
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taxing authority all taxes required to be so withheld and paid
over, except where the failure to pay tax would not have a
Material Adverse Effect on booktech.
(ii) There are no tax liens upon the assets of
booktech.
(iii) booktech has not requested (and no request has
been made on its behalf) any extension of time within which to
file any material tax return since January 1, 1997.
(iv) No income tax returns have been examined by any
taxing authorities since January 1, 1997.
(v) No audits or other administrative proceedings or
court proceedings are presently pending with regard to any
taxes or tax returns of booktech.
(vi) To the extent requested by Parent and Merger-Sub
booktech has made available to Parent and Merger-Sub (or, in
the case of tax returns to be filed on or after the Closing,
will make available) complete and accurate copies of all tax
returns and associated work papers filed by or on behalf of
booktech for all taxable years ending on or prior to the
Closing.
(vii) booktech has always been taxed as a corporation
for United States federal tax purposes, and will remain so
through the Closing.
(p) Employee Benefit Plans.
booktech does not contribute to any pension, profit-sharing,
option, other incentive plan, or any other type of employee benefit plan, other
than health and disability plans nor has it any obligation to, or customary
arrangement with, employees for bonuses, incentive
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compensation, vacations, severance pay, service award, relocation, tuition
refund or other benefits, whether oral or written.
(q) Intangibles.
(See Section 3.02 (e)).
(r) Insurance.
booktech has neither key-person life insurance nor any
directors' and officers' liability or other insurance policies that insure the
business, operations, properties, or assets of booktech, except as otherwise
disclosed herein.
(s) Labor Matters.
booktech has fifty (50) employees. The positions and salaries
of all employees of booktech are set forth on Schedule 3.02(s)(i). To the
knowledge of booktech, no executive, key employee, or group of employees has any
plans to terminate employment with booktech. booktech has not experienced any
labor disputes or work stoppage due to labor disagreements. booktech is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and have not
been and are not engaged in any unfair labor practice as defined in the National
Labor Relations Act, as amended, the violation of which could have a Material
Adverse Effect. There is no unfair labor practice charge or complaint against
pending or threatened before the National Labor Relations Board. No grievance
which might have a Material Adverse Effect nor any arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
pending claims therefore have been made. Except as disclosed in Schedule
3.02(s)(ii), no collective bargaining
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agreement of booktech restricts booktech from relocating, closing or
subcontracting any of its operations.
(t) Tangible Property, Business, Assets, etc.
Except as set forth in Schedule 3.02(t) and except as
contemplated by this Agreement, booktech has, from the date of its respective
inception, never owned any material property (both real and personal), conducted
any material business, owned any material assets, conducted any operations, or
incurred any material liabilities.
(x) Present Intention Not to Sell.
To the best of booktech's knowledge, none of shareholders has
a present intention to sell their capital stock.
(y) Subsidiaries.
booktech does not have any Subsidiaries. For purposes of this
Section 3.02(y), "Subsidiary" shall mean: (i) any corporation at least a
majority of whose outstanding voting stock is owned, directly or indirectly, by
such Person or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries, (ii) any general partnership, joint venture or similar
entity, at least a majority of whose outstanding partnership or similar
interests shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii)
any limited partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, "voting stock" means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the
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equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of contingency.
(z) No Material Adverse Change.
Since December 31, 1999, there has not been any change which
has resulted in a Material Adverse Effect to booktech and no event has occurred
or circumstance exists that may result in such a Material Adverse Effect to
booktech.
(aa) Leases.
Except as set forth on Schedule 3.02(aa) booktech does not
lease or subleases any real property.
(bb) Contracts.
Except as set forth on Schedule 3.02(bb) booktech is not a
party to any material contract or agreement with any third party except as
contemplated by this Agreement.
(cc) Powers of Attorney.
There are no outstanding powers of attorney executed on behalf
of booktech in respect of booktech, its assets, liabilities or business or its
shares of capital stock.
(dd) Insurance and Risk Management.
Schedule 3.02(dd) sets forth the following information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which the business operations of booktech have been a party, a
named insured, or otherwise the beneficiary of coverage from the period from
December 31, 1998 to the date hereof:
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(i) the name , address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number, the period of coverage and
premium; and
(iv) a description of any retrospective premium
adjustments or other loss-sensitive premium arrangements.
With respect to each such insurance policy: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect; (ii) the transactions
contemplated hereby will not result in the cancellation or modification of such
policies; (iii) neither booktech nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; (iv) booktech has delivered true and complete
copies of all policies and related indemnity or premium payment agreements to
Parent; (v) the policy has not been amended or modified and no riders have been
issued in respect of such policies referred to in (iv) above without the consent
of booktech; and (vi) no party to the policy has repudiated any provision
thereof. Schedule 3.02(dd) describes any self-insurance arrangements affecting
either Parent or Merger-Sub.
(ee) Environment, Health, and Safety.
(i) Except as disclosed in Schedule 3.02(ee):
1. booktech is and has been in compliance
with all applicable Environmental Laws and Safety
Laws;
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2. booktech has obtained, and is and has
been in material compliance with the conditions of,
all Environmental Permits required for the continued
conduct of the business of booktech in the manner now
conducted and presently proposed to be conducted;
3. booktech has filed all required
applications, notices and other documents necessary
to effect the timely renewal or issuance of all
Environmental Permits for the continued conduct of
the business of booktech in the manner now conducted
and presently proposed to be conducted;
4. there are no past or present events,
conditions or circumstances, including, without
limitation, to the knowledge of booktech, pending
changes in any Environmental Law or Permit or Safety
Laws, that are likely to interfere with or otherwise
affect the business of booktech in the manner now
conducted or which would interfere with compliance
with any Environmental Law or Permit or Safety Law;
5. there are no circumstances or conditions
present at or arising out of the present or former
assets, properties, leaseholds, businesses or
operations of booktech in respect of off-site
storage, transportation or disposal of, or any
off-site Release of, a Chemical Substance which
reasonably may be expected to give rise to any
Environmental Liabilities and costs;
6. there are no circumstances or conditions
present at or arising out of the present or former
assets, properties, leaseholds,
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businesses or operations of booktech, including but
not limited to any on-site Storage, use, disposal or
Release of a Chemical Substance, which reasonably may
be expected to give rise to any Environmental
Liabilities and Costs or Safety Liability and Costs;
7. booktech has not and its present or past
assets, properties, businesses, leaseholds or
operations have not received or been subject to, or
within the past three years been subject to, any
outstanding order, decree, judgment, complaint,
agreement, claim, citation, or notice or is subject
to any ongoing judicial or administrative proceeding
indicating that booktech, or the past and present
assets of booktech are or may be: (A) in violation of
any Environmental Law; (B) in violation of any Safety
Laws; (C) responsible for the on-site or off-site
storage or Release of any Chemical Substance; or, (D)
liable for any Environmental Liabilities and Costs or
Safety Liabilities and Costs;
8. booktech has no reason to believe that
booktech will become subject to a matter identified
in subsection (7); and, no investigation or review
with respect to such matters is pending or, to the
knowledge of booktech, is threatened, nor has any
authority or other third-party indicated an intention
to conduct the same;
9. neither the business of booktech nor any
of its properties or assets is subject to, or as a
result of the transactions contemplated by this
Agreement will be subject to, the requirements of any
Environmental Laws which require notice, disclosure,
cleanup or approval prior to
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transfer of the shares pursuant to the Merger or the
business of booktech or which will impose Liens on
any such asset or property or otherwise interfere
with or affect the business of booktech;
10. Schedule 3.02(ee)(i)(10) lists all
property presently or previously leased, owned or
operated by booktech and identifies all such property
(and the area within that property) that has been
used by booktech or by any other Person (including a
prior owner or operator) for the storage or disposal
of Chemical Substances;
11. Schedule 3.02(ee)(i)(11) lists all
off-site locations, including, without limitation,
commercial waste disposal facilities or municipal
landfills, to which or at which Chemical Substances
originating from booktech, or its assets, properties
or business have been sent (or otherwise have come to
be located) in amounts that would require a waste
manifest under the Resource Conservation and Recovery
Act of 1976 as now in effect for treatment, storage,
disposal, reuse or recycling;
12. Schedule 3.02(ee)(i)(12) sets forth a
list of all underground storage tanks owned or
operated at any time by booktech and, except as
disclosed in Schedule 3.02(ee)(i)(12), no such tank
is leaking or has leaked at any time in the past, and
there is no pollution or contamination of the
Environment caused by or contributed to or threatened
by a Release of a Chemical Substance from any such
tank; and
13. Schedule 3.02(ee)(i)(13) lists all
environmental audits, inspections, assessments,
investigations or similar reports in booktech's
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possession or of which booktech is aware relating to
booktech's assets, properties or business or the
compliance of the same with applicable Environmental
Laws and Safety Laws.
(ii) For purposes of this Section only, all
references to the "booktech" are intended to include any and
all other entities to which booktech may be considered a
successor under applicable Environmental Laws. The
representations and warranties in this section are the only
representations and warranties with respect to Environmental
Laws or Environmental Liabilities and Costs, or Safety Laws or
Safety Liabilities and Costs notwithstanding any other
language in this Agreement of general applicability.
(iii) For purposes of this Section 3.02(ee)(iii):
1. "Chemical Substance" means any chemical
substance, including but not limited to any: (i)
pollutant, contaminant, irritant, chemical, raw
material, intermediate, product, by-product, slag,
construction debris; (ii) industrial, solid, liquid
or gaseous toxic or hazardous substance, material or
waste; (iii) petroleum or any fraction thereof; (iv)
asbestos or asbestos-containing material; (v)
polychlorinated biphenyl; (vi) chlorofluorocarbons;
and, (vii) any other substance, material or waste,
which is identified or regulated under any
Environmental Law or Safety Law, as now and
hereinafter in effect, or other comparable laws.
2. "Environment" means soil, land surface or
subsurface strata, real property, surface waters
(including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands), groundwater,
water
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body sediments, drinking water supply, stream
sediments, ambient air (including indoor air), plant
and animal life and any other environmental medium or
natural resource.
3. "Environmental Laws" mean the
Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and
Recovery Act, and the Clean Air Act, the Clean Water
Act, each, as amended or hereinafter in effect, and
any other law or legal requirement, as now or
hereinafter in effect, relating to: (a) the Release,
containment, removal, remediation, response, cleanup
or abatement of any sort of any Chemical Substance;
(b) the manufacture, generation, formulation,
processing, labeling, distribution, introduction into
commerce, use, treatment, handling, storage,
recycling, disposal or transportation of any Chemical
Substance; (c) exposure of persons, including
employees, to any Chemical Substance; (d) the
physical structure, use or condition of a building,
facility, fixture or other structure, including,
without limitation, those relating to the management,
use, storage, disposal, cleanup or removal of
asbestos, asbestos-containing materials,
polychlorinated biphenyls or any other Chemical
Substance; (e) the pollution, protection or clean up
of the Environment; or (f) noise.
4. "Environmental Liabilities and Costs"
means all Losses incurred: (i) to comply with any
Environmental Law; (ii) as a result of a Release of
any Chemical Substance; or (iii) as a result of any
environmental conditions present at, created by or
arising out of the past
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or present operations of booktech through the Closing
Date or of any prior owner or operator of a facility
or site at which booktech now operates or has
previously operated.
5. "Environmental Permit" means any permit
or authorization from any governmental authority
required under, issued pursuant to, or authorized by
any Environmental Law.
6. "Release" means any actual, threatened or
alleged spilling, leaking, pumping, pouring,
emitting, dispersing, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing
of any Chemical Substance into the Environment that
may cause an Environmental Liability and Cost
(including the disposal or abandonment of barrels,
containers, tanks or other receptacles containing or
previously containing any Chemical Substance).
7. "Safety Laws" means the Occupational
Safety and Health Act and any other federal, state,
local and foreign law, regulation or legal
requirement relating to health or safety, each as now
or hereinafter in effect, including any such law,
regulation or legal requirement relating to the (a)
exposure of employees to any Chemical Substance, air
quality or working conditions or noise or (b) the
physical structure, use or condition of a building,
facility, fixture or other structure, including,
without limitation, those relating to equipment or
manufacturing processes, or the management, use,
storage, disposal, cleanup or removal of any Chemical
Substances, air quality or working conditions.
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8. "Safety Liabilities and Costs" means all
Losses incurred to comply with any Safety Law or as a
result of any health or safety conditions present at,
created by or arising out of the past or present
operations of the Company through the Closing Date.
(ff) Affiliated Transaction.
Except as contemplated by this Agreement, booktech is not a
party to or bound by any contract, commitment or understanding with any of the
stockholders, directors or officers of booktech or any of their affiliates or
any member of their family and none of the stockholders, directors or officers
of booktech or affiliates or any member of their family owns or otherwise has
any rights to or interests in any asset, tangible or intangible, which is used
in the business of booktech.
(gg) Government Contracts.
booktech has not been nor are they a party to any contract or
arrangement with any federal, state or local government agency.
(hh) No Illegal Payments, Etc.
Neither booktech, nor any of the directors, officers,
employees or agents of booktech, has (a) directly or indirectly given or agreed
to give any illegal gift, contribution, payment or similar benefit to any
supplier, customer, governmental official or employee or other person who was,
is or may be in a position to help or hinder booktech (or assist in connection
with any actual or proposed transaction) or made or agreed to make any illegal
contribution, or reimbursed any illegal political gift or contribution made by
any other person, to any candidate for federal, state, local or foreign public
office (i) which might subject booktech to any damage
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or penalty in any civil, criminal or governmental litigation or proceeding or
(ii) the non-continuation of which has had or might have, individually or in the
aggregate, a Material Adverse Effect or (b) established or maintained any
unrecorded fund or asset or made any false entries on any books or records for
any purpose.
(ii) Books and Records.
The books and all corporate (including minute books and stock
record books) and financial records of booktech are complete and correct in all
material respects and have been maintained in accordance with applicable sound
business practices, laws and other requirements.
(jj) Consents.
Schedule 3.02(jj) sets forth a true, correct and complete list
of any Person whose consent or approval is required and the matter, agreement or
contract to which such consent relates in connection with the transactions
contemplated by this Agreement.
IV. COVENANTS.
ss.4.01 Covenants of Parent and Merger-Sub.
Parent and Merger-Sub covenant and agree as follows:
(a) Articles of Incorporation and By-Laws.
As of the Closing Date, the articles of incorporation and
by-laws of Merger-Sub shall be in the form of Exhibit 4.01(a)(i) and the
articles of incorporation and by-laws of Parent shall be in the form of Exhibit
4.01(a)(ii).
(b) Shares, Options and Warrants.
Except as contemplated hereby, until the earlier of the
Effective Time or the Termination of this Agreement pursuant to Article VI (the
"Release Time") without the prior
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written consent of booktech, no share of capital stock of Parent or Merger-Sub
or any option or warrant for any such share, right to subscribe to or purchase
any such share, or security convertible into or exchangeable for any such share,
shall be issued or sold by Parent or Merger-Sub, nor shall Parent or Merger-Sub
enter into any agreement or commitment to effect any such issuance or sale,
except as set forth in Schedule 4.01(b) hereto.
(c) Dividends and Purchases of Stock.
Until the Release Time, without the prior written consent of
booktech, no cash or non-cash dividend or liquidating or other distribution or
stock split shall be authorized, declared, paid or effected by Parent or
Merger-Sub in connection with their respective outstanding capital stock.
(d) Borrowing of Money; Working Capital.
Until the Release Time, neither Parent nor Merger-Sub shall
incur indebtedness for borrowed money. Until the Release Time, neither Parent
nor Merger-Sub shall guarantee the borrowing of money by any third party, enter
into or modify any capital or operating lease or enter into any material
agreement, which in any case would by its terms require the payment by Parent or
Merger-Sub of more than $5,000 by Parent or Merger-Sub in any twelve (12) month
period.
(e) Access.
Until the Release Time, Parent and Merger-Sub will afford the
Directors, officers, employees, counsel, agents, investment bankers,
accountants, and other representatives of booktech reasonable access to the
plants, properties, books, and records of Parent and Merger-Sub, will permit
them to make extracts from and copies of such books and records, and will from
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time to time furnish booktech with such additional financial and operating data
and other information as to the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of Parent and
Merger-Sub as booktech from time to time may reasonably request.
(f) Conduct of Business.
Except as otherwise contemplated or permitted hereby, until
the Release Time, neither Parent nor Merger-Sub shall take any action that would
or is reasonably likely to result in any of the representations or warranties of
Parent or Merger-Sub set forth in this Agreement being untrue at the Closing
Date, or in any of the conditions to the Merger set forth in Article V not being
satisfied. Except as otherwise contemplated or permitted hereby, until the
Release Time, Parent and Merger-Sub will conduct their affairs in all respects
only in the ordinary course.
(g) Advice of Changes.
Until the Release Time, Parent and Merger-Sub will promptly
advise booktech in a reasonably detailed written notice of any fact or
occurrence or any pending threatened occurrence of which either of them obtains
knowledge and which (if existing and known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed in or pursuant
to this Agreement, which (if existing or known at any time prior to or at the
Effective Time) would make the performance by any party of a covenant contained
in this Agreement impossible or make such performance materially more difficult
in the absence of such fact or occurrence, or which (if existing or known at the
time of the Effective Time) would cause a condition to any party's obligations
under this Agreement not to be fully satisfied.
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(h) Public Statements.
Before Parent or Merger-Sub releases any information
concerning this Agreement, the Merger, or any other transactions contemplated by
this Agreement which is intended for or is reasonably expected to result in
public dissemination thereof, Parent and Merger-Sub shall cooperate with
booktech, shall furnish drafts of all documents or proposed oral statements to
booktech for comments, and shall not release any such information without the
prior consent of booktech; provided, however, that the foregoing shall not be
deemed to prevent Parent or Merger-Sub from releasing any information or making
any disclosure to the extent that Parent or Merger-Sub reasonably determines
that it is required to do so by law.
(i) Other Proposals.
Until the Release Time, Parent and Merger-Sub shall not, and
shall not authorize or permit any officer, director, employee, counsel, agent,
investment banker, accountant, or other representative of Parent and Merger-Sub,
directly or indirectly, to: (i) initiate contact with any person or entity in an
effort to solicit any Takeover Proposal (as such term is defined in this Section
4.01(i); (ii) cooperate with, or furnish or cause to be furnished any non-public
information concerning the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of Parent or
Merger-Sub to, any person or entity in connection with any Takeover Proposal;
(iii) negotiate with any person or entity with respect to any Takeover Proposal;
or (iv) enter into any agreement or understanding with the intent to effect a
Takeover Proposal; provided, however, that Parent or Merger-Sub shall be
entitled to take any action described in the foregoing clauses (ii)-(iv) if and
to the extent that the Board of Directors of Parent or Merger-Sub determines in
good faith, based on the advice of its counsel, that the failure to take any
such action would violate its fiduciary duties to Parent's or Merger-
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Sub's stockholders. Parent and Merger-Sub will immediately give written notice
to booktech of the details of any Takeover Proposal of which Parent or
Merger-Sub becomes aware. As used in this Section 4.01(i), "Takeover Proposal"
shall mean any proposal, other than as contemplated by this Agreement, for a
merger, consolidation, reorganization, other business combination, or
recapitalization involving Parent or Merger-Sub, for the acquisition of a ten
percent (10%) or greater interest in the equity or in any class or series of
capital stock of Parent or Merger-Sub, for the acquisition of the right to cast
ten percent (10%) or more of the votes on any matter with respect to Parent or
Merger-Sub or any subsidiary of Parent or Merger-Sub, or for the acquisition of
one of their divisions or of a substantial portion of any of their respective
assets, the effect of which may be to prohibit, restrict, or delay the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, or impair the contemplated benefits to booktech of the Merger or any
of the other transactions contemplated by this Agreement.
(j) Consents Without Any Condition.
Neither Parent nor Merger-Sub shall make any agreement or
reach any understanding, not approved in writing by booktech, as a condition for
obtaining any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated by this
Agreement.
(k) Transfer Taxes.
Parent and Merger-Sub shall timely prepare and file any
declaration or filing necessary to comply with any transfer tax statutes that
require any such filing before the Effective Time.
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(l) Issuance of Stock.
The issuance of stock by Parent in connection with the Merger
will be effected on a private placement basis pursuant to Regulation S and/or
rule 506 under Regulation D of the Securities Act.
(m) Directors' and Officers' Insurance.
(i) Parent shall at its expense, until the third
(3rd) anniversary of the Effective Time, cause to be
maintained in effect, to the extent available, policies of
directors' and officers' liability insurance in a face amount
of not less than $10,000,000.
(ii) The provisions of this Section 4.01(m) are
intended to be for the benefit of, and shall be enforceable
by, each party entitled to insurance coverage under Section
4.01(m)(i) above, and his or her heirs and legal
representatives, and shall be in addition to any other rights
a Director or Officer may have under the articles of
incorporation or by-laws of Parent or under the NMAL, or
otherwise.
(iii) In the event Parent or any of its successors or
assigns (a) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (b) transfers all or
substantially all of its properties and assets to any person,
then, in each such case, proper provision shall be made so
that the successors and assigns of Parent, as the case may be,
shall assume the obligations set forth in this Section
4.01(m).
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(n) OTCBB Listing.
Parent shall cause the shares of Common Stock to remain
eligible for quotation on the OTCBB of the NASD.
(o) Approval of Board of Directors.
Prior to the date of this Agreement, the Boards of Directors
of Parent and Merger-Sub by written consent approved the terms of this
Agreement.
(p) SEC Filings.
Parent shall use reasonable efforts to prepare and file in a
timely manner any Exchange Act Filings required to be made prior to or after the
Closing Date. If at any time prior to the Closing Date Parent finds that any
Exchange Act Filing contained an untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, Parent shall, upon becoming aware of any such untrue
statement or omission, promptly notify booktech.
(q) Reputable Investor.
Parent shall retain a reputable investor relations firm that
is reasonably acceptable to Parent and booktech pursuant to an agreement
substantially in the form of Exhibit 4.01(q) hereto.
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(r) AMEX Listing.
Parent shall use its best efforts to cause its shares of
Common Stock to be admitted for trading on the American Stock Exchange ("AMEX"),
subject to official notice of issuance, as soon as possible.
(s) Notices and Consents.
Parent and Merger-Sub have given any notices to third parties,
and will each use their best efforts to obtain any third party consents, that
are required in connection with the transactions contemplated by this Agreement,
as set forth in Schedule 4.01(s).
(t) Written Consent of Sole Stockholder.
Merger-Sub shall obtain the written consent of Parent, its
sole stockholder, approving all matters necessary for the consummation of the
transactions contemplated by this Agreement.
(u) Confidentiality.
Both Parent and Merger-Sub shall insure that all information
and documentation of a confidential or proprietary nature which is obtained
pursuant to this Agreement or the transactions contemplated hereby and which has
been marked or otherwise expressly identified as confidential shall be treated
as strictly confidential and that all such information and documentation which
such party or any of their respective officers, directors, employees, attorneys,
agents, investment bankers or accountants may now possess or may hereafter
create or obtain relating to the financial condition, results of operations,
businesses, properties, assets, liabilities or future prospects of the other
parties hereto, any affiliate of such other parties, or any customer or supplier
of such other parties or any such affiliate shall not be published, disclosed
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or made accessible by any of them to any other person or entity at any time or
used by any of them, in each case without the prior written consent of the other
parties hereto; provided, however, that the restrictions of this Section 4.01(u)
shall not apply (i) as may otherwise be required by law, (ii) as may be
necessary or appropriate in connection with the enforcement of this Agreement;
or (iii) to the extent such information was in the public domain when received
or thereafter enters the public domain other than because of disclosure by the
other parties hereto. Both Parent and Merger-Sub shall, and shall cause all of
such other persons and entities who receive or received such confidential or
proprietary information and materials from time to time to return to the party
who provided such information or materials all of such information and materials
at such time as negotiations with respect to the Mergers are terminated.
(v) General.
Parent and Merger-Sub will use their best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth is
Sections 5.01 and 5.02 below).
ss.4.02 Covenants of booktech.
booktech covenants and agrees as follows:
(a) Articles of Organization and By-Laws.
As of the Closing Date, the articles of Organization and
by-laws of booktech shall be in the form of Exhibit 4.02(a).
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(b) Shares, Options and Warrants.
Except as contemplated hereby, until the earlier of the
Effective Time or the Release Time without the prior written consent of Parent,
no share of capital stock of booktech or any option or warrant for any such
share, right to subscribe to or purchase any such share, or security convertible
into or exchangeable for any such share, shall be issued or sold by booktech,
nor shall booktech enter into any agreement or commitment to effect any such
issuance or sale, except as set forth in Schedule 4.02(b) hereto.
(c) Borrowing of Money; Working Capital.
Until the Release Time, booktech shall not incur indebtedness
for borrowed money. Until the Release Time, booktech shall not guarantee the
borrowing of money by any third party, enter into or modify any capital or
operating lease or enter into any material agreement, which in any case would by
its terms require the payment by booktech of more than $5,000 by booktech in any
twelve (12) month period.
(d) Access.
Until the Release Time, booktech will afford the Directors,
officers, employees, counsel, agents, investment bankers, accountants, and other
representatives of Parent and Merger-Sub reasonable access to the plants,
properties, books, and records of booktech, will permit them to make extracts
from and copies of such books and records, and will from time to time furnish
Parent and Merger-Sub with such additional financial and operating data and
other information as to the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of booktech as
Parent and Merger-Sub from time to time may reasonably request.
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(e) Conduct of Business.
Until the Release Time, booktech shall not take any action
that would or is reasonably likely to result in any of the representations or
warranties of booktech set forth in this Agreement being untrue at the Closing
Date or to any of the conditions to the Merger set forth in Article V not being
satisfied. Until the Release Time, booktech will use all reasonable efforts to
preserve the business operations of booktech intact, to keep available the
services of its present personnel, and to preserve the good will of its
suppliers, customers, and others having business relations with any of them.
(f) Advice of Changes.
Until the Release Time, booktech will promptly advise Parent
and Merger-Sub in a reasonably detailed written notice of any fact or occurrence
or any pending or threatened occurrence of which it obtains knowledge and which
(if existing or known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement,
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than in
the absence of such fact or occurrence, or which (if existing and known at the
time of the Effective Time) would cause a condition to any party's obligations
under this Agreement not to be fully satisfied.
(g) Public Statements.
Before booktech releases any information concerning this
Agreement, the Merger, or any of the other transactions contemplated by this
Agreement which is intended for or is reasonably expected to result in public
dissemination thereof, booktech shall cooperate with
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Parent and Merger-Sub, shall furnish drafts of all documents or proposed oral
statements to Parent and Merger-Sub for comments, and shall not release any such
information without the prior consent of Parent; provided, however, that the
foregoing shall not be deemed to prevent booktech from releasing any information
or making any disclosure to the extent booktech reasonably determines that it is
required to do so by law.
(h) Securities Law Exemption.
booktech, at its expense, will take all necessary steps to
insure that there are less than an aggregate of 35 non-accredited holders of its
securities and the securities of Virtuosity (on a consolidated basis) at the
Effective Time.
(i) Approval of Board of Directors.
Prior to the date of this Agreement, the Board of Directors of
booktech by written consent approved the terms of this Agreement.
(j) Break-Up Fee.
If booktech terminates this Agreement other than for Parent's
failure to perform its obligations hereunder, then booktech shall pay to Verus a
break-up fee not to exceed $85,000.
(k) Stockholders Meeting.
booktech shall call a special meeting of its stockholders to
consider and vote upon the matters necessary for the consummation of the
transactions contemplated by this Agreement (or, alternatively, shall solicit
written consents in lieu of holding such a special meeting).
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(l) Confidentiality.
booktech shall insure that all information and documentation
of a confidential or proprietary nature which is obtained pursuant to this
Agreement or the transactions contemplated hereby shall be treated as strictly
confidential and that all such information and documentation which such party or
any of its respective officers, directors, employees, attorneys, agents,
investment bankers or accountants may now possess or may hereafter create or
obtain relating to the financial condition, results of operations, businesses,
properties, assets, liabilities or future prospects of the other parties hereto,
any affiliate of such other parties, or any customer or supplier of such other
parties or any such affiliate shall not be published, disclosed or made
accessible by any of them to any other person or entity at any time or used by
any of them, in each case without the prior written consent of the other parties
hereto; provided, however, that the restrictions of this Section 4.02(h) shall
not apply (i) as may otherwise be required by law, (ii) as may be necessary or
appropriate in connection with the enforcement of this Agreement; or (iii) to
the extent such information was in the public domain when received or thereafter
enters the public domain other than because of disclosure by the other parties
hereto. booktech shall, and shall cause all of such other persons and entities
who receive or received such confidential or proprietary information and
materials from time to time to return to the party who provided such information
or materials all of such information and materials at such time as negotiations
with respect to the Mergers are terminated.
(m) General.
booktech will use its best efforts to take all action and to
do all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by
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this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Section 5.03 below).
V. CONDITIONS.
ss.5.01 Conditions to Each Party's Obligation to Effect the
Merger.
The respective obligation of each party to effect the Merger
is subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) Stockholder Approval.
This Agreement and the Merger shall have been adopted by the
requisite vote of (i) the stockholders of Merger-Sub and (ii) the stockholders
of booktech.
(b) State Securities Laws.
Parent shall have received all state securities or "Blue Sky"
permits and other authorizations necessary to issue Common Stock pursuant to the
Merger.
(c) No Injunctions or Restraints.
No court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making illegal or
otherwise restricting, preventing or prohibiting consummation of the Merger or
the other transactions contemplated by this Agreement.
(d) Consents and Approvals.
Other than the filings provided for by Section 1.02, all
consents, approvals and actions of, filings with and notices to any Governmental
or Regulatory Authority or any other public or private third parties required of
Parent, Merger-Sub or booktech to consummate the
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Merger shall have been obtained, all in form and substance reasonably
satisfactory to each of Parent, Merger-Sub and booktech, and no such consent,
approval or action shall contain any term or condition which could be reasonably
expected to result in a material diminution of the benefits of the Merger to the
stockholders of Parent and booktech.
(e) Customary Documents.
All customary certificates, documents, instruments and
opinions of counsel, which each of the parties agrees to negotiate in good faith
shall be executed and delivered on or before the Closing Date.
ss.5.02 Conditions to Obligation of Parent and Merger-Sub to
Effect the Merger.
The obligation of Parent and Merger-Sub to effect the Merger
is further subject to the fulfillment, at or prior to the Closing, of each of
the following additional conditions (all or any of which may be waived in whole
or in part by Parent and Merger-Sub and in their sole discretion):
(a) Representations and Warranties.
The representations and warranties made by booktech in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date, and booktech shall have delivered
to Parent a certificate, dated the Closing Date and executed on behalf of
booktech by a duly authorized officer, to such effect.
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(b) Performance of Obligations.
booktech shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by booktech at or prior to the
Closing, and booktech shall have delivered to Parent a certificate dated the
Closing Date and executed on behalf of booktech by a duly authorized officer, to
such effect.
(c) Other Closing Documents.
booktech shall have delivered to Parent and Merger-Sub at or
prior to the Closing Date such other documents as Parent or Merger-Sub may
reasonably request in order to enable Parent or Merger-Sub to determine whether
the conditions to its obligations under this Agreement have been met and
otherwise to carry out the provisions of this Agreement.
(d) Review of Proceedings.
All actions, proceedings, instruments and documents required
by Parent and Merger-Sub to carry out this Agreement or incidental thereto and
all other related legal matters shall be subject to the reasonable approval of
Preston Gates & Ellis LLP, counsel to Parent and Merger-Sub, and booktech shall
have furnished such documents as such counsel may have reasonably requested for
the purpose of enabling it to pass upon such matters.
(e) Legal Action.
There shall not have been instituted or threatened any legal
proceeding relating to, or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement, or to obtain
substantial damages with respect thereto.
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(f) Certificates.
booktech shall have delivered to each of Parent and Merger-Sub
a certificate to the effect that each of the conditions specified in Section
5.03 are satisfied in all respects.
(g) Opinion.
Each of Parent and Merger-Sub shall have received an opinion
from counsel to booktech, in form and substance as set forth in Exhibit 5.02(g)
attached hereto, addressed to both Parent and Merger-Sub, and dated as of the
Closing Date.
ss.5.03 Conditions to Obligation of booktech to Effect the
Merger.
The obligation of booktech to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
booktech in its sole discretion):
(a) Representations and Warranties
The representations and warranties made by Parent and
Merger-Sub in this Agreement shall be true and correct in all material respects
as of the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date earlier than
the Closing Date, on and as of such earlier date, and Parent and Merger-Sub
shall have delivered to booktech a certificate, dated the Closing Date and
executed on behalf of Parent and Merger-Sub by a duly authorized officer, to
such effect.
(b) Performance of Obligations.
Parent and Merger-Sub shall have performed and complied with
in all material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by Parent and Merger-Sub at
or prior to the Closing, and Parent and
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Merger-Sub shall have delivered to booktech a certificate, dated the Closing
Date and executed on behalf of Parent and Merger-Sub by a duly authorized
officer, to such effect.
(c) Other Closing Documents.
Parent and Merger-Sub shall have delivered to booktech at or
prior to the Effective Time such other documents as booktech may reasonably
request in order to enable booktech to determine whether the conditions to their
obligations under this Agreement have been met and otherwise to carry out the
provisions of this Agreement.
(d) Review of Proceedings.
All actions, proceedings, instruments and documents required
by booktech to carry out this Agreement or incidental thereto and all other
related legal matters shall be subject to the reasonable approval of Camhy
Karlinsky & Stein LLP, counsel to booktech, and Parent and Merger-Sub shall have
furnished such documents as such counsel may have reasonably requested for the
purpose of enabling it to pass upon such matters.
(e) Legal Action.
There shall not have been instituted or threatened any legal
proceeding relating to, or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement, or to obtain
substantial damages with respect thereto or to cause any of the transactions
contemplated by this Agreement to be rescinded following consummation.
(f) OTCBB.
The shares of the Common Stock issued shall remain eligible
for quotation on the OTCBB of the NASD.
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(g) Tax-Free Exchanges.
booktech and its advisors shall be reasonably satisfied that
the Merger will qualify as a tax-free exchange.
(h) Capital.
Parent and Merger-Sub shall be in strict compliance with
Section 2.05.
(i) Consents.
Parent and Merger-Sub shall have procured all of the consents,
approvals or authorizations and third party consents specified in Schedule
4.01(s).
(j) Certificates.
Parent and Merger-Sub shall each have delivered to booktech a
certificate to the effect that the representations and warranties set forth in
Section 4.01 are true and correct as of the Closing, and each of the conditions
specified in Section 5.02 are satisfied in all respects.
(k) Opinion.
booktech shall have received an opinion from counsel to each
of Parent and Merger-Sub, in form and substance as set forth in Exhibit 5.03(k)
attached hereto, addressed to booktech, and dated as of the Closing Date.
(l) Due Diligence.
booktech shall have completed its due diligence investigation
of Parent and Merger-Sub and shall have been satisfied, in its sole discretion,
with the results of such investigation.
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(m) No Material Adverse Change.
There shall not have been any change which has resulted in a
Material Adverse Effect and no event has occurred or circumstances exists that
may result in such a Material Adverse Effect.
VI. TERMINATION.
ss.6.01 Termination.
This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether prior to or after Merger-Sub's stockholders' approval or the booktech's
stockholders' approval:
(a) By mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors.
(b) By either booktech, Parent or Merger-Sub upon written
notification to the other party, if:
(i) Merger-Sub's stockholders' approval or booktech's
stockholders' approval shall not be obtained by reason of the
failure to obtain the requisite vote upon a vote held at a
meeting of such stockholders; or
(ii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in
Section 5.01 and such are not waived by Parent, Merger-Sub and
booktech.
(c) By Parent and Merger-Sub upon written notification to
booktech, if:
(i) there has been a material breach of any
representation, warranty, covenant or agreement on the part of
booktech set forth in this Agreement which
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breach has not been cured within ten (10) business days
following receipt by booktech of notice of such breach from
Parent or Merger-Sub or assurance of such cure reasonably
satisfactory to Parent and Merger-Sub have not been given by
or on behalf of booktech within such ten (10) business day
period; or
(ii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in
Section 5.02 and such are not waived by booktech; or
(d) By booktech upon written notification to Parent and
Merger-Sub, if:
(i) at any time after March 31, 2000 if the Merger
shall not have been consummated on or prior to such date and
such failure to consummate the Merger is not caused by a
breach of this Agreement by booktech; or
(ii) there has been a material breach of any
representation, warranty, covenant or agreement on the part of
Parent or Merger-Sub set forth in this Agreement which breach
has not been cured within ten (10) business days following
receipt by Parent or Merger-Sub of notice of such breach from
booktech or assurance of such cure reasonably satisfactory to
booktech shall not have been given by or on behalf of Parent
or Merger-Sub within such ten (10) business day period; or
(iii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in
Section 5.03 and such are not waived by booktech.
ss.6.02 Effect of Termination.
If this Agreement is validly terminated by Parent and
Merger-Sub or booktech pursuant to Section 6.01, this Agreement shall forthwith
become null and void and there shall be
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no liability or obligation on the part of either Parent and Merger-Sub or
booktech (or any of their respective officers, directors, representatives, or
affiliates), except that (i) the provisions of this Section 6.02, and the
Break-Up Fee referred to in Section 4.02(f) will continue to apply following any
such termination, and (ii) nothing contained herein shall relieve Parent and
Merger-Sub, or booktech from liability for willful or intentional breach of
their respective obligations contained in this Agreement or for fraud.
VII. INDEMNIFICATION.
ss.7.01 Indemnification by Parent.
Parent agrees to indemnify and hold harmless booktech and its
officers, directors, employees, counsel and agents (the "booktech Indemnitees")
against and in respect of any and all liabilities, obligations, judgments,
Liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, taxes, losses, fines, penalties, expenses, fees, costs, amounts
paid in settlement (including reasonable attorneys' and expert witness fees and
disbursements in connection with investigating, defending or settling any action
or threatened action), arising out of claims, damages, complaints, demands,
causes of action, audit, investigations, hearing, action, suit or other
proceeding asserted or initiated or otherwise existing in respect of any matter
(collectively the "Losses") (within one (1) year of the Closing Date) arising
out of or based upon any breach or inaccuracy of any representation, warranty,
covenant or agreement of Parent or Merger-Sub contained in this Agreement
(including the Exhibits and Schedules attached hereto) or any certificates
delivered pursuant to this Agreement, or arising out of any litigation pending
against Parent or Merger-Sub, their officers or directors, on the date of this
Agreement.
ss.7.02 Indemnification by booktech.
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booktech agrees to indemnify and hold harmless Parent and
Merger-Sub and their officers, directors, employees, counsel and agents (the
"E&G Indemnitees") against and in respect of any and all Losses within one (1)
year of the Closing Date, arising out of or based upon any breach or inaccuracy
of any representation, warranty, covenant or agreement of booktech contained in
this Agreement (including the Exhibits and Schedules attached hereto) or any
certificates delivered pursuant to this Agreement, or arising out of any
litigation pending against booktech, its officers or directors on the date of
this Agreement.
ss.7.03 Third Party Claims.
If any third party shall notify any party to this Agreement
(the "Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other party to
this Agreement (the "Indemnifying Party") under this Section 7, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(a) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Losses the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim, (ii)
the Indemnifying Party provides the Indemnified Party with evidence acceptable
to the Indemnified Party that the Indemnifying Party will have
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the financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief, (iv)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(b) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7.03(b) above, (i)
the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which consent shall not unreasonably be
withheld), and (iii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
unless written agreement is obtained releasing the Indemnified Party from all
liability thereunder.
(c) In the event any of the conditions in Section 7.05(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (ii) the Indemnifying Parties
will reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (iii) the Indemnifying Parties
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will remain responsible for any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 7.
VIII. MISCELLANEOUS.
ss.8.01 Further Actions.
Each party hereto will execute such further documents and
instruments and take such further actions as may reasonably be requested by the
other party to consummate the Merger, to vest the booktech with full title to
all assets, properties, rights, approvals, immunities and franchises of either
of the Constituent Entities or to effect the other purposes of this Agreement.
ss.8.02 Availability of Equitable Remedies.
Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, any party shall be entitled, either
before or after the Effective Time, in addition to any other right or remedy
available to it, to an injunction restraining such breach or threatened breach
and to specific performance of any such provision of this Agreement, and, in
either case, no bond or other security shall be required in connection
therewith, and the parties hereby consent to the issuance of such an injunction
and to the ordering of specific performance.
ss.8.03 Survival.
The representations and warranties contained in this Agreement
or in any instrument delivered pursuant to this Agreement shall not survive the
Merger. The termination of any such representations and warranties, however,
shall not effect any claim for breaches of
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representations or warranties if written notice thereof is given to the
breaching party or parties prior to such termination date.
ss.8.04 Modification.
This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time. No such amendment,
supplement or modification shall be effective unless set forth in a written
instrument duly executed by or on behalf of each party hereto.
ss.8.05 Notices.
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested or by Federal Express, express mail, e-mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
which it is to be given at the address of such party set forth in the preamble
to this Agreement (or to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 8.05) with copies
(which copies shall not constitute notice) as follows:
If to Parent
and Merger-Sub: Ebony & Gold Ventures, Inc.
c/o Verus International Ltd.
Hanger 5, 4360 Agar Drive
Richmond, British Columbia
V7B 1A3
With a copy to: Preston Gates & Ellis LLP
701 Fifth Avenue, Suite 5000
Seattle, Washington 98104
Attn: Gary J. Kocher
If to booktech: booktech.com, inc.
42 Cummings Park
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Woburn, Massachusetts 01801
With a copy to: Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, New York 10019-4315
Attn: Willie E. Dennis, Esq.
Any notice shall be addressed to the attention of the Chief
Executive Officer. Any notice or other communication given by certified mail
shall be deemed given three (3) business days after certification thereof,
except for a notice changing a party's address which will be deemed given at the
time of receipt thereof. Any notice given by other means permitted by this
Section 8.05 shall be deemed given at the time of receipt thereof.
ss.8.06 Waiver.
Any waiver by any party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing and be authorized by
a resolution of the Board of Directors, of the waiving party, or by an officer
of the waiving party.
ss.8.07 Binding Effect.
The provisions of this Agreement shall be binding upon and
inure to the benefit of Parent, Merger-Sub, booktech, and their respective
successors and assigns.
ss.8.08 No Third-Party Beneficiaries.
This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement
(other than the respective successors
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and permitted assigns of a party), except as referred to in Sections 4.01(m),
4.02(f), 7.01 and 7.02.
ss.8.09 Severability.
If any provision of this Agreement is hereafter held to be
invalid, illegal or unenforceable for any reason, such provision shall be
reformed to the maximum extent permitted so as to preserve the parties' original
intent, failing which, it shall be severed from this Agreement, with the balance
of this Agreement continuing in full force and effect. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable. If any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances.
ss.8.10 Merger; Assignability.
This Agreement, the other agreements to be delivered pursuant
to this Agreement, and Exhibits and Schedules attached hereto set forth the
entire understanding of the parties with respect to the subject matter hereof
and supersede all existing agreements concerning such subject matter, including
the letter of intent, as amended, between booktech and Parent. This Agreement
may not be assigned by any party without the prior written consent of each other
party to this Agreement.
ss.8.11 Headings.
The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
ss.8.12 Counterparts; Governing Law; Jurisdiction.
This Agreement may be executed in any number of counterparts
(and by facsimile), each of which shall be deemed an original, but all of which
together shall constitute
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one and the same instrument. This Agent shall be governed by the Laws of the
State of Massachusetts. Each party to this Agreement, by its execution hereof,
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court located in the State of Massachusetts for the purposes of any
action arising out of or based upon this Agreement, or any related agreements or
relating to the subject matter hereof or thereof, in each case whether now
existing or hereafter arising, (ii) hereby waives to the extent not prohibited
by applicable law, agrees not to assert by way of motion, as a defense or
otherwise, in any such action, any claim that it is not subject personally to
the jurisdiction of the above-named court, that its property is exempt or immune
from attachment or execution, that any such action brought in the above-named
court should be dismissed on the grounds of forum non conveniens, should be
transferred to any court other than the above-named court, or should be stayed
by reason of the pendency of some other proceeding in any other court other than
the above-named court, or that this Agreement, any related agreements or the
subject matter hereof or thereof, in each case whether now existing or hereafter
arising, may not be enforced in or by such court, or that this Agreement, any
related agreements or relating or the subject matter hereof or thereof may not
be enforced in or by such court and (iii) hereby agrees not to commence any
action arising out of or based upon this Agreement, any related agreements or
relating to the subject matter hereof or thereof, in each case whether now
existing or hereafter arising, other than before the above-named court nor to
make any motion or take any other action seeking or intending to cause the
transfer or removal of any such action to any other court other than the
above-named court whether on the grounds of inconvenient forum or otherwise.
Each party hereby (x) consents to service of process in any such action in any
manner permitted by Massachusetts law; (y) agrees that service of process made
in accordance with clause (x) or by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 8.05, is reasonably
calculated
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to give actual notice of any such action; and (z) waives and agrees not to
assert (by way of motion, as a defense, or otherwise) in any such action any
claim that services of process made in accordance with clause (x) or (y) does
not constitute good and sufficient service of process.
ss.8.13 Waiver of Jury Trial.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR PASSED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF,
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR
CONTRACT OR OTHERWISE.
ss.8.14 Expenses.
All of the costs and expenses (including legal and accounting
fees and expenses and including the legal fees of Camhy Karlinsky & Stein LLP)
of booktech incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Surviving Corporation at the Closing.
ss.8.15 Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
ss.8.16 Specific Performance.
Each of the parties acknowledges and agrees that the other
parties would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in
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accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter in
addition to any other remedy to which it may be entitled, at law or in equity.
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IN WITNESS WHEREOF, this Merger Agreement has been executed by
duly authorized officers of each of the parties hereto as of the date first
above written.
EBONY & GOLD VENTURES, INC.
By:
-------------------------------------
Name: Joel Dumaresq
Title: President
EG ACQUISITIONS CORPORATION
By:
-------------------------------------
Name: Joel Dumaresq
Title: President
booktech.com, inc.
By:
-------------------------------------
Name: Morris A. Shepard, Ph.D.
Title: President & Chief Executive Officer
By:
-------------------------------------
Name: Ted Bernhart
Title: Chief Financial Officer
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Exhibit 2.2
EXHIBIT 2.2
LIST OF SCHEDULES AND EXHIBITS
TO MERGER AGREEMENT
<TABLE>
<CAPTION>
SCHEDULES AND EXHIBITS TO THE AGREEMENT AND PLAN OF MERGER.
<S> <C>
Exhibit 1.04(a) Amended and Restated Articles of Organization of Surviving Corp.
Exhibit 1.04(b) Amended ByLaws of Surviving Corporation
Exhibit 2.02 Stock Option Plan
Schedule 2.06(b)(i) Financing Shareholders
Schedule 2.06(b)(ii) List of Parent's Original Common Stockholders
Exhibit 2.06(b)(iii) Contribution Agreement
Exhibit 2.06(c) Warrant
Exhibit 2.07(b) Lock-Up Agreement
Exhibit 2.08 Consulting Agreement
Exhibit 2.13(a) Shepard Employment Agreement
Exhibit 2.14 Use of Proceeds
Exhibit 3.01(b)(i)(A) Articles of Incorporation and ByLaws of Parent
Exhibit 3.01(b)(i)(B) Articles of Incorporation and ByLaws of Merger-Sub
Schedule 3.01(b)(ii) Stockholders of Parent and Merger-Sub
Schedule 3.01(b)(v) Debt Obligations
Schedule 3.01(d)(ii) Governmental and other Consents
Schedule 3.01(g) Materially Adverse Events
Schedule 3.01(h) Material Liabilities and Obligations
Schedule 3.01(i) Actions against Parent or Merger-Sub
Schedule 3.01(p)(i) Employees of Parent and Merger-Sub
Schedule 3.01(p)(ii) Restrictions on Parent or Merger-Sub
Schedule 3.01(q) Property of Parent and Merger-Sub
Schedule 3.01(r) Unfiled Tax Returns
Schedule 3.01(s) Brokers fees
Schedule 3.01(aa) Insurance Policies
Schedule 3.01(bb) Non-Compliance with Environmental Laws
Schedule 3.01(gg) Required Consents to Merger
Exhibit 3.02(b) Articles of Organization and ByLaws of booktech
Schedule 3.02(b)(i) Stockholders of booktech
Schedule 3.02(b)(ii) Debt Obligations of booktech
Exhibit 3.02(e) Intangibles
Schedule 3.02(m) Brokers fees
Schedule 3.02(o) Tax Claims
Schedule 3.02(s)(i) booktech Employees
Schedule 3.02(s)(ii) Collective Bargaining Agreements
Schedule 3.02(t) Material Property Owned by booktech
Schedule 3.02(aa) booktech Leases
Schedule 3.02(bb) Material Contracts
Schedule 3.02(dd) booktech Insurance Policies
Schedule 3.02(ee) Non-Compliance with Environmental Laws
Schedule 3.02(ee)(i)(10) Property for Storage of (Chemical Substances)
Schedule 3.02(ee)(i)(11) Waste disposal facilities
Schedule 3.02(ee)(i)(12) Underground Storage Tanks
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Schedule 3.02(ee)(i)(13) Environmental Audits
Schedule 3.02(jj) Required Consents and Approvals
Exhibit 4.01(a)(i) Articles of Incorporation and ByLaws of Merger-Sub at Closing
Exhibit 4.01(a)(ii) Articles of Incorporation and ByLaws of Parent at Closing
Schedule 4.01(b) Agreements to Sell Parent or Merger-Sub Stock
Exhibit 4.01(q) Form of Investor Agreement
Schedule 4.01(s) Third Party Consents
Exhibit 4.02(a) Articles of Incorporation and ByLaws of Booktech
Schedule 4.02(b) Agreement for Sale of Shares
Exhibit 5.02(g) Form of Opinion of Counsel
Exhibit 5.03(k) Form of Opinion of Counsel
</TABLE>
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 03 [illegible]
ARTICLES OF INCORPORATION
OF
EBONY & GOLD VENTURES, INC.
a Nevada corporation
No. C 20741-96
I, the undersigned, being the original incorporator herein named, for
the purpose of forming a corporation under the General Corporation Laws
of the State of Nevada, to do business both within and without the
State of Nevada, do make and file these Articles of Incorporation,
hereby declaring and certifying that the facts herein stated are true:
ARTICLE I
NAME
The name of the corporation is EBONY & GOLD VENTURES, INC.
ARTICLE II
RESIDENT AGENT & REGISTERED OFFICE
Section 2.01. Resident Agent. The name and address of the Resident
Agent for service of process is Nevada Corporate Headquarters, Inc., 5300 West
Sahara, Suite 101, Las Vegas, Nevada 89102. Mailing Address: P.0. Box 27740, Las
Vegas, NV 89126.
Section 2.02. Registered Office. The address of its Registered Office is
5300 West Sahara, Suite 101, Las Vegas, Nevada 89102.
Section 2.03. Other Offices. The Corporation may also maintain offices for
the transaction of any business at such other places within or without the State
of Nevada as it may from time to time determine. Corporate business of every
kind and nature may be conducted, and meetings of directors and stockholders
held outside the State of Nevada with the same effect as if in the State of
Nevada.
ARTICLE III
PURPOSE
The corporation is organized for the purpose of engaging in any lawful
activity, within or without the State of Nevada.
ARTICLE IV
SHARES OF STOCK
Section 4.01 Number and Class. The total number of shares of authorized
capital stock of the Corporation shall consist of a single class of twenty-five
thousand (25,000) shares of common stock, no par value.
The Common Stock may be issued from time to time without action by the
stockholders. The Common Stock may be issued for such consideration as may be
fixed from time to time by the Board of Directors.
<PAGE>
The Board of Directors may issue such shares of Common Stock in one or
more series, with such voting powers, designations, preferences and rights or
qualifications, limitations or restrictions thereof as shall be stated in the
resolution or resolutions adopted by them.
Section 4.02. No Preemptive Rights. Holders of the Common Stock of the
corporation shall not have any preference, preemptive right, or right of
subscription to acquire any shares of the corporation authorized, issued or
sold, or to be authorized, issued or sold, and convertible into shares of the
Corporation, nor to any right of subscription thereto, other than to the
extent, if any, the Board of Directors may determine from time to time.
Section 4.03. Non-Assessability of Shares. The Common Stock of the
corporation, after the amount of the subscription price has been paid, in
money, property or services, as the directors shall determine, shall not be
subject to assessment to pay the debts of the corporation, nor for any other
purpose, and no stock issued as fully paid shall ever be assessable or
assessed, and the Articles of Incorporation shall not be amended in this
particular.
ARTICLE V
DIRECTORS
Section 5.01. Governing Board. The members of the Governing Board of the
Corporation shall be styled as directors.
Section 5.02. Initial Board of Directors. The initial Board of
Directors shall consist of one (1) member. The name and address of the initial
member of the Board of Directors is as follows:
NAME ADDRESS
Cort W. Christie P.O. Box 27740
Las Vegas, Nevada 89126
This individual shall serve as Director until the first annual meeting of the
stockholders or until his successor(s) shall have been elected and qualified.
Section 5.03. Change in Number of Directors. The number of
directors may be increased or decreased by a duly adopted amendment to the
Bylaws of the corporation.
ARTICLE VI
INCORPORATOR
The name and address of the incorporator is Nevada Corporate
Headquarters, Inc., P.O. Box 27740, Las Vegas, Nevada 89126.
ARTICLE VII
PERIOD OF DURATION
The corporation is to have a perpetual existence.
2
<PAGE>
ARTICLE VIII
DIRECTORS' AND OFFICERS' LIABILITY
A director or officer of the corporation shall not be personally liable
to this corporation or its stockholders for damages for breach of fiduciary duty
as a director or officer, but this Article shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or (ii) the unlawful
payment of distributions. Any repeal or modification of this Article by the
stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the corporation for acts or omissions prior to such repeal or
modification.
ARTICLE IX
INDEMNITY
Every person who was or is a party to, or is threatened to be made a
party to, or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless to the fullest extent legally
permissible under the laws of the State of Nevada from time to time against
all expenses, liability and loss (including attorneys' fees, judgments, fines
and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith. Such right of indemnification shall
be a contract right which may be enforced in any manner desired by such person.
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall not be exclusive of any other
right which such directors, officers or representatives may have or hereafter
acquire, and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any by-law,
agreement, vote of stockholders, provision of law, or otherwise, as well as
their rights under this Article.
Without limiting the application of the foregoing, the stockholders or
Board of Directors may adopt by-laws from time to time with respect to
indemnification, to provide at all times the fullest indemnification
permitted by the laws of the State of Nevada, and may cause the corporation
to purchase and maintain insurance on behalf of any person who is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprises
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the corporation would
have the power to indemnify such person.
<PAGE>
The indemnification provided in this Article shall continue as to a
person who has ceased to be a director, officer, employee or agent, and shall
inure to the benefit of the heirs, executors and administrators of such
person.
ARTICLE X
AMENDMENTS
Subject at all times to the express provisions of Section 4.03 which
cannot be amended, this corporation reserves the right to amend, alter, change,
or repeal any provision contained in these Articles of Incorporation or its
Bylaws, in the manner now or hereafter prescribed by statute or by these
Articles of Incorporation or said Bylaws, and all rights conferred upon the
stockholders are granted subject to this reservation.
ARTICLE XI
POWERS OF DIRECTORS
In furtherance and not in limitation of the powers conferred by
statute the Board of Directors is expressly authorized:
(1) Subject to the Bylaws, if any, adopted by the stockholders, to make,
alter or repeal the Bylaws of the corporation;
(2) To authorize and cause to be executed mortgages and liens, with or
without limit as to amount, upon the real and personal property of the
corporation;
(3) To authorize the guaranty by the corporation of securities, evidences
of indebtedness and obligations of other persons, corporations and business
entities;
(4) To set apart out of any of the funds of the corporation available for
distributions a reserve or reserves for any proper purpose and to abolish any
such reserve;
(5) By resolution, to designate one or more committees, each committee to
consist of at least one director of the corporation, which, to the extent
provided in the resolution or in the Bylaws of the corporation, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be stated in the Bylaws of the
corporation or as may be determined from time to time by resolution adopted by
the Board of Directors; and
(6) To authorize the corporation by its officers or agents to exercise
all such powers and to do all such acts and things as may be exercised or done
by the corporation, except and to the extent that any such statute shall require
action by the stockholders of the corporation with regard to the exercising of
any such power or the doing of any such act or thing.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
corporation, except as otherwise provided herein and by law.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 30TH day of
SEPTEMBER, 1996, hereby declaring and certifying that the facts stated
hereinabove are true.
/s/ Cort W. Christie
--------------------
(For Nevada Corporate Headquarters, Inc.)
ACKNOWLEDGMENT
STATE OF NEVADA)
)SS:
COUNTY OF CLARK)
On this 30TH day of SEPTEMBER, 1996, personally appeared before me, a
Notary Public (or judge or other authorized person, as the case may be), CORT
W. CHRISTIE, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
[Notary Stamp] /s/ Stacey Chrisman
---------------------
NOTARY PUBLIC NOTARY PUBLIC in and for
[SEAL] STATE OF NEVADA said County and State
County of Clark
STACEY CHRISMAN
Appointment Expires March 6, 1999
I, NEVADA CORPORATE HEADQUARTERS, INC., hereby accept as Resident Agent for the
previously named Corporation.
SEPTEMBER 30TH, 1996.
/s/ Illegible
--------------------
Office Administrator
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
Filed by:
No.
EBONY & GOLD VENTURES, INC.
Name of Corporation
the undersigned DENISE E. CORDOVA, President
President or Vice President
TRICIA A. WILLIS, Secretary of EBONY & GOLD VENTURES, INC.
Secretary or Assistant Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 3rd day of February, 1999, adopted a resolution to amend the
original articles as follows:
RESOLVED: That Article IV, Section 4.01 of the Articles of Incorporation be
amended to read in full as follows:
"Section 4.01 - Number and Class. The total number of shares of stock which the
Corporation shall have authority to issue is Twenty-Five Million (25,000,000).
The par value of each of such shares is $.001. All such shares are one class and
are shares of Common Stock. Upon the amendment of this Article to read as
hereinabove set forth, each one (1) outstanding shares is split, reconstituted
and converted into one hundred (100) shares.
The Common Stock may be issued from time to time without action by the
stockholders. The Common Stock may be issued for such consideration as may be
fixed from time to time by the Board of Directors.
The Board of Directors may issue such shares of Common Stock in one or more
series, with such voting powers, designations, preferences and rights or
qualifications, limitations or restrictions thereof as shall be stated in the
resolution or resolutions adopted by them."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 21,000; that
the said change(s) and amendment have been consented to and approved by
a majority vote of the stockholders holding at least a majority of each
class of stock outstanding and entitled to vote thereon.
DENISE E. CORDOVA
President or Vice President
TRICIA A. WILLIS
Secretary or Assistant SecretarY
<PAGE>
State of NEVADA )
) ss.
County of CLARK )
On February 12, 1999, personally appeared before me, a Notary Public,
DENISE E. CORDOVA who acknowledged that she executed the above instrument.
/s/ Felicia Nilson
-------------------
Signature of Notary
NOTARY PUBLIC
STATE OF NEVADA
[SEAL] County of Clark
FELICIA NILSON
Appl. No. 94-3721-1
My Appt. Expires Apr. 10, 2002
State of NEVADA )
) ss.
County of CLARK )
On February 12, 1999, personally appeared before me, a Notary Public,
TRICIA A. WILLIS who acknowledged that she executed the above instrument.
/s/ Felicia Nilson
-------------------
Signature of Notary
NOTARY PUBLIC
STATE OF NEVADA
[SEAL] County of Clark
FELICIA NILSON
Appl. No. 94-3721-1
My Appt. Expires Apr. 10, 2002
<PAGE>
CERTIFICATE OF
AMENDMENT OF
ARTICLES OF INCORPORATION
OF
Ebony & Gold Ventures, Inc.
(after payment of capital and issuance of stock)
I the Undersigned, sole Officer of Ebony & Gold Ventures, Inc. (the
"Corporation") hereby certify that, pursuant to the provisions of the Nevada
Revised Statutes, the following resolutions to amend its articles of
incorporation were duly adopted:
1. Board/Shareholder Consents Authorizing Amendments
(a) The Board of Directors of the Corporation, acting pursuant to a
unanimous written consent on February 11, 2000 resolved to amend the
Articles of Incorporation as originally filed and/or amended as follows:
"RESOLVED, that pursuant to NRS 78.380, this amendment to the
Articles of Incorporation is deemed advisable and in the best
interest of the Corporation.
RESOLVED, that pursuant to Nevada General Corporation Law, the
Board of Directors of the corporation determines it advisable to
reconstitute the Common Stock of the corporation for the purpose of
effecting a stock split (in the form of a stock dividend), to amend
the Articles of Incorporation of the corporation to increase the
authorized shares and change the par value of the Common Stock from
$0.001 per share to $0.00042 per share.
FURTHER RESOLVED, that the corporation shall set aside for the
payment of a stock dividend on the Common Stock of the corporation,
and the proper officers of the corporation are directed to issue
and deliver to the shareholders of record as of the date that the
Secretary of State of the State of Nevada files the basis of
1.3809524 shares for each one (1) share held by said shareholder,
such issuance and delivery shall be made as soon as practical after
said amendment.
FURTHER RESOLVED, that the treasurer of the corporation shall
reduce the appropriate surplus account and/or shall make such other
appropriate entries on the books of the corporation as may be
required by the distribution.
FURTHER RESOLVED, that for the reasons set forth above, the
following amendment to the Articles of Incorporation be and it
hereby is approved pursuant to NRS 78.207 and accordingly no
approval by shareholder is required.
RESOLVED, that Article IV, Section 4.01 of Articles of
Incorporation be amended to read in full as follows:
<PAGE>
Section 4.01- Number and Class. The total number of shares of stock
which the Corporation shall have authority to issue is Fifty Nine
Million Five Hundred Twenty Three Eight Hundred Ten (59,523,810).
The par value of each such share is $0.00042. All such shares are of
one class and are shares of Common Stock. Except as otherwise
provided in accordance with these Articles of Incorporation, the
Common Shares shall have unlimited voting rights, with each share
being entitled to one vote, and the rights to receive the net assets
of the Corporation upon dissolution, with each share participating
on a pro rata basis.
Upon amendment to this Article to read hereinabove set forth, each
one (1) outstanding share of Common Stock, par value $0.001 is
reconstituted and converted into one (1) share of Common Stock, par
value $0.00042.
The Common Stock may be issued from time to time without action by
the stockholders. The Common Stock may be issued for such
consideration as may be fixed from time to time by the Board of
Directors.
The Board of Directors may issue such share of Common Stock in one
or more series, with such vesting powers, designations, preferences
and rights or qualifications, limitations or restrictions thereof as
shall be stated in the resolution or resolutions adopted by them.
FURTHER RESOLVED, that, subject to the filing of the Amended
Articles of Incorporation to effectuate the amendment set forth
above, the Board hereby directs that a 1.3809524 for one (1)
dividend of the Common Stock be paid to the record shareholder and
each shall be entitled to receive a certificate or certificates
representing an additional 1.3809524 shares of Common Stock then
owned of record by such shareholder. Pursuant to such stock split in
the form of a stock dividend, each holder: (i) shall not be required
to surrender for exchange or cancellation any certificates for
shares of Common Stock held by such holder; and (ii) shall receive a
full share in the event that said holder would have received a
fractional share, i.e., the Company shall issue such additional
fraction of a share as is necessary to increase the fractional share
to a full share."
(b) The Board of Directors of the Corporation, acting pursuant to a
unanimous written consent on February 25, 2000 resolved to amend the
Articles of Incorporation as originally filed and/or amended, as follows:
"RESOLVED FURTHER, that upon shareholder approval and the filing of
a Certificate of Amendment with the Nevada Secretary of State,
Article 1 of the Articles of Incorporation shall be amended to read
as follows:
ARTICLE I
NAME
The name of the corporation is: booktech.com, inc.
<PAGE>
RESOLVED FURTHER, in our unanimous written consent dated February
11, 2000, the Board of Directors of the Company approved the
amendment of Article IV Section 4.01 of the Articles of
Incorporation in order to increase the authorized shares of capital
stock of the Company in connection with a corresponding forward
stock split. No amendment to the Company's Articles of Incorporation
has yet been filed, and the Board now further resolves to amend
Article IV Section 4.01 to create a class of preferred stock of the
Company, consisting of 5,000,000 shares of the capital stock of the
Company, and with the voting power and the designations, preferences
and relative, participating, optional or other rights of each such
series.
RESOLVED FURTHER, that upon shareholder approval and the filing of a
Certificate of Amendment to that effect with the Nevada Secretary of
State, Article IV Section 4.01 of the Articles of Incorporation
shall be amended to read as follows:
Section 4.01 - Number and Class. The total number of shares of
capital stock which the corporation shall have authority to issue is
Fifty-Nine Million Five Hundred Twenty-Three Thousand Eight Hundred
Ten (59,523,810), shares of the par value of $0.00042 each, divided
into (a) Fifty-Four Million Five Hundred Twenty-Three Thousand Eight
Hundred Ten (54,523,810) shares of common stock (the "Common Stock")
and (b) Five Million (5,000,000) shares of preferred stock (the
"Preferred Stock"). The Common Stock and Preferred Stock may be
issued from time to time without action by the stockholders. The
Common Stock and Preferred Stock may be issued for such
consideration as may be fixed from time to time by the Board of
Directors. There is hereby expressly vested in the Board of
Directors the authority to fix in the resolution or resolutions
providing for the issue of each series of Preferred Stock, the
voting power and the designations, preferences and relative,
participating, optional or other rights of each such series, and the
qualifications, limitations or restrictions thereof. Shares of
Preferred Stock may be issued from time to time in one or more
series as may from time to time be determined by the Board of
Directors, each such series to be distinctly designated.
RESOLVED FURTHER, that the Board approved and recommend to the
shareholders for approval the amendment to the Company's Articles of
Incorporation ("Articles") as described in the Proxy Statement to be
distributed to shareholders on February 26, 2000, copies of which
were distributed to each of the members of the Board prior to the
meeting (the "Proxy Statement");
RESOLVED FURTHER, that a special meeting of the shareholders of the
Company be held at 10:00 A.M. on March 7, 2000 at the offices of
Preston Gates & Ellis LLP for the purpose of approving the
amendment of the Company's Articles of Incorporation to change the
Company's name to booktech.com, inc., approving the Board's adoption
of the Company's 2000 Stock Option Plan,
<PAGE>
approving the amendment of the Company's Bylaws increasing the
authorized number of directors on the Board of Directors to seven
(7), and amending the Company Articles of Incorporation to create a
class of preferred stock in such series and with such rights,
privileges and preferences as the Board of Directors may determine
from time to time;
RESOLVED FURTHER, that the Secretary of the Company is authorized
to cause a notice and the Proxy Statement to be served upon all
shareholders of record of the Company as of the record date, which
date shall be February 25, 2000;
RESOLVED FURTHER, that Joel Dumaresq shall be authorized to serve
as proxies for the Company's shareholders."
2. Amendments to Articles of Incorporation
(a) A majority of the stockholders holding 80.5% of the common shares
outstanding of Ebony & Gold Ventures voted, by person or proxy, at a
special meeting duly held at 10:00 A.M. on March 7, 2000, duly adjourned
and duly reconvened at 3:00 PM on March 30, 2000 for the purpose of
approving the change in the Company's name to booktech.com, inc.,
approved the following amendment to the Company's Articles of
Incorporation. The amendment was approved by shareholders holding shares
in the Corporation entitling them to exercise at least a majority of the
voting power, which number is sufficient under Nevada law to approve the
matter, and the Company's Articles of Incorporation, as amended, are
hereby amended as follows:
ARTICLE I
NAME
The name of the corporation is: booktech.com, inc.
(b) A majority of the stockholders holding 79.5% of the common shares
outstanding of Ebony & Gold Ventures voted, by person or proxy, at a
special meeting duly held at 10:00 A.M. on March 7, 2000, duly adjourned
and duly reconvened at 3:00 P.M. on March 30, 2000 for the purpose of
approving the change in the Company's name to booktech.com, inc.,
approved the following amendment to the Company's Articles of
Incorporation. The amendment was approved by shareholders holding shares
in the Corporation entitling them to exercise at least a majority of the
voting power, which number is sufficient under Nevada law to approve the
matter, and the Company's Articles of Incorporation, as amended, are
hereby amended as follows:
Section 4.01 - Number and Class. The total number of shares of capital
stock which the corporation shall have authority to issue is Fifty-Nine
Million Five Hundred Twenty-Three Thousand Eight Hundred Ten
(59,523,810), shares of the par value of $0.00042 each, divided into (a)
Fifty-Four Million Five Hundred Twenty-Three Thousand Eight Hundred Ten
(54,523,810) shares of common stock (the "Common Stock") and (b) Five
<PAGE>
Million (5,000,000) shares of preferred stock (the "Preferred Stock").
The Common Stock and Preferred Stock may be issued from time to time
without action by the stockholders. The Common Stock and Preferred Stock
may be issued for such consideration as may be fixed from time to time by
the Board of Directors. There is hereby expressly vested in the Board of
Directors the authority to fix in the resolution or resolutions
providing for the issue of each series of Preferred Stock, the voting
power and the designations, preferences and relative, participating,
optional or other rights of each such series, and the qualifications,
limitations or restrictions thereof. Shares of Preferred Stock may be
issued from time to time in one or more series as may from time to time
be determined by the Board of Directors, each such series to be
distinctly designated.
3. Requirements of NRS 78.207 and 78.209
Pursuant to NRS 78.207 and 78.209 and the resolutions of the Board above
approving the increase in the number of the authorized shares of the
Corporation, the following information is provided to satisfy the requirements
of NRS 78.209:
(a) The current numbers of authorized shares of the Corporation is
25,000,000 shares of common stock, $0.001 par value;
(b) The number of authorized shares of the Corporation after the change
is 59,523,810 shares of common stock, $0.00042 par value;
(c) After the change, 1.3809524 shares of common stock will be issued for
every one share of common stock held by each stockholder of common stock before
the increase;
(d) In lieu of fractional shares, all split shares shall be rounded to
the nearest whole share;
(e) Pursuant to NRS 78.207, no approval of the stockholders is necessary
to effect the increase of the authorized shares of the Corporation; and
(f) The change to increase the number of authorized shares of the
Corporation is effective as of the date of filing of this Certificate.
Joel Dumaresq
President and Secretary
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that Joel Dumaresq is
the person who signed this instrument and acknowledged it to be their free and
voluntary act for the uses and purposes mentioned in this instrument.
Dated:
-----------------------
Notary Public
[Seal or Stamp]
-----------------------
[Printed Name]
My appointment expires:
<PAGE>
CERTIFICATE OF DESIGNATION,
POWERS, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
PAR VALUE $.01 PER SHARE
OF
booktech.com, inc.
-------------------
Pursuant to Section 78.1955 of the General
Corporation Law of the State of Nevada
-------------------
IT IS HEREBY CERTIFIED that:
1. The name of the company (hereinafter called the "Company") is
booktech.com, inc. a corporation organized and existing under the General
Corporation Law of the State of Nevada.
2. The articles of incorporation of the Company (the "Articles of
Incorporation") authorize the issuance of five million (5,000,000) shares of
preferred stock, $.01 par value per share (the "Preferred Stock"), and expressly
vest in the Board of Directors of the Company the authority provided therein to
issue any or all of such shares in one (1) or more series and by resolution or
resolutions to establish the designation and number and to fix the relative
rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, and pursuant to the provisions of Section
78.1955 of the General Corporation Law of the State of Nevada, has adopted the
resolutions set forth below creating a Series A issue of Preferred Stock:
RESOLVED, that two million one hundred and thirty five thousand three
hundred and one (2,135,301) shares of the five million (5,000,000) authorized
shares of Preferred Stock of the Company shall be designated Series A Preferred
Stock, $.01 par value per share, and shall possess the rights and preferences
set forth below:
Section 1. Designation and Amount; Dividends.
a. Designation and Amount. The shares of such series shall have a par
value of $.01 per share, and shall be designated as Series A Preferred Stock
(the "Series A Preferred Stock"). The number of shares constituting the Series A
Preferred Stock shall be two million one hundred and thirty five thousand three
hundred and one (2,135,301). The Series A Preferred
<PAGE>
Stock shall be issued or offered at a purchase price of one dollar fifty ($1.50)
per share (the "Original Issue Price").
b. Dividends. (i) The holders of shares of the Series A Preferred
Stock shall be entitled to receive, when, as and if dividends are declared by
the Board of Directors out of funds of the Company legally available therefor,
cumulative preferential dividends from the Issue Date accumulating at the rate
of eight percent (8.00%) of the Liquidation Preference per share per annum,
payable annually in arrears on January 1 of each year or, if any such date is
not a Business Day, on the next succeeding Business Day (each, a "Dividend
Payment Date"), to the holders of record of such shares of Series A Preferred
Stock as of the next preceding December 15 (each, a "Record Date"). Dividends
shall be paid to any holder of Series A Preferred Stock only by the issuance of
shares of the Company's Common Stock, with the number of shares of Common Stock
issued to be determined based upon the Current Market Price of the Company's
Common Stock during the twenty-five (25) Trading Days immediately prior to the
Dividend Payment Date. The issuance of such shares of Common Stock shall
constitute "payment" of the dividend for all purposes of this Certificate of
Designation. The first dividend payment on the Series A Preferred Stock shall be
payable on January 1, 2001 (except with respect to shares of Series A Preferred
Stock converted or redeemed prior to such date, if any). Dividends payable on
the Series A Preferred Stock will be computed on the basis of a 360-day year
consisting of twelve (12) thirty (30) day months and will be deemed to
accumulate on a daily basis on the Liquidation Preference of the Series A
Preferred Stock.
(ii) Dividends on the Series A Preferred Stock shall accrue
whether or not the Company has earnings or profits and whether or not dividends
are declared. Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate.
(iii) As used herein, "Current Market Price" shall mean the
average of the daily Closing Prices per share of Common Stock for the
twenty-five (25) consecutive trading days immediately prior to the date in
question. The "Closing Price" with respect to any securities on any day shall
mean the closing sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the principal notional security exchange or
quotation system on which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not so available, in such manner as
furnished by any National Association of Securities Dealers firm selected from
time to time by the Board of Directors for that purpose, or a price determined
in good faith by the Board of Directors or, to extent permitted by applicable
law, a duly authorized committee thereof, whose determination shall be
conclusive.
Section 2. Rank. The Series A Preferred Stock shall rank: (i) junior to
any other class or series of capital stock of the Company hereafter created
specifically ranking by its terms senior to the Series A Preferred Stock (the
"Senior Securities"); (ii) prior to all of the Common Stock; (iii) prior to any
class or series of capital stock of the Company hereafter created not
specifically ranking by its terms senior to or on parity with any Series A
Preferred Stock of whatever subdivision (collectively, with the Common Stock,
the "Junior Securities"); and (iv) on parity with any class or series of capital
stock of the Company hereafter created specifically ranking by its terms on
parity with the Series A Preferred Stock ("Parity Securities") in each case as
to distribution of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").
Section 3. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
the Company, either voluntary or involuntary, the Holders of shares of Series A
Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Company's Articles of
Incorporation or any certificate of designation, and prior in preference to any
distribution to Junior Securities but in parity with any distribution to Parity
Securities, (i) an amount per share equal to the sum of the Original Issue Price
and (ii) an amount equal to any accrued but unpaid Dividends. If upon the
occurrence of such event, and after payment in full of the preferential amounts
with respect to the Senior Securities, the assets and funds available to be
distributed among the Holders of the Series A Preferred Stock and Parity
Securities shall be insufficient to permit the payment to such Holders of the
full preferential amounts due to the Holders of the Series A Preferred Stock and
the Parity Securities, respectively, then the entire assets and funds of the
Company legally available for distribution shall be distributed among the
Holders of the Series A Preferred Stock and the Parity Securities, pro rata,
based on the respective liquidation amounts to which each such series of stock
is entitled by the Company's Articles of Incorporation and any certificate(s) of
designation relating thereto.
(b) Upon the completion of the distribution required by Section
3(a), if assets remain in the Company, they shall be distributed to holders of
Junior Securities in accordance with the Company's Articles of Incorporation,
including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or disposition of
all or substantially all the assets of the Company to a private entity, the
common stock of which is not publicly traded, shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 3;
provided, however, that an event described in the prior clause that the Holder
does not elect to treat as a liquidation and a consolidation, merger,
acquisition, or other business combination of the Company with or into any other
company or companies shall not be treated as a liquidation, dissolution or
winding up within the meaning of this Section 3, but instead shall be treated
pursuant to Section 4(c) hereof (a Holder who elects to have the transaction
treated as a liquidation is herein referred to as a "Liquidating Holder").
<PAGE>
(d) Prior to the closing of a transaction described in Section
3(c) which would constitute a liquidation event, the Company shall either (i)
make all cash distributions it is required to make to the Liquidating Holders
pursuant to the first sentence of Section 3(a), (ii) set aside sufficient funds
from which the cash distributions required to be made to the Liquidating Holders
can be made, or (iii) establish an escrow or other similar arrangement with a
third party pursuant to which the proceeds payable to the Company from a sale of
all or substantially all the assets of the Company will be used to make the
liquidating payments to the Liquidating Holders immediately after the
consummation of such sale. In the event that the Company has not fully complied
with any of the foregoing alternatives, the Company shall either: (x) cause such
closing to be postponed until such cash distributions have been made, or (y)
cancel such transaction, in which event the rights of the Holders or other
arrangements shall be the same as existing immediately prior to such proposed
transaction.
Section 4. Conversion of Series A Preferred Stock. The record Holders of
the Series A Preferred Stock shall have conversion rights as follows:
(a) Right to Convert. Each record Holder of Series A Preferred
Stock shall be entitled to convert whole shares of Series A Preferred Stock into
Common Stock as follows: three and one-half (3 1/2) shares of Series A Preferred
Stock are convertible into one fully-paid and non-assessable share of Common
Stock, subject to adjustment as provided in Section 4(c) hereof. The number of
shares of Common Stock issuable upon conversion of one share of Series A
Preferred Stock is hereafter referred to as the "Conversion Rate."
(b) Mechanics of Conversion. In order to convert Series A
Preferred Stock into full shares of Common Stock, the Holder shall (i) fax a
copy of a fully executed notice of conversion ("Notice of Conversion") to the
Company at the office of the Company or to the Company's designated transfer
agent (the "Transfer Agent") for the Series A Preferred Stock, stating that the
Holder elects to convert, which notice shall specify the date of conversion, the
number of shares of Series A Preferred Stock to be converted, the Conversion
Rate and a calculation of the number of shares of Common Stock issuable upon
such conversion (together with a copy of the front page of each certificate to
be converted) and (ii) surrender to a common courier for either overnight or two
(2) day delivery to the office of the Company or the Transfer Agent, the
original certificates representing the Series A Preferred Stock being converted
(the "Preferred Stock Certificates"), duly endorsed for transfer; provided,
however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion, unless
either the Preferred Stock Certificates are delivered to the Company or the
Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subsection 4(b)(i) below).
3
<PAGE>
(i) Lost or Stolen Certificates. Upon receipt by the Company
of evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series A Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security reasonably satisfactory
to the Company, and upon surrender and cancellation of the Preferred Stock
Certificates, if mutilated, the Company shall execute and deliver new Preferred
Stock Certificates of like tenor and date. However, the Company shall not be
obligated to re-issue such lost or stolen Preferred Stock Certificates if Holder
contemporaneously requests the Company to convert such Series A Preferred Stock
into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The Company no
later than 6:00 p.m. (Pacific time) on the third (3rd) business day after
receipt by the Company or its Transfer Agent of all necessary documentation duly
executed and in proper form required for conversion, including the original
Preferred Stock Certificates to be converted (or after provision for security or
indemnification in the case of lost, stolen or destroyed certificates, if
required), shall issue and surrender to a common courier for either overnight or
(if delivery is outside the United States) two (2) day delivery to the Holder as
shown on the stock records of the Company a certificate for the number of shares
of Common Stock to which the Holder shall be entitled as aforesaid.
(iii) Date of Conversion. The date on which conversion occurs
(the "Date of Conversion") shall be deemed to be the date such Notice of
Conversion is faxed to the Company or the Transfer Agent, as the case may be,
provided that the advance copy of the Notice of Conversion is faxed to the
Company on or prior to 6:00 p.m., New York City time, on the Date of Conversion.
The original Preferred Stock Certificates representing the shares of Series A
Preferred Stock to be converted shall be surrendered by depositing such
certificates with a common courier for either overnight or two (2) day delivery,
as soon as practicable following the Date of Conversion. The person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record Holder or Holders of such shares
of Common Stock on the Date of Conversion.
(c) Adjustment to Conversion Rate.
(i) Adjustment to the Conversion Rate due to Stock Split,
Stock Dividend or Other Similar Event. If, prior to the conversion of all the
Series A Preferred Stock, the number of outstanding shares of Common Stock is
increased by a stock split, stock dividend or other similar event, the
Conversion Rate shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Rate shall be
proportionately increased.
(ii) Adjustment Due to Consolidation, Merger, Exchange of
Shares, Recapitalization, Reorganization or Other Similar Event. If, prior to
the conversion of all the Series A Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization or other
similar event, as a result of which shares of Common
4
<PAGE>
Stock of the Company shall be changed into the same or a different number of
shares of the same or another class or classes of stock or securities of the
Company or another entity or there is a sale of all or substantially all of the
Company's assets that is not deemed to be a liquidation pursuant to Section
3(c), then the Holders of Series A Preferred Stock thereafter shall have the
right to receive upon conversion of Series A Preferred Stock, upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such stock,
securities and/or other assets which the Holder would have been entitled to
receive in such transaction had the Series A Preferred Stock been converted
immediately prior to such transaction, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the Holders
of the Series A Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for the adjustment of the Conversion
Rate and of the number of shares issuable upon conversion of the Series A
Preferred Stock) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities thereafter deliverable upon the exercise hereof.
The Company shall not effect any transaction described in this subsection
4(c)(ii) unless (a) it first gives thirty (30) calendar days prior notice of
such merger, consolidation, exchange of shares, recapitalization, reorganization
or other similar event (during which time the Holder shall be entitled to
convert its shares of Series A Preferred Stock into Common Stock to the extent
permitted hereby) and (b) the resulting successor or acquiring entity (if not
the Company) assumes by written instrument the obligation of the Company under
this Certificate of Designation, including the obligation of this subsection
4(c)(ii).
(iii) No Fractional Shares. If any adjustment under this
Section 4(c) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next higher number of shares of Series A Preferred Stock.
Section 5. Voting Rights. The Holders of the Series A Preferred Stock
shall be entitled to vote, together with the holders of Common Stock acting as a
single class, and may otherwise participate in any proceeding in which actions
shall be taken by the Company or the stockholders thereof or be entitled to
notification as to any meeting of the stockholders. Each set of five shares of
the Series A Preferred Stock shall have one vote.
Section 6. Protective Provision. So long as shares of Series A Preferred
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by the General Corporation Law
of Nevada) of the Holders of at least a majority of the then-outstanding shares
of Series A Preferred Stock:
(a) alter or change the rights, preferences or privileges of
the Series A Preferred Stock so as to affect adversely the Series A Preferred
Stock, including, but not limited to, the creation or authorization of any
Senior Securities;
5
<PAGE>
(b) increase the size of the authorized number of Series
A Preferred Stock; or
(c) do any act or thing not authorized or contemplated by
this Certificate of Designation which would result in taxation of the Holders of
shares of the Series A Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).
In the event Holders of a majority of the then-outstanding shares of
Series A Preferred Stock agree to allow the Company to alter or change the
rights, preferences or privileges of the shares of Series A Preferred Stock,
pursuant to subsection (a) above, so as to affect adversely the Series A
Preferred Stock, then the Company will deliver notice of such approved
alteration or change to the Holders of the Series A Preferred Stock that did not
agree to such alteration or change (the "Dissenting Holders") and the Dissenting
Holders shall have the right for a period of thirty (30) days to convert
pursuant to the terms of this Certificate of Designation as they exist prior to
such alteration or change or continue to hold their shares of Series A Preferred
Stock subject to the approved alteration or change of the rights, preferences or
privileges of the Series A Preferred Stock.
Section 7. Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 4 hereof, the shares so
converted shall be canceled, shall return to the status of authorized but
unissued preferred stock of no designated series, and shall not be issuable by
the Company as Series A Preferred Stock.
Section 8. Preference Rights. Nothing contained herein shall be construed
to prevent the Board of Directors of the Company from issuing one (1) or more
series of preferred stock with dividend and/or liquidation preferences junior to
the dividend and liquidation preferences of the Series A Preferred Stock.
[SIGNATURE PAGE TO FOLLOW]
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be duly executed on its behalf by its President this ____ day of March, 2000.
booktech.com, inc.
By:
-------------------------------------
Name: Joel Dumaresq
Title: President
7
<PAGE>
CERTIFICATE OF DESIGNATION,
POWERS, PREFERENCES AND RIGHTS OF
SERIES B PREFERRED STOCK
PAR VALUE $.00042 PER SHARE
OF
booktech.com, inc.
-------------------
Pursuant to Section 78.1955 of the General
Corporation Law of the State of Nevada
-------------------
IT IS HEREBY CERTIFIED that:
1. The name of the company (hereinafter called the "Company") is
booktech.com inc., a corporation organized and existing under the General
Corporation Law of the State of Nevada.
2. The Articles of Incorporation of the Company (the "Articles of
Incorporation") authorize the issuance of five million (5,000,000) shares of
preferred stock, $.00042 par value per share (the "Preferred Stock"), and
expressly vest in the Board of Directors of the Company the authority provided
therein to issue any or all of such shares in one (1) or more series and by
resolution or resolutions to establish the designation and number and to fix the
relative rights and preferences of each series to be issued.
3. The Corporation has previously designated and authorized for issuance
2,135,301 shares of Series A Preferred Stock, $.01 par value per share.
4. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, and pursuant to the provisions of Section
78.1955 of the General Corporation Law of the State of Nevada, has adopted the
resolutions set forth below creating a Series A issue of Preferred Stock:
RESOLVED, that one million one hundred thousand (1,100,000) shares of the
five million (5,000,000) authorized shares of Preferred Stock of the Company
shall be designated Series B Preferred Stock, $.00042 par value per share, and
shall possess the rights and preferences set forth below:
Section 1. Designation and Amount. The shares of such series shall have a
par value of $.00042 per share, and shall be designated as Series B Preferred
Stock (the "Series B Preferred Stock"). The number of shares constituting the
Series B Preferred Stock shall be one million one
<PAGE>
hundred thousand (1,100,000). The Series B Preferred Stock shall be issued or
offered for such price and under such terms and conditions as the Board of
Directors of the Company shall determine (the "Original Issue Price").
Section 2. Rank. The Series B Preferred Stock shall rank: (i) junior to
the Series A Preferred Stock and any other class or series of capital stock of
the Company hereafter created (the "Senior Securities"), unless such later class
of stock is specifically ranked by its terms junior to the Series B Preferred
Stock (such class of stock, a "Junior Security"); (ii) prior to all of the
Common Stock; and (iii) on parity with any class or series of capital stock of
the Company hereafter created specifically ranking by its terms on parity with
the Series B Preferred Stock ("Parity Securities"), in each case as to
distribution of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").
Section 3. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
the Company, either voluntary or involuntary, the Holders of shares of Series B
Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Company's Articles of
Incorporation or any certificate of designation, and prior in preference to any
distribution to Junior Securities and the Common Stock, but in parity with any
distribution to Parity Securities, an amount per share equal to the sum of the
Original Issue Price, provided that if the Series B Preferred Stock was issued
in exchange for the securities of another entity, the Original Issue Price shall
be the value attributed in good faith to such Series B Preferred Stock by the
Board of Directors in such transaction. If upon the occurrence of such event,
and after payment in full of the preferential amounts with respect to the Senior
Securities, the assets and funds available to be distributed among the holders
of the Series B Preferred Stock and Parity Securities shall be insufficient to
permit the payment to such Holders of the full preferential amounts due to the
holders of the Series B Preferred Stock and the Parity Securities, collectively,
then the entire assets and funds of the Company legally available for
distribution shall be distributed among the holders of the Series B Preferred
Stock and the Parity Securities, pro rata, based on the respective liquidation
amounts to which each such series of stock is entitled by the Company's Articles
of Incorporation and any certificate(s) of designation relating thereto.
(b) Upon the completion of the distribution required by Section
3(a), the holders of Series B Stock shall not be entitled to any additional
payments or distributions.
Section 4. Conversion of Series B Preferred Stock. The record Holders of
the Series B Preferred Stock shall have conversion rights as follows:
<PAGE>
(a) Right to Convert; Mandatory Conversion. Each record holder of
Series B Preferred Stock shall be entitled to convert each whole share of Series
B Preferred Stock into one fully-paid and non-assessable share of Common Stock,
subject to adjustment as provided in Section 4(c). Such conversion will happen
with respect to each share of Series B Preferred Stock then outstanding,
automatically and without any further action on the part of the holder of the
Series B Preferred Stock, on the one-year anniversary of the issuance of its
issuance. The number of shares of Common Stock issuable upon conversion of one
share of Series B Preferred Stock is hereafter referred to as the "Conversion
Rate."
(b) Mechanics of Conversion. In order to convert Series B Preferred
Stock into shares of Common Stock, the Holder shall (i) fax a copy of a fully
executed Notice of Conversion to the Company at the office of the Company or to
the Company's designated transfer agent (the "Transfer Agent") for the Series B
Preferred Stock, stating that the holder elects to convert, which notice shall
specify the date of conversion, the number of shares of Series B Preferred Stock
to be converted and a calculation of the number of shares of Common Stock
issuable upon such conversion (together with a copy of the front page of each
certificate to be converted) and (ii) surrender to a common courier for either
overnight or two (2) day delivery to the office of the Company or the Transfer
Agent, the original certificates representing the Series B Preferred Stock being
converted (the "Preferred Stock Certificates"), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion, unless
either the Preferred Stock Certificates are delivered to the Company or the
Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subsection 4(b)(i) below).
(i) Lost or Stolen Certificates. Upon receipt by the Company
of evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series B Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security reasonably satisfactory
to the Company, and upon surrender and cancellation of the Preferred Stock
Certificates, if mutilated, the Company shall execute and deliver new Preferred
Stock Certificates of like tenor and date. However, the Company shall not be
obligated to re-issue such lost or stolen Preferred Stock Certificates if Holder
contemporaneously requests the Company to convert such Series B Preferred Stock
into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The Company no
later than 6:00 p.m. (Pacific time) on the third (3rd) business day after
receipt by the Company or its Transfer Agent of all necessary documentation duly
executed and in proper form required for conversion, including the original
Preferred Stock Certificates to be converted (or after provision for security or
indemnification in the case of lost, stolen or destroyed certificates, if
required), shall issue and surrender to a common courier for either overnight or
(if delivery is outside the United States) two (2) day delivery to the Holder as
shown on the stock records of the Company a certificate for the number of shares
of Common Stock to which the Holder shall be entitled as aforesaid.
<PAGE>
(iii) Date of Conversion. The date on which conversion occurs
(the "Date of Conversion") shall be deemed to be the date such Notice of
Conversion is faxed to the Company or the Transfer Agent, as the case may be,
provided that the advance copy of the Notice of Conversion is faxed to the
Company on or prior to 6:00 p.m., eastern time, on the Date of Conversion. The
original Preferred Stock Certificates representing the shares of Series B
Preferred Stock to be converted shall be surrendered by depositing such
certificates with a common courier for either overnight or two (2) day delivery,
as soon as practicable following the Date of Conversion. The person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record Holder or Holders of such shares
of Common Stock on the Date of Conversion.
(c) Adjustment to Conversion Rate.
(i) Adjustment to the Conversion Rate due to Stock Split,
Stock Dividend or Other Similar Event. If, prior to the conversion of all the
Series B Preferred Stock, the number of outstanding shares of Common Stock is
increased by a stock split, stock dividend or other similar event, the
Conversion Rate shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Rate shall be
proportionately increased.
(ii) Adjustment Due to Consolidation, Merger, Exchange of
Shares, Recapitalization, Reorganization or Other Similar Event. If, prior to
the conversion of all the Series B Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities of the Company or another entity, then
the Holders of Series B Preferred Stock thereafter shall have the right to
receive upon conversion of Series B Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets which the Holder would have been entitled to receive in such
transaction had the Series B Preferred Stock been converted immediately prior to
such transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holders of the Series B Preferred
Stock to the end that the provisions hereof (including, without limitation,
provisions for the adjustment of the Conversion Rate and of the number of shares
issuable upon conversion of the Series B Preferred Stock) shall thereafter be
applicable, as nearly as may be practicable in relation to any securities
thereafter deliverable upon the exercise hereof. The Company shall not effect
any transaction described in this subsection 4(c)(ii) unless (a) it first gives
ten (10) calendar days prior notice of such merger, consolidation, exchange of
shares, recapitalization, reorganization or other similar event (during which
time the Holder shall be entitled to convert its shares of Series B Preferred
Stock into Common Stock to the extent permitted hereby) and (b) the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
the obligation of the Company under this Certificate of Designation, including
the obligation of this subsection 4(c)(ii).
<PAGE>
(iii) No Fractional Shares. If any adjustment under this
Section 4(c) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next higher number of shares of Series B Preferred Stock.
Section 5. Voting Rights. The holders of the Series B Preferred Stock
shall be entitled to vote, together with the holders of Common Stock acting as a
single class, and may otherwise participate in any proceeding in which actions
shall be taken by the Company or the stockholders thereof or be entitled to
notification as to any meeting of the stockholders. Each share of the Series B
Preferred Stock shall have six votes.
Section 6. Status of Converted Stock. When shares of Series B Preferred
Stock are converted pursuant to Section 4 hereof, the shares so converted shall
be canceled, shall return to the status of authorized but unissued preferred
stock of no designated series, and shall not be issuable by the Company as
Series B Preferred Stock.
Section 7. Protective Provision. So long as shares of Series B Preffered
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by the General Corporation law
of Nevada) of the Holders of at least a majority of the then-outstanding shares
of Series B Preferred Stock;
(a) alter or change the rights, preferences or privledges of
the Series B Preferred Stock so as to affect adversely the Series B
Preferred Stock, including but not limited to, the creation or
authroization of any Senior Securities;
(b) increase the size of the authorized number of Series B
Preferred Stock; or
(c) do any act or thing not authorized or contemplated by this
Certificate of Designation which would result in taxation of the
Holders of shares of the Series B Preferred Stock under Section 305 of
the internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue Code as hereafter from time to time
amended).
In the event Holders of a majority of the then-outstanding shares of
Series B Preferred Stock agree to allow the company to alter or change the
rights, preferences or privileges of the shares of Series B Preferred Stock,
pursuant to subsection (a) above, so as to affect adversely the Series B
Preferred Stock, then the Company will deliver notice of such approved
alteration or change to the Holders of the Series B Preferred Stock that did not
agree to such alteration or change (the "Dissenting Holders") and the Dissenting
Holders shall have the right for a period of thirty (30) days to convert
pursuant to the terms of this Certificate of Designation as they exist prior to
such alteration or change or continue to hold their shares of Series B Preferred
Stock subject to the approved alteration or change of the rights, preferences or
privileges of the Series B Preferred Stock.
Section 8. Preference Rights. Nothing contained herein shall be construed
to prevent the Board of Directors of the Company from issuing one (1) or more
series of preferred stock with dividend and/or liquidation preferences junior to
or on a parity with the dividend and liquidation preferences of the Series B
Preferred Stock.
[SIGNATURE PAGE TO FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be duly executed on its behalf by its President this ____ day of March, 2000.
booktech.com, inc.
By:
----------------------
Name: Joel Dumaresq
Title: President
<PAGE>
EXHIBIT 4.6
THIS WARRANT AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), NOR UNDER ANY
STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD, ASSIGNED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR COUNSEL
TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITH OUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF
ARE RESTRICTED AS DESCRIBED HEREIN.
EBONY & GOLD VENTURES, INC.
Verus International Warrant to Purchase
833,333 shares of Common Stock
par value .00042 per share
No. _________________
Verus International warrant_no _________________
March ___, 2000
Section 1
THIS CERTIFIES that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Verus International (the Holder"),
is entitled to subscribe for and purchase from Ebony & Gold Ventures, Inc., a
Nevada corporation (the "Company"), upon the terms and conditions set forth
herein, at any time or from time to time, during the period commencing 180 days
from the date of the closing (the "Closing Date") of the merger of EG
Acquisition Corporation, a wholly-owned subsidiary of the Company (the
"Merger-Sub") into booktech.com, inc. ("booktech"), pursuant to the terms of an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of March ____,
2000 by and between booktech, the Merger-Sub and the Company, and expiring at
5:00 p.m. from issue date (the "Exercise Period"), shares of the Company's
Common Stock, par value .00042 per share (the "Common Stock"), at an exercise
price (the "Exercise Price") per share of One Dollar Fifty Cents ($1.50). As
used herein, the term "this Warrant" shall mean and include this Warrant and any
Warrant or Warrants here after issued as a consequence of the exercise or
transfer of this Warrant in whole or in part. As used herein, the term "Holder"
shall include any transferee to whom this Warrant has been transferred in
accordance with the terms hereof.
1
<PAGE>
The number of shares of Common Stock issuable upon exercise of this Warrant (the
"Warrant Shares") and the Exercise Price may be adjusted from time to time as
herein after set forth.
Section 2
Subject to the provisions of Section 2, this Warrant may be exercised
during the Exercise Period, as to the whole or any lesser number of whole
Warrant Shares, by transmission by telecopy of the Election to Exercise,
followed within three (3) business days by the surrender of this Warrant (with
the Election to Exercise attached hereto duly executed) to the Company at its
office at Woburn, Massachusetts, or at such other place as is designated in
writing by the Company, together with a certified or bank cashier's check
payable to the order of the Company in an amount equal to the product of the
Exercise Price and the number of Warrant Shares for which this Warrant is being
exercised (the "Aggregate Exercise Price").
Section 3
Upon each exercise of the Holder's rights to purchase Warrant Shares, the
Holder shall be deemed to be the holder of record of the Warrant Shares issuable
upon such exercise, notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Warrant Shares shall not then
have been actually delivered to the Holder. Within five (5) business days after
each such exercise of this Warrant and receipt by the Company of this Warrant,
the Election to Exercise and the Aggregate Exercise Price, the Company shall
issue and deliver to the Holder a certificate or certificates for the Warrant
Shares issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
Section 4
Any Warrants issued upon the transfer or exercise in part of this Warrant
shall be numbered and shall be registered in a Warrant register (the "Warrant
Register") as they are issued. The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration of transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge of the general counsel of the
Company that a fiduciary or nominee is commit ting a breach of trust in
requesting such registration of transfer. In all cases of transfer by an
attorney, executor, administrator, guardian, or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants to
the person entitled thereto. This Warrant may be exchanged, at the Warrant of
the Holder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares (or portions thereof), upon surrender
to the Company or its duly authorized agent. Notwithstanding anything contained
herein to the contrary, the Company shall
2
<PAGE>
have no obligation to cause Warrants to be transferred on its books to any
person if, in the opinion of counsel to the Company, such transfer does not
comply with the provisions of the Act and the rules and regulations thereunder.
Section 5
The Company, until the expiration or termination of this Warrant, shall
reserve and keep available out of its authorized and unissued common stock,
solely for the purpose of providing for the exercise of the rights to purchase
all Warrant Shares granted pursuant to this Warrant and all other Common Stock
Warrants, such number of shares of common stock as shall, from time to time, be
sufficient therefor. The Company covenants that all shares of preferred stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
Exercise Price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.
Section 6
The issuance of any Warrant, Warrant Shares or other securities upon the
exercise of this Warrant, and the delivery of certificates or other instruments
representing such Warrant Shares or other securities, except as otherwise
required by law, shall be made without charge to the Holder for any tax or other
charge in respect of such issuance, other than applicable transfer taxes.
Notwithstanding anything contained herein, all applicable transfer taxes shall
be borne by the Holder.
Section 7
Subject to the completion of an audit and the preparation and delivery of
audited financial statements, within ninety (90) days after the Closing date,
the Company shall file to register the shares of Common Stock underlying the
Warrants with the Securities and Exchange Commission (the "SEC"). In connection
with the registration statement, the Company shall indemnify the Holders against
all losses, claims or damages resulting from any untrue or allegedly untrue
statement of material fact contained in the registration statement, or any
omission or alleged omission of a material fact required to be stated in the
registration statement to make the statements therein not misleading; provided,
however, that such indemnification shall not extend to any Holder to the extent
any such claim for indemnification is based on information furnished by such
Holder to the Company in writing for use in connection with the registration
statement, which information contains any untrue or allegedly untrue statement
of material fact contained in the registration statement or any omission or
alleged omission of a material fact required to be stated in the registration
statement to make the statements therein not misleading. All expenses incurred
in connection with the preparation and filing of the registration statement fees
shall be paid by the Company.
Section 8
Unless registered, the Warrant Shares issued upon exercise of the Warrants
shall be subject to a stop transfer order and the certificate or certificates
evidencing such Warrant Shares shall bear the following legend:
3
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER ANY STATE SECURITIES LAW. SUCH
SHARES MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE COMPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS."
Section 9
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction, or mutilation of any Warrant (and upon surrender of any Warrant if
mutilated), and upon reimbursement of the Company's reasonable incidental
expenses and, if reasonably requested, an indemnity reasonably acceptable to the
Company, the Company shall execute and deliver to the Holder thereof a new
Warrant of like date, tenor, and denomination.
Section 10
The Holder of any Warrant shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
Section 11
This Warrant shall be governed by and construed in accordance with the
laws of the State of Massachusetts, without giving effect to the rules governing
the conflicts of laws.
Section 12
The parties hereby irrevocably consent to the jurisdiction of the courts
of the State of Massachusetts and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Warrant, any document or instrument delivered pursuant to, in connection with,
or simultaneously with this Warrant, or a breach of this Warrant.
[SIGNATURE PAGES TO FOLLOW]
4
<PAGE>
Dated: ____________, 2000
EBONY & GOLD VENTURES, INC.
By:
------------------------
Name:
Title:
5
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns, and transfers unto __________________ a Warrant to purchase __________
shares of Common Stock, par value .00042 per share, of Ebony & Gold Ventures,
Inc. (the "Company"), together with all right, title, and interest therein, and
does hereby irrevocably constitute and appoint attorney to
transfer such Warrant on the books of the Company, with full power of
substitution.
Dated:
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to the name as written
upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.
6
<PAGE>
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______ Warrant
Shares covered by the within Warrant and tenders payment herewith in the amount
of $_________ in accordance with the terms thereof, certifies that he owns this
Warrant free and clear of any and all claims, liens and/or encumbrances and
requests that certificates for such securities be issued in the name of, and
delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated
- -------------------------------
(Signature)
Name:
Address:
- --------------------------------
(Print)
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's balance sheet, statement of operations, statement of stockholder's
equity and statement of cash flows and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> AUG-01-1997
<PERIOD-END> JUL-31-1998
<CASH> 32,155
<SECURITIES> 0
<RECEIVABLES> 77,023
<ALLOWANCES> 8,887
<INVENTORY> 0
<CURRENT-ASSETS> 109,178
<PP&E> 189,680
<DEPRECIATION> 75,865
<TOTAL-ASSETS> 222,993
<CURRENT-LIABILITIES> 2,366,699
<BONDS> 219,431
0
0
<COMMON> 260,000
<OTHER-SE> (2,623,137)
<TOTAL-LIABILITY-AND-EQUITY> 222,993
<SALES> 793,178
<TOTAL-REVENUES> 793,178
<CGS> 856,559
<TOTAL-COSTS> 856,559
<OTHER-EXPENSES> 1,025,932
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 112,300
<INCOME-PRETAX> (1,201,613)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,201,613)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,201,613)
<EPS-BASIC> (56)
<EPS-DILUTED> (56)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's balance sheet, statement of operations, statement of stockholder's
equity and statement of cash flows and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 82,753
<SECURITIES> 0
<RECEIVABLES> 228,466
<ALLOWANCES> 91,732
<INVENTORY> 0
<CURRENT-ASSETS> 311,219
<PP&E> 808,298
<DEPRECIATION> 73,928
<TOTAL-ASSETS> 1,070,789
<CURRENT-LIABILITIES> 5,438,929
<BONDS> 738,074
0
0
<COMMON> 760,000
<OTHER-SE> (5,866,214)
<TOTAL-LIABILITY-AND-EQUITY> 1,070,789
<SALES> 1,024,866
<TOTAL-REVENUES> 1,024,866
<CGS> 1,027,223
<TOTAL-COSTS> 1,027,223
<OTHER-EXPENSES> 919,034
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 125,749
<INCOME-PRETAX> (1,060,646)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,060,646)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,060,646)
<EPS-BASIC> (46)
<EPS-DILUTED> (46)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's balance sheet, statement of operations, statement of stockholder's
equity and statement of cash flows and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1999
<CASH> 58,451
<SECURITIES> 0
<RECEIVABLES> 114,107
<ALLOWANCES> 13,331
<INVENTORY> 0
<CURRENT-ASSETS> 191,825
<PP&E> 225,628
<DEPRECIATION> 124,966
<TOTAL-ASSETS> 315,687
<CURRENT-LIABILITIES> 4,522,441
<BONDS> 338,814
0
0
<COMMON> 260,000
<OTHER-SE> (4,805,568)
<TOTAL-LIABILITY-AND-EQUITY> 315,687
<SALES> 1,328,813
<TOTAL-REVENUES> 1,328,813
<CGS> 1,578,308
<TOTAL-COSTS> 1,578,308
<OTHER-EXPENSES> 1,718,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 214,636
<INCOME-PRETAX> (2,182,431)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,182,431)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,182,431)
<EPS-BASIC> (109)
<EPS-DILUTED> (109)
</TABLE>
