AGREEMENT AND PLAN OF MERGER
among
ESYNCH CORPORATION,
ESYN KISSCO ACQUISITION CORPORATION,
AND
KISS SOFTWARE CORPORATION
DATED AS OF FEBRUARY 26, 1999
AGREEMENT AND PLAN
OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made as
of this 26th day of February, 1999, by and among ESYNCH CORPORATION, a
Delaware corporation ("ESYNCH"); ESYN KISSCO ACQUISITION CORPORATION, a
Delaware corporation ("Acquisition Sub"); KISS SOFTWARE CORPORATION, a
California corporation ("Kissco"); and present stakeholders of Kissco
identified as such on the signature page hereto ("Kissco Holders").
WHEREAS, the parties desire to adopt a plan of reorganization
intended to effect a tax-free Merger under SectionSection 361(a) and
368(a)(1)(A) of the Code (as defined below), pursuant to which Kissco
will merge with Acquisition Sub, with Kissco being the surviving
corporation, and all of the capital stock of Kissco will be cancelled
in exchange for voting stock of ESYNCH (the "Merger");
WHEREAS, the Boards of Directors of ESYNCH, Acquisition Sub and
Kissco, and the shareholder(s) of Acquisition Sub and Kissco each (i)
has determined that this Agreement and the transactions contemplated
hereby, including the Merger (as defined hereinafter) are fair to it
and in its best interests, and (ii) approved this Agreement and the
transactions contemplated hereby, including the Merger, all on the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable considerations, receipt
and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
SECTION 1. Certain Definitions.
"CGCL" means the California General Corporation Law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Dissenting Shares" shall have the meaning given in Section 1300 et
seq. of the CGCL.
"Effective Date" means the date on which the Merger becomes effective
in accordance with the CGCL.
"Effective Time" means the time the Merger becomes effective in
accordance with the CGCL.
"Escrow Agreement" means an Escrow Agreement on terms mutually
acceptable to Kissco and ESYNCH for the purposes contemplated in
Section 8.
"Exchange Ratio" as defined herein means the "Preferred Exchange Ratio"
or the "Common Exchange Ratio" or the "Option Exchange Ratio" as the
context requires. The Exchange Ratio is calculated based on the
issuance or reservation for future issuance of only 1,591,321 ESYNCH
Common Shares, divided among the actual number immediately prior to the
Effective Time of Fully-Diluted Kissco Shares. Accordingly, the Common
Exchange Ratio is estimated at .181557136 based on preliminary
calculations, and the Preferred Exchange Ratio is estimated at
0.4183964 based on preliminary calculations, and the Option Exchange
Ratio is estimated at 0.194270501 based on preliminary calculations,
using assumptions that there will be 4,230,000 outstanding Kissco
Common Shares (including all shares issuable upon conversion of the
Kissco Subordinated Notes), 840,000 Kissco Common Shares reserved for
issuance under Kissco Options, 1,577,803 outstanding Kissco Preferred
Shares, and 100,000 ESYNCH Common Shares deposited in the Escrow (as
defined in the Escrow Agreement). If the actual numbers of Kissco
Preferred Shares, Kissco Common Shares, Kissco Options, or
Fully-Diluted Kissco Shares outstanding immediately prior to the
Effective Time differ from those assumptions, appropriate adjustments
will be made to the Exchange Ratio prior to the Effective Time
consistent with the foregoing calculations.
"Excluded Shares" shall mean any Kissco Shares held of record as of the
Effective Time by ESYNCH or any subsidiary of ESYNCH.
"Fully-Diluted Kissco Shares" means the sum of (a) the number of Kissco
Common Shares issued and outstanding, plus (b) the number of Kissco
Common Shares that are subject to issuance upon exercise or conversion
of outstanding preferred stock, stock warrants, stock options,
conversion rights and other similar rights, whether or not such
warrants, options and rights are currently exercisable or convertible
or are subject to any contingency, in each case determined as of the
Closing Date.
"ESYNCH Common Shares" means the shares of common stock, par value
$.001 per share, as presently authorized.
"ESYNCH Options" means the options to purchase ESYNCH Common Shares on
the terms contemplated by this Agreement.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith,
and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d)
all trade secrets and confidential business information (including
ideas, research and development, know-how, compilations, compositions,
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (e) all
computer software (including data and related documentation), source
code, algorithms, and object code, and (f) all other proprietary
rights, and (g) all copies and tangible embodiments thereof (in
whatever form or medium).
"Kissco Common Shares" means the issued and outstanding shares of
Common Stock, $0.001 par value, of Kissco determined as of the Closing
Date.
"Kissco Options" means the outstanding options to purchase Kissco
Common Shares, whether or not exercisable, determined as of the Closing
Date.
"Kissco Preferred Shares" means the issued and outstanding shares of
Series A Preferred Stock, $0.001 par value, of Kissco determined as of
the Closing Date.
"Kissco Shares" means and includes both (a) Kissco Common Shares, and
(b) Kissco Preferred Shares.
"Kissco Subordinated Notes" means the Subordinated Convertible
Promissory Notes dated February 27, 1998, in the original principal
amount of $354,297 issued by Kissco to Donald C. Watters and Sigmund A.
Fidyke III.
"SEC" means the U.S. Securities and Exchange Commission.
"Surviving Corporation" shall have the meaning given in Section 2(a) of
this Agreement.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Trading Price" shall mean (A) the closing sale price of the ESYNCH
Common Shares as reported by the principal trading market of the ESYNCH
Common Shares if they are traded on a national securities exchange or
quoted on a national quotation system of a national association of
securities dealers (such as the Nasdaq National Market or Nasdaq
SmallCap Market) on the day concerned, and if no sales occur on such
day, then the closing sale price on the first prior trading day on
which at least one sale occurs on such principal market, or (B) if the
ESYNCH Common Shares are not traded on a national securities exchange
or quoted on such a national quotation system, then the closing bid
price of the ESYNCH Common Shares, if a closing bid price is reported
on such day on the over-the-counter bulletin board, and if not, then
the reported closing bid price on the first prior trading day on which
such a closing bid price is reported for the ESYNCH Common Shares or
(C) if the prices for ESYNCH Common Shares have not been reported on
any national securities exchange, automated quotation systems of a
national association of securities dealers or the over-the-counter
bulletin board for the immediately preceding ten (10) trading days,
then the opening bid price for the ESYNCH Common Shares on the next
trading day on which so reported.
SECTION 2. The Merger; Other Exchanges of Securities.
(A) The Merger. Kissco and Acquisition Sub shall be the constituent
corporations in the Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Merger shall be implemented
by means of a merger (hereinafter sometimes referred to as the
"Merger") of Acquisition Sub with and into Kissco in accordance with
Section 1100 et seq. of the CGCL, to be effected by the filing of a
Merger Agreement (the "Merger Agreement") in form mutually acceptable
to Kissco and ESYNCH in accordance with the applicable terms of this
Agreement, with the California Secretary of State and the Delaware
Secretary of State along with all certificates required by such law.
Such Merger Agreement shall be filed prior to, and the Merger shall be
effective at the time (the "Effective Time") specified in such filing.
In accordance with such statutes, at the Effective Time, the
Acquisition Sub shall be merged with and into Kissco, the separate
corporate existence of Acquisition Sub shall cease, and Kissco shall be
the surviving corporation (the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of
California. From and after the Effective Time and thereafter until
amended as provided by law, the Articles of Incorporation of Kissco as
in effect immediately prior to the effective time shall become the
Articles of Incorporation of the Surviving Corporation. From and after
the Effective Time and thereafter until amended as provided by law, the
Bylaws of Kissco as in effect immediately prior to the effective time
shall become the Bylaws of the Surviving Corporation, except that the
Bylaws of the Surviving Corporation shall be amended such that the
number of directors shall be one, which number may be changed from time
to time, by a resolution duly adopted by the shareholders or a majority
of the directors then in office. The directors and officers of the
Surviving Corporation shall be as designated by ESYNCH in the Merger
Agreement or otherwise, and each such director or officer shall serve
until his or her successor has been duly elected or appointed and
qualified or until his or her earlier death, resignation or removal in
accordance with the terms of the Surviving Corporation's Articles of
Incorporation and Bylaws.
(B) Treatment of Kissco Shares and Acquisition Sub Stock.
(I) Conversion of Kissco Common Shares, Kissco Preferred Shares
and Acquisition Sub Stock. At the Effective Time, each of the Kissco
Common Shares issued and outstanding immediately prior to the Effective
Time (other than Dissenting Shares and Excluded Shares, if any) shall,
by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive a number of
ESYNCH Common Shares equal to the Common Exchange Ratio, and each of
the Kissco Preferred Shares issued and outstanding immediately prior to
the Effective Time (other than Dissenting Shares and Excluded Shares,
if any) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive a
number of ESYNCH Common Shares equal to the Preferred Exchange Ratio
(the "Merger Consideration"). All Kissco Shares shall, as of the
Effective Time, no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each certificate previously
representing any such shares shall thereafter represent only the right
to receive the Merger Consideration into which the shares of Kissco
Shares represented by such certificate have been converted. As of the
Effective Time, all Excluded Shares, if any, shall cease to exist and
the certificates for such shares shall, as promptly as practicable
thereafter, be cancelled and no payments shall be made in consideration
therefor. Notwithstanding anything in this Agreement to the contrary,
Dissenting Shares shall not be converted into the right to receive, or
be exchangeable for, the Merger Consideration provided for in Section
2(b)(i) hereof, but, instead, the holders thereof shall be entitled to
payment for such Dissenting Shares in accordance with the provisions of
Chapter 13 of the CGCL, unless and until a holder of Dissenting Shares
shall have failed to perfect or shall have effectively withdrawn or
lost such holder's rights to appraisal and payment, as the case may be.
Kissco shall (a) comply with the provisions of Sections 1300 et seq.
of the CGCL applicable to it in a prompt and expeditious manner, (b)
give ESYNCH prompt written notice of (i) the identities of all Kissco
shareholders who have perfected rights to dissent pursuant to the CGCL
and (ii) the receipt of any notice from any Kissco shareholder
demanding the purchase of his, her or its Kissco Common Shares, (c) not
settle or offer to settle any such demands without the prior written
consent of ESYNCH, and (d) not, without the prior written consent of
ESYNCH, waive any vote in favor of the Merger or failure of any Kissco
shareholder timely to take any other action required under CGCL. At
the Effective Time, the shares of common stock of Acquisition Sub then
issued and outstanding shall be converted into a like number of shares
of common stock of the Surviving Corporation, which thereafter shall
constitute all of the issued and outstanding shares of common stock of
the Surviving Corporation.
(II) Exchange of Certificates. After the Effective Time, each
holder of a certificate or certificates theretofore representing issued
and outstanding Kissco Shares (other than the Dissenting Shares and
Excluded Shares) shall, upon the surrender of such certificates to
ESYNCH, or an exchange agent designated by ESYNCH, be entitled to
receive, in exchange for each of the shares represented by such
certificate or certificates so surrendered, an amount in ESYNCH Common
Shares equal to the Merger Consideration, less any required withholding
of Taxes (as hereinafter defined). The holder of a certificate that
prior to the Merger represented issued and outstanding Kissco shall
have no rights, after the Effective Time, with respect to each such
share except to surrender the certificate in exchange for the Merger
Consideration, without interest thereon or, if applicable, to perfect
such rights as a holder of Dissenting Shares as such holder may have
pursuant to the applicable provisions of Chapter 13 of the CGCL.
Within ten (10) business days after the Effective Time, the Surviving
Corporation will send to each holder of Kissco Shares at the Effective
Time a letter of transmittal for use in such exchange. In the event
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, if required by the
Surviving Corporation, the posting by such person of a bond in such
amount as the Surviving Corporation may direct as indemnity against any
claim that may be made against it with respect to such certificate,
ESYNCH will deliver, or cause to be delivered, in exchange for such
lost, stolen or destroyed certificate, certificates representing the
Merger Consideration payable in respect thereof.
(III) Certain Taxes. If any certificates representing Merger
Consideration are to be registered in a name other than that in which
the certificate surrendered in exchange therefor is registered, it
shall be a condition of such delivery of Merger Consideration that the
certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form
for transfer, and that the person requesting such exchange shall pay to
ESYNCH, in advance, any transfer or other Taxes required by reason of
the payment to a person other than the registered holder of the
certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of ESYNCH that such Tax has been paid or
is not payable.
(IV) Closing of Transfer Books. At the Effective Time, the
transfer books for Kissco Common Shares shall be closed, and no
transfer of Kissco Shares shall thereafter be made on such books. If,
after the Effective Time, certificates representing any such shares are
presented for transfer to ESYNCH, they shall be cancelled and exchanged
for the Merger Consideration as provided in this Section 2.
(C) Fractional Shares. No certificates or scrip representing
fractional share interests in ESYNCH Common Shares will be issued, and
no such fractional share interest will entitle the holder thereof to
vote, or to any rights of a stockholder of the Company. ESYNCH shall
arrange for the disposition of fractional interests such that a holder
of Kissco Shares shall receive, in lieu of any fraction of a ESYNCH
Common Share to which the holder would otherwise be entitled, a cash
payment therefor, rounded to the nearest cent, on the basis of the
Trading Price. If more than one certificate representing Kissco Shares
shall be surrendered at one time for the account of the same
stockholder, the number of full ESYNCH Common Shares which shall be
issued shall be computed on the basis of the aggregate number of shares
represented by the Kissco Common Share certificates so surrendered. In
the event that ESYNCH's Exchange Agent determines in good faith that a
holder of Kissco Shares has not tendered all his certificates for
exchange, such Exchange Agent may carry forward any fractional share
until all certificates of that holder have been presented for exchange
such that payment for fractional shares to any one person shall not
exceed the value of one share.
(D) Treatment of Kissco Options. At the Effective Time of the Merger,
ESYNCH Corporation shall assume and continue the Kissco 1997 Stock
Option Plan and any other outstanding Kissco Options, with such
adjustments as are required so as not to increase or diminish the
benefits thereof to the optionees, such that the Kissco Options are
exchanged for ESYNCH Options to purchase, at the same aggregate
exercise price, a number of ESYNCH Common Shares equal to the Option
Exchange Ratio for each one Kissco Common Share that such optionee
would have received had the optionee exercised the KISSCO Options prior
to the Merger. An appropriate number of ESYNCH Common Shares shall be
reserved for issuance upon the exercise of such stock options. None of
the Kissco Options shall be accelerated or otherwise modified.
(E) Treatment of Kissco Subordinated Notes. Prior to the Effective
Time, Kissco and all of the holders Kissco Subordinated Notes will
enter into one or more agreements in form and substance acceptable to
ESYNCH that provide for the treatment Kissco Subordinated Notes as
described herein. Prior to the Effective Time, the Kissco Subordinated
Notes shall be converted into Kissco Common Shares in accordance with
their terms to the maximum extent permitted under the terms thereof.
The remaining balance, which shall not exceed $272,297, will continue
after the Effective Time, without acceleration of maturity.
(F) Escrow of 100,000 ESYNCH Common Shares. ESYNCH shall deliver to
the Escrow Agent, as defined in the Escrow Agreement, an aggregate of
100,000 ESYNCH Common Shares, registered in the names of the respective
holders of Kissco Shares (other than Dissenting Shares and Excluded
Shares) and in the denominations set forth in the Escrow Agreement,
which shall be pro rata to the number of ESYNCH Common Shares
deliverable to each such holder as Merger Consideration.
SECTION 3. Other Agreements.
(A) Promptly following the execution and delivery of this Agreement,
the parties shall issue a joint press release in a form mutually to be
agreed upon. The parties shall not, and shall instruct their
representatives not to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make
any public statement concerning, this Agreement or the Merger without
the consent of the other party, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, in the event that any party
determines, based upon the advice of counsel, that a press release,
disclosure in a public filing, or other public disclosure of or
reference to this Agreement, the Merger or the other party is required
by law, the former party shall first use reasonable efforts to notify
the latter party of the potential disclosure, and use reasonable
efforts to afford the latter party a reasonable opportunity to review
and comment on the proposed disclosure, provided that the consent of
the latter party for such publication shall not be required in any such
instance. In addition, ESYNCH shall file on a timely basis a Current
Report on Form 8-K reporting this transaction as an acquisition, and
make any additional filings and reports as may be required or advisable
under applicable law.
(B) Promptly following the date of execution of this Agreement, ESYNCH
shall file a Form D with the SEC regarding the Merger, and make all
other necessary or advisable filings under California and other
applicable state securities laws, as necessary or advisable to obtain
appropriate exemptions from registration or qualification under federal
and applicable state securities laws. Except as expressly disclosed in
writing by Kissco, ESYNCH shall understand that the Kissco shareholders
are residents of California. In order to perfect such exemptions as
are available under Regulation D and the California Corporate
Securities Law, and other applicable laws, Kissco shall require that
prior to the Effective Time the holders of Kissco Shares and Kissco
Options consent and acknowledge in writing that the ESYNCH Common
Shares or ESYNCH Options, as the case may be, being acquired by the
holder are being acquired for the person's personal account, for
investment purposes only, and not with a view to the distribution,
resale or other disposition thereof, that ESYNCH is issuing the ESYNCH
Common Shares and ESYNCH Options without registering such shares under
the Securities Act of 1933 (the "Act") on the basis of certain
exemptions from such registration requirement, and accordingly that the
person acknowledges that the certificates evidencing the ESYNCH Common
Shares and ESYNCH Options shall bear a legend indicating such
non-registration under the Act and the resulting restrictions on
transfer, and the person may be required to hold the ESYNCH Common
Shares indefinitely unless they are subsequently registered for resale
under the Act or an exemption from such registration is available, and
that the person has received a copy of the Filings (as defined below)
and understands that all rights and obligations connected with this
Agreement are set forth in this Agreement, acknowledges having had an
opportunity to request and receive additional information from ESYNCH,
its being experienced and sophisticated in financial and business
matters sufficient to protect its interests in this transaction and to
evaluate the merits and risks of the Merger and its being in such
financial condition so as to be able to invest in illiquid securities
for an indefinite period of time.
(C) On the Closing Date, Kissco shall cause to be delivered to ESYNCH
and Acquisition Sub such resignations of directors and officers of
Kissco and cause to take effect such amendments of its bylaws as may be
necessary or appropriate to elect Thomas Hemingway and other designates
of Acquisition Sub to constitute all of the members of Kissco's Board
of Directors and officers.
(D) Following the Closing, ESYNCH shall continue to file reports with
the SEC as required in Rule 144(c)(1), or any successor rule, for a
period of at least twenty-four (24) months immediately following the
Closing, or such longer period as any Kissco Holder shall be deemed an
affiliate of ESYNCH on account of being an officer or director of
ESYNCH or its receipt and holding of Merger Consideration, or such
shorter time as any ESYNCH Common Shares are outstanding, and ESYNCH
shall take all other actions as may reasonably be required of ESYNCH in
order that Rule 144, or any successor rule, may be available to the
shareholders of ESYNCH who satisfy the provisions of the rule
applicable to the holder or its offer or sale of securities.
(E) Until five years from the Effective Time, unless otherwise
required by applicable law, the articles of incorporation and bylaws of
the Surviving Corporation shall contain provisions no less favorable
with respect to the elimination of liability of directors and the
indemnification of (and advancement of expenses to) directors,
officers, employees and agents that are set forth in the articles of
incorporation and bylaws of Kissco, as in effect on the date hereof.
True and correct copies, including all amendments, of the articles and
bylaws of Kissco have been provided to ESYNCH. The purpose of this
provision is to assure that the Surviving Corporation does not deny
indemnity claims under its articles of incorporation or bylaws that
would be allowed as to actions or inactions that occurred prior to the
Effective Time but for such subsequent amendment, and shall not be
construed to cover any actions or inactions occurring after the
Effective Time.
SECTION 4. Representations and Warranties of Kissco. As of the date
hereof, and as of the Closing Date, Kissco and the Kissco Holders
hereby represent and warrant to ESYNCH, except as set forth on Kissco's
Disclosure Schedule, as follows:
(A) Kissco is a corporation duly organized and existing and in good
standing under the laws of the State of California and Kissco has all
necessary corporate power and authority to own and conduct its business
as currently conducted. Kissco is not required by the nature of its
business or properties to be qualified to do business as a foreign
corporation in any jurisdiction outside California. Kissco has no
subsidiaries and owns no similar interest in any other entity.
(B) Other than approval of the shareholders of Kissco required by
applicable law and other than the agreements contemplated in Sections
2(c), 2(d) or 2(e), Kissco has obtained all necessary corporate
authorizations and material approvals required for the execution,
delivery and consummation of the transactions provided for in this
Agreement. This Agreement, and when executed and delivered each of the
other agreements contemplated by this Agreement, to which Kissco is to
be a party, constitutes the valid and binding obligations of Kissco,
enforceable against Kissco in accordance with its terms except as such
enforcement may be limited by bankruptcy laws or other laws affecting
creditors' rights generally.
(C) Kissco has authorized capital of 20,000,000 shares of Common
Stock, $0.001 par value per share, of which a total of 4,030,000 shares
of Common Stock are issued and outstanding and 3,000,000 shares of
Preferred Stock, $0.001 par value per share, of which a total of
1,818,750 are designated as the Series A Preferred Stock, and of which
1,577,803 are issued and outstanding, and 840,000 Kissco Common Shares
are reserved for issuance under outstanding Kissco Options and 200,000
Kissco Common Shares are reserved for issuance under Kissco
Subordinated Notes, and no other shares are reserved for issuance under
outstanding convertible notes or other securities or arrangements
except the Kissco Options listed in the Disclosure Schedule. There are
no preemptive rights or similar rights as to Kissco's capital stock.
All of the Kissco Shares that are outstanding are, and all of the
Kissco Shares which shall have become outstanding prior to the
Effective Time shall be when issued, validly issued, fully-paid and
non-assessable and were or shall have been issued in compliance with
all applicable federal and state securities laws.
(D) The execution and delivery of this Agreement by Kissco, and the
consummation of the transactions and obligations contemplated hereby,
do not conflict with or result in a material breach of the terms,
conditions or provisions of, or constitute a material default (or an
event that would upon notice or lapse of time or both would become a
default) under, or result in the creation of a lien or encumbrance of
any kind on any of its assets pursuant to (i) its Articles of
Incorporation, as amended, or bylaws, as amended, (ii) any material
agreement, document or instrument to which Kissco is a party or by
which Kissco is bound, or (iii) any judgment, decree, order, statute,
rule or regulation applicable to Kissco.
(E) The unaudited financial statements of Kissco as of December 31,
1997 as previously delivered to ESYNCH, and as of December 31, 1998
when delivered to ESYNCH shall, fairly present the consolidated
financial condition of Kissco for the periods and at the dates stated
therein, subject to normal audit adjustments and the absence of
footnotes. No fact or condition is known to Kissco that materially
adversely affects, or that is reasonably expected to materially
adversely affect Kissco's business or financial condition, taken as a
whole.
(F) Kissco is not (i) a party to any pending or, to its knowledge,
likely to be a party to any threatened investigation, litigation or
legal proceeding that may have a material adverse effect upon its
financial condition, business or prospects, or (ii) subject to any
order, judgment or decree that would reasonably be likely to have such
effect. All known, current or potential, or threatened claims that
could reasonably be anticipated to result in a material claim against
Kissco for indemnity are set forth in the Kissco Disclosure Schedule.
(G) At the Closing Date, all of the assets of Kissco shall be free and
clear of any and all material liens, liabilities, claims or
encumbrances of any kind or nature whatsoever, except those in favor of
expressly provided herein or as arises in favor of ESYNCH.
(H) Except as set forth in the Kissco Disclosure Schedule, to the best
knowledge of Kissco, neither has Kissco infringed nor is Kissco now
infringing, any patent, trade name, trademark, service mark, copyright,
trade secret, technology, know-how or process belonging to any other
person, firm or corporation, which infringement would have an material
adverse effect on Kissco. Kissco has not received any written notice
or other written indication of any such claim of infringement.
(I) Kissco has not utilized the services of, and it does not and will
not have any liability to, any broker or finder in connection with this
Agreement or the transactions contemplated hereby. Neither Kissco nor
any holder of Kissco securities has any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which ESYNCH,
Acquisition Sub, Kissco or any of the other person could become liable
or obligated or otherwise. The solicitations of holders of Kissco
Shares, Kissco Options, or any other securities of Kissco, do not and
shall not involve any advertisement, general solicitation, or payment
of commissions or other amounts, directly or indirectly, to persons
soliciting consents, approvals, exchanges or proxies or any violations
by Kissco of registration or qualification requirements of applicable
federal or state securities laws. The holders of Kissco securities
include no unsophisticated investors (except such as have retained
personal representatives) and fewer than 35 non-accredited investors.
(J) The Kissco Disclosure Schedule lists all employee pension plans
(as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), all material employee welfare plans
(as defined in Section 3(1) of ERISA), and all other bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit
plans, programs or arrangements, and any material current or former
employment, executive compensation, consulting or severance agreements,
written or otherwise, for the benefit of, or relating to, any employee
of or consultant (or former employee of or consultant) to Kissco, any
trade or business (whether or not incorporated) which is a member of a
controlled group including Kissco or which is under common control with
Kissco (an "ERISA Affiliate") within the meaning of Section 414 of the
Code, (all such plans, practices and programs are referred to as the
"Kissco Benefit Plans"), excluding agreements with former employees
under which Kissco has no remaining monetary obligations. Neither
Kissco nor any ERISA Affiliate maintains, or has ever maintained, an
Kissco Benefit Plan intended to qualify under Section 401(a) of the
Code or subject to Title IV of ERISA. There have been made available
to ESYNCH copies of (i) each written Kissco Benefit Plan and (ii) the
most recent annual report on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Kissco Benefit
Plan required to make such a filing. No Kissco Benefit Plan promises
or provides retiree medical or other retiree welfare benefits to any
person, and no Kissco Benefit Plan is a "multiemployer plan" as such
term is defined in Section 3(37) of ERISA. There has been no
"prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code with respect to any Kissco Benefit
Plan, which could result in any material liability to Kissco. All
Kissco Benefit Plans are in material compliance with the requirements
prescribed by any and all statutes (including ERISA and the Code),
orders, or governmental rules and regulations currently in effect with
respect thereto (including all applicable requirements for notification
to participants or the Department of Labor, IRS or Secretary of the
Treasury), and, Kissco has performed all obligations required to be
performed by it under, are not in any respect in default under or
violation of, and Kissco has no knowledge of any default or violation
by any other party to, any Kissco Benefit Plans; and (iv) all
contributions required to be made to any Kissco Benefit Plan pursuant
to the terms of such Kissco Benefit Plan have been made on or before
their due dates. The Kissco Disclosure Schedule also sets forth a true
and complete list of (i) all employment agreements with officers or key
management personnel of Kissco; (ii) all agreements with consultants
obligating Kissco to make annual cash payments in an amount exceeding
$10,000; (iii) all employees of, or consultants to, Kissco who have
executed a confidentiality or non-competition agreement with Kissco;
(iv) all severance agreements, programs and policies of Kissco with or
relating to its employees, excluding programs and policies required to
be maintained by law; and (v) all plans, programs, agreements and other
arrangements of Kissco with or relating to its employees which contain
change in control provisions. Except as set forth in the Kissco
Disclosure Schedule, (i) there are no controversies, including any
unfair labor practice complaint, pending or, to the knowledge of
Kissco, threatened, between Kissco and any of its employees; and (ii)
Kissco is in material compliance with all applicable laws, regulations
and orders respecting employment and employment practices, terms and
conditions of employment and wages and hours and Kissco is not engaged
in any unfair labor practice.
(K) The Kissco Disclosure Schedule includes a list of all agreements
to which Kissco is a party or by which Kissco is bound (i) under which
the consequences of a default, nonrenewal or termination could
reasonably be expected to have a material adverse effect on Kissco; or
(ii) pursuant to which payments might be required or acceleration of
benefits may be required upon a "change of ownership" of Kissco. Such
list shall include any agreements or notes or other instruments under
which Kissco borrows money or finances the purchase of any goods or
services, that grants any security interest or other lien or
encumbrance on any assets of Kissco, restricts the scope or nature of
or places geographic restrictions on the business of Kissco, that
governs the provision of services by Kissco its clients, or provides
for the sale or issuance of any shares of Kissco stock or any
convertible securities or for the sale of any assets of Kissco, other
than sales of inventory in the ordinary course of business consistent
with past practice (collectively, the "Material Contracts"). Except as
set forth in the Kissco Disclosure Schedule, all of the Material
Contracts are valid and binding obligations of Kissco, and, to the
knowledge of Kissco, of the other parties thereto, all such Material
Contracts are in full force and effect and there has not occurred any
material default under or breach of any of the Material Contracts,
whether by Kissco or, to the knowledge of Kissco, by the other parties
thereto and, to the knowledge of Kissco, no events or circumstances
have occurred that, with the passage of time or the giving of notice,
or both, would constitute a material breach or default of any such
Material Contract (whether by Kissco or any of the other parties
thereto) under any of the Material Contracts, or would materially
impair or alter Kissco's rights or obligations or alter the rights or
obligations of any third party under, or give to any of the other
parties any rights of termination, amendment, acceleration or
cancellation of any Material Contract, or result in the creation of a
lien or encumbrance on any of the material assets of Kissco.
SECTION 5. Representations and Warranties of ESYNCH. As of the date
hereof and as of the Closing Date, ESYNCH represents and warrants,
except as set forth on the ESYNCH Disclosure Schedule, to Kissco and
the Kissco Holders as follows:
(A) ESYNCH is a corporation duly organized and existing in good
standing under the laws of the State of Delaware and has all necessary
corporate power and authority to own and conduct its business as now
conducted. Acquisition Sub is a corporation duly organized and
existing in good standing under the laws of the State of Delaware and
has all necessary corporate power and authority to own and conduct its
business as now conducted. ESYNCH and each subsidiary of ESYNCH
("Subsidiary") is qualified to do business as a foreign corporation in
each jurisdiction where the nature of its business or properties requires.
(B) ESYNCH has authorized capital of 20,000,000 Common Shares, par
value $.001 per share, and 1,000,000 shares of Preferred Stock, par
value $.001 per share, of which a total of approximately 8,500,000
ESYNCH Common Shares are issued and outstanding, and a total of 600,000
shares of Preferred Stock, designated Series I Preferred Stock ("Series
I Preferred Shares"), are issued and outstanding. The foregoing
exclude the ESYNCH Common Shares issuable pursuant to this Agreement or
upon subsequent exercise of ESYNCH Options issuable pursuant to this
Agreement. As of the date hereof, the authorized capital stock of
Acquisition Sub consists of three thousand shares of common stock,
$.001 par value, one thousand shares of which are validly issued, fully
paid and nonassessable and owned by ESYNCH. All outstanding shares of
capital stock of each of ESYNCH's material subsidiaries have been
validly issued, are fully paid and nonassessable and are owned directly
or indirectly by ESYNCH free and clear of all liens, charges, claims or
encumbrances. Approximately 2,000,000 ESYNCH Common Shares are
reserved for issuance under outstanding options or warrants. In
addition, the former shareholders of SoftKat have a contingent right to
receive up to 720,000 additional ESYNCH Common Shares, depending upon
the trading price of the common stock during the 30-trading-day period
ending November 16, 1999. ESYNCH's Series I Preferred Shares are
redeemable at a price of $1.00 per share at the option of ESYNCH at any
time, subject to legal restrictions on redemption or restrictions in
loan or other agreements, and is required to be redeemed in certain
amounts in certain events related to receipt of funding by ESYNCH. The
Series I Preferred Shares become convertible into ESYNCH Common Shares
as of November 17, 1999, or earlier if the Company receives a specified
amount of funding prior to such time. The exercise price will be based
on a formula, equal to the lesser of $3.00 per ESYNCH Common Share, or
the average closing bid price for the common stock over the
10-trading-day period ending November 16, 1999. At the Effective Time,
ESYNCH shall have full power and authority to issue the ESYNCH Common
Shares and to reserve ESYNCH Common Shares for issuance pursuant to the
ESYNCH Options, in the manner provided herein, free and clear of any
liens, claims, charges, options and encumbrances, other than
restrictions that arise under federal or state securities laws, and all
of the ESYNCH Common Shares are, and those to be issued in accordance
with the terms of this Agreement or upon exercise of ESYNCH Options
shall be validly issued, fully-paid and non-assessable and free of any
preemptive rights, and in reliance on the list of states and the
representations and warranties made by Kissco as to the holders of its
securities, and the further representations as shall be required to be
made pursuant to Section 3(c), will be issued in compliance with
exemptions from registration or qualification requirements of
applicable federal and state securities laws. The other issuances of
ESYNCH shares pending or currently contemplated include approximately
460,000 ESYNCH Common Shares issuable under or in connection with
convertible notes, shares issuable in connection with private
placements at prices to be negotiated, and shares issuable in
connection with acquisitions. Prior to the Closing, ESYNCH shall
provide Kissco with all such further related information as it may
request and/or supplement the ESYNCH Disclosure Schedule.
(C) ESYNCH and Acquisition Sub have obtained all necessary corporate
authorizations and approvals including consents to third parties,
required for the execution, delivery and consummation of the
transactions provided for in this Agreement except for any federal and
state securities law filings or permits as may be required hereafter,
which will be timely made when due. This Agreement has been duly
executed by each of ESYNCH and Acquisition Sub and constitutes a valid
and binding obligation of ESYNCH and Acquisition Sub, enforceable
against them in accordance with its terms except as such enforcement
may be limited by bankruptcy laws or other laws affecting creditors'
rights generally.
(D) The execution and delivery of this Agreement by ESYNCH, and the
consummation of the transactions and obligations contemplated hereby
does not conflict with or result in a material breach of the terms,
covenants or provisions of, or constitute a material default (or an
event that would upon notice or lapse of time or both would become a
default) under, or result in the creation of a lien or encumbrance of
any kind on any of the assets of ESYNCH or any Subsidiary pursuant to
(i) its Certificate of Incorporation, as amended, or bylaws, as
amended, (ii) any material agreement, document or instrument to which
ESYNCH is a party or by which ESYNCH or any Subsidiary is bound, or
(iii) any judgment, decree, order, statute, rule or regulation
applicable to ESYNCH or any Subsidiary. Neither ESYNCH nor any of its
material Subsidiaries is in default or violation (and no event has
occurred that with the notice or the lapse of time or both would
constitute a default or violation) of any term, condition or provision
of (i) its Articles of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which ESYNCH
or any of its material Subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound or (iii)
any order, writ, injunction, decree, law, statute, rule or regulation
applicable to ESYNCH, any of its material Subsidiaries or any of their
respective properties or assets, except in the case of clause (ii) or
(iii) for violations, breaches or defaults that individually or in the
aggregate would not have a material adverse effect on ESYNCH and its
Subsidiaries taken as a whole.
(E) No fact or condition is known to ESYNCH or any subsidiary that
materially adversely affects, or that may materially adversely affect
any of the assets, business, financial condition or prospects of ESYNCH
or any Subsidiary which is not reflected in the filings (the "Filings")
by ESYNCH with the SEC, all of which have been delivered by ESYNCH to
Kissco or have been accessed by Kissco through the Electronic Data
Gathering and Retrieval System at the SEC's public website at
http://www.sec.gov/cgi-bin/srch-edgar?innovus or at
http://www.sec.gov/cgi-bin/srch-edgar?esynch. ESYNCH has not taken any
action, or omitted to take any action, or executed any agreement,
instrument or other document, that would create any liability for
ESYNCH, which is not reflected in the Filings or in Appendix F to the
Kissco Proxy Statement. Since January 1, 1998, ESYNCH has made all
Filings required of it by the SEC or applicable federal or state
securities laws in a timely manner and in compliance with such
requirements. The Filings, including all financial statements and
schedules included therein, at the time filed, and such Appendix F at
the time prepared, did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and the
Filings complied in all material respects with the applicable
requirements of the Securities Exchange Act of 1934 and the Securities
Act of 1933 and the applicable rules and regulations of the SEC
thereunder. The financial statements of ESYNCH (including the related
notes thereto) included in the Filings comply in all material respects
with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in such financial statements or in the notes thereto or, in
the case of the unaudited financial statements, as permitted by the
requirements of Form 10-Q) and fairly present (subject, in the case of
the unaudited statements, to normal recurring audit adjustments) the
consolidated financial position of ESYNCH and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended. The
unaudited financial statements of ESYNCH, as set forth in the 10-QSB/A
filed by ESYNCH on December 16, 1998 with the SEC fairly present the
consolidated financial position of ESYNCH for the period ended, and at,
September 30, 1998, subject to normal audit adjustments. No fact or
condition is known to ESYNCH and not disclosed in the Filings that
materially adversely affects, or that reasonably is expected to
materially adversely affect, ESYNCH's or its subsidiaries' business or
financial condition taken as a whole.
(F) Neither ESYNCH nor any Subsidiary (i) is involved in any pending
or, to its knowledge, threatened investigation, litigation or legal
proceeding that may have a material adverse effect upon the
consummation of the Merger or the business or prospects of ESYNCH or
any Subsidiary, or (ii) is subject to any order, judgment, or decree
that may have such effect.
(G) To the best knowledge of ESYNCH, neither ESYNCH nor any Subsidiary
has infringed, and neither now infringing, any patent, trade name,
trademark, service mark, copyright, trade secret, technology, know-how
or process belonging to any other person, firm or corporation, which
infringement would have an material adverse effect on ESYNCH or any
Subsidiary. Neither ESYNCH has received any written notice or other
written indication of any such claim of infringement. ESYNCH owns, or
holds adequate licenses or other rights to use, all Intellectual
Property used in or necessary for the operation of ESYNCH's business as
now conducted.
(H) ESYNCH has not utilized the services of, and that it does not and
will not have any liability to, any broker or finder in connection with
this Agreement or the transactions contemplated hereby. The
solicitations of holders of Kissco Shares, Kissco Options, or any other
securities of Kissco, do not and shall not involved any advertisement,
general solicitation, or payment of commissions or other amounts,
directly or indirectly, to persons soliciting consents, approvals,
exchanges or proxies, or any violations by ESYNCH of registration or
qualification requirements of applicable federal or state securities laws.
(I) ESYNCH and Acquisition Sub each is acquiring any securities it may
be deemed to receive in connection with the Merger for investment, and
not with a view toward resale or distribution thereof, and ESYNCH
acknowledges that such securities are neither registered under the Act,
nor qualified under any state securities laws, and will bear
restrictive legends required under such laws. ESYNCH further
acknowledges having had an opportunity to request and receive
additional information from Kissco regarding the merits and risks to
ESYNCH and Acquisition Sub of the Merger, and being experienced and
sophisticated in financial and business matters sufficient to protect
its interests in this transaction and to evaluate the merits and risks
of the Merger.
(J) Except as publicly disclosed by ESYNCH, since September 30, 1998
there have been no events, changes or effects with respect to ESYNCH
and its material Subsidiaries having, or that are likely to have,
individually or in the aggregate a material adverse effect on ESYNCH
and its Subsidiaries taken as a whole.
(K) Except as publicly disclosed by ESYNCH, ESYNCH and its material
Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all governmental entities necessary for the lawful
conduct of their respective businesses (the "Permits"). Except as
publicly disclosed by ESYNCH, ESYNCH and its material Subsidiaries are
in compliance with the terms of the Permits. Except as publicly
disclosed by ESYNCH, the businesses of ESYNCH and its material
Subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any governmental entity, except for violations that
individually or in the aggregate do not, and insofar as reasonably can
be foreseen will not, have a material adverse effect on ESYNCH and its
Subsidiaries taken as a whole. Except as publicly disclosed by ESYNCH,
no investigation or review by any governmental entity with respect to
ESYNCH or any of its material Subsidiaries is pending or, to the best
knowledge of ESYNCH, threatened, nor, to the knowledge of ESYNCH, has
any governmental entity indicated an intention to conduct the same,
other than, in each case, those that ESYNCH reasonably believes will
not have a material adverse effect on ESYNCH and its Subsidiaries taken
as a whole.
(L) Acquisition Sub was formed solely for the purpose of engaging in
the transactions contemplated hereby and by the Agreement and has not
engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated hereby and by the
Agreement.
SECTION 6. Closing; Conditions.
(A) Closing. Unless the parties shall mutually fix another date, time
or place, the closing of the Merger ("Closing") shall take place at
2:00 P.M. Pacific Time as promptly as practicable following the
execution of this Agreement, at the offices of Stradling Yocca Carlson
& Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach,
California 92660. The date on which Closing occurs is referred to
herein as the "Closing Date." Except as otherwise provided herein, all
proceedings to be taken and all documents to be executed at the Closing
shall be deemed to have been taken, delivered and executed
simultaneously as of the Closing Date, and no proceeding shall be
deemed taken nor documents deemed executed or delivered until all have
been taken, delivered and executed.
(B) Conditions to Obligations of ESYNCH. The obligations of ESYNCH to
cause Acquisition Sub to consummate the Merger are subject to the
satisfaction of, or ESYNCH's written waiver of, each of the following
conditions by or before the Termination Date:
(I) Accuracy of Representations and Warranties. Kissco's
representations and warranties contained in Section 4 of this Agreement
shall have been true and correct as of the dates when made and again as
of the Closing Date, except to the extent that the event or
development rendering such representation or warranty untrue,
individually or in the aggregate with all other events or developments
rendering that or any other representation or warranty of Kissco
untrue, shall not have resulted in or constitute, and could not
reasonably be expected to result in or constitute, a material adverse
effect on Kissco or ESYNCH or on the ability of Kissco, Acquisition
Sub, or ESYNCH to consummate the Merger.
(II) Compliance with Covenants. Kissco shall have performed,
satisfied and complied with, in all material respects, each of its
agreements and covenants contained in this Agreement, unless the
failure to perform, satisfy or comply, taken together with all other
such failures, does not constitute a material failure by Kissco to
perform its obligations hereunder.
(III) Receipt of Officers' Certificate. ESYNCH shall have
received from Kissco a certificate, executed by respectively, the
President and Secretary of Kissco and dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Section
6(d) (with regard to Kissco only) and Section 6(b), including a
certification that each representation or warranty contained in Section
4 is true and correct as of the Closing Date (or, if such certification
cannot be made, specifying the exceptions thereto), excepting only
representations and warranties which speak expressly as of an earlier
specified date.
(IV) Documents and Instruments in Satisfactory Form. All
corporate and other proceedings in connection with this Agreement and
with the Merger and all documents and instruments incidental to the
Merger shall be reasonably satisfactory in substance and form to ESYNCH
and its counsel, and ESYNCH and its counsel shall have received all
such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(V) Board and Shareholder Approvals. The Board of Directors of
Kissco shall have unanimously approved this Agreement and the Merger,
and determined that each of them is aware of all personal interests of
the directors in this transaction, if any, and that the Merger and the
transactions contemplated in this Agreement are fair from a financial
point of view to Kissco and the shareholders of Kissco and is in
Kissco's and such shareholders' best interests, and shall not have
rescinded or qualified such approval. At least seventy-five percent of
the shareholders of Kissco shall have approved the Merger and this
Agreement and not more than 10% shall have disapproved of this
Agreement and the Merger.
(VI) Dissenting Kissco Shares. There shall be fewer than five
percent (5%) of the Kissco Common Shares and fewer than five percent
(5%) of the Kissco Preferred Shares constituting dissenting shares as
defined in Article 13 of the CGCL. All of the Kissco Options shall
have become the ESYNCH Options as described in Section 2(d).
(vii) Shareholder Information. The lists and information
provided by Kissco or Kissco's legal counsel to ESYNCH or ESYNCH's
legal counsel concerning the residencies, accreditedness, status as
institutional investor, and sophistication of the holders of Kissco
securities, as the case may be, shall have been correct in all material
respects as with respect to availability of exemptions from
registration or qualification under federal and state securities laws,
including exemptions under Rule 506 of Regulation D and corresponding
state laws and regulations, or with respect to any relevant exemption
for offers and sales of securities to institutional investors in
connection with the Merger and each of the related transactions
contemplated in Section 2.
(vii) ESYNCH, Kissco and a mutually acceptable escrow agent shall
have entered into the Escrow Agreement.
(viii) All employees of Kissco (except employees terminable
at will by Kissco without obligation for severance or any other
payment, other than any required by law for all employees) shall have
validly terminated their employment agreements with Kissco; the parties
to the Shareholders Agreement dated February 27, 1998 shall have
validly terminated such agreement; and all registration rights binding
on Kissco or its successors or assigns shall have been validly
terminated, all without incurring any continuing obligation to Kissco
or ESYNCH.
(C) Conditions to Obligations of Kissco. The obligations of Kissco to
consummate the Merger, are subject to the satisfaction of, or Kissco's
written waiver of, each of the following conditions by or before the
Termination Date:
(I) Accuracy of Representations and Warranties. ESYNCH's
representations and warranties contained in this Agreement shall have
been true and correct as of the dates when made and again as of the
Closing Date, except to the extent that the event or development
rendering such representation or warranty untrue, individually or in
the aggregate with all other events or developments rendering that or
any other representation or warranty of ESYNCH untrue, shall not have
resulted in or constitute, and could not reasonably be expected to
result in or constitute, a material adverse effect on ESYNCH or on the
ability of ESYNCH, Kissco or Acquisition Sub to consummate the Merger.
(II) Compliance with Covenants. ESYNCH shall have performed,
satisfied and complied with, in all material respects, each of its
agreements and covenants contained in this Agreement, unless the
failure to perform, satisfy or comply, taken together with all other
such failures, does not constitute a material failure by ESYNCH to
perform its obligations hereunder.
(III) Receipt of Officers' Certificate. Kissco shall have
received from ESYNCH a certificate, executed by respectively, the
President and Chief Financial Officer of ESYNCH and dated as of the
Closing Date, certifying to the fulfillment of the conditions specified
in Section 6(d) (with regard to ESYNCH and Acquisition Sub only) and
Section 6(c), including a certification that each representation or
warranty contained in Section 5 is true and correct as of the Closing
Date (or, if such certification cannot be made, specifying the
exceptions thereto), excepting only representations and warranties
which speak expressly as of an earlier specified date.
(IV) Documents and Instruments in Satisfactory Form. All
corporate and other proceedings in connection with this Agreement and
with the Merger, and all documents and instruments incidental to the
Merger shall be reasonably satisfactory in substance and form to Kissco
and its counsel, and Kissco and its counsel shall have received all
such counterpart originals or certified or file-stamped or other copies
and proofs of filing of such documents as they may reasonably request.
(VI) Board and Shareholder Approvals. The Board of Directors of
Acquisition Sub shall have unanimously approved this Agreement and the
Merger, and determined that the Merger and the transactions
contemplated in this Agreement is entirely fair to ESYNCH, as the sole
shareholder of Acquisition Sub and provides the best available
financial value to the shareholder of Acquisition Sub and is in
Acquisition Sub's and such shareholder's best interests, and shall not
have rescinded or qualified such approval. The sole shareholder of
Acquisition Sub shall have approved the Merger and this Agreement. The
Board of Directors of ESYNCH shall have unanimously approved this
Agreement, the Merger and the issuances of all ESYNCH securities
contemplated by this Agreement.
(D) Conditions to Obligations of Each Party.
(I) There shall be no claim, action, suit, investigation or
other proceeding pending or overtly threatened before any court or
other governmental or regulatory entity that presents a substantial
risk of restraint or prohibition of the Merger; and no such restraint
or prohibition shall be effective as of the Closing or the Closing
Date, whether or not the action in which the same was entered shall
remain pending.
SECTION 7. Termination. This Agreement may be terminated, and the
Merger abandoned, prior to the Closing solely by the following means
and with the following effects:
(A) By Mutual Agreement. ESYNCH and Kissco may terminate this
Agreement by mutual written consent at any time.
(B) By Kissco. Kissco may unilaterally terminate this Agreement: (i)
If ESYNCH has breached any of its representations or warranties or
covenants contained in this Agreement and such breach is of a nature
that would, in the reasonable determination of Kissco, cause the
failure of the condition to Kissco's obligations set forth in Section
6(c), and ESYNCH has failed to cure such breach within ten (10)
business days following written notice to ESYNCH from Kissco
identifying and describing such breach in reasonable detail; or (ii)
Upon written notice to ESYNCH at any time after March 31, 1999 (the
"Termination Date"), if the Closing and the Closing Date shall not have
occurred on or prior to such date, unless such failure results from
Kissco breaching any of its representations, warranties, covenants or
agreements contained in this Agreement in any material respect.
(C) By ESYNCH. ESYNCH may unilaterally terminate this Agreement: (i)
If Kissco has breached any of its representations or warranties or
covenants contained in this Agreement and such breach is of a nature
that would, in the reasonable determination of ESYNCH, cause the
failure of the condition to ESYNCH's obligations set forth in Section
6(b), and Kissco has failed to cure such breach within ten (10)
business days following written notice to Kissco from ESYNCH
identifying and describing such breach in reasonable detail; or (ii)
Upon written notice to Kissco after the Termination Date, if the
Closing shall not have occurred on or prior to such date, unless the
failure results from ESYNCH breaching any of its representations,
warranties, covenants or agreements contained in this Agreement in any
material respect.
(D) Effect of Termination; Remedies. In the event of the termination
of this Agreement pursuant to this Section 7, this Agreement shall
forthwith become void and there shall be no liability on the part of
any party hereto or any of its affiliates, directors, officers or
stockholders, and all documents, instruments and consideration
delivered hereunder shall be returned to the delivering party within
two days of such termination. Specifically, and without limiting the
generality of the foregoing, Kissco and ESYNCH agree that termination
of this Agreement shall be their sole and exclusive remedy for any
nonwillful breach by the other party of its representations, warranties
and covenants under this Agreement. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring
such cost or expense.
SECTION 8. Remedies for Breaches of this Agreement.
All of the representations and warranties of ESYNCH, Acquisition
Sub and Kissco contained in Sections 4 or 5 shall survive and continue
in full force and effect until and shall expire at the Effective Time.
The remedies contained in this Section 8 shall constitute the sole
remedies of the Parties for claims under this Section 8, provided that
if ESYNCH makes a written claim for indemnification hereunder before
the Expiration Date, then each of the holders of Kissco Shares, and
their successors and assigns, who otherwise would have any claim or
interest in the Escrow whatsoever, agrees to indemnify ESYNCH, the
Surviving Corporation, its respective stockholders, directors,
officers, employees, representatives, insurers, lenders, attorneys,
accountants and agents ("Indemnified Parties"), from and hold the
Indemnified Parties harmless against any loss, damage, judgment, lien,
claim, expense or cost, including attorneys' fees and costs arising
from or related to (1) the litigation of Kissco required to be
disclosed in Schedule 4(f), (2) any claims or demands of dissenting
shareholders, or (3) any other claims or demands of any past or present
Kissco shareholders, option holders, or security holders against
Kissco, its directors or officers related to this Agreement or the
Merger (other than as arise from any breach of ESYNCH's obligations
under this Agreement); provided, however, that there shall be no
obligation to indemnify the Indemnified Parties except to the extent
that their claims for indemnification aggregately are in excess of
$50,000; and provided, further, that the sole source of indemnity for
the Indemnified Parties under this Section 8 shall be the ESYNCH Common
Shares deposited in the Escrow (as defined in the Escrow Agreement),
and upon the release of the Escrow, shall have no liability under this
Section 8.
SECTION 9. Certain Covenants Prior to Closing.
(A) Access. Each party shall make available to the other all
information regarding the party that the other party reasonably may
request and shall authorize all reasonable visits to the party's
premises with such staff, consultants and experts as the other party
may reasonably request. Kissco shall promptly provide ESYNCH's legal
counsel with originals or full and complete copies of Kissco's minute
books and of Kissco's stock ledgers and option ledgers and, in each
case, books and records related thereto. Kissco agrees to coordinate
closely all activities concerning it creditor and security holder
relations and renegotiations with ESYNCH's and Acquisition Sub's CEO.
Each party shall conduct any such inquiries with appropriate discretion
and sensitivity to the other party's relationships with its employees,
clients and suppliers. The parties acknowledge that certain of the
information made available to one another pursuant to this Section 9
and otherwise in connection with the Merger is confidential,
proprietary or otherwise nonpublic ("Confidential Information"), and
each party agrees, for itself and for each of representatives, that it
shall maintain in confidence and not disclose or use, except as
contemplated in this Agreement or to enforce or interpret this
Agreement or as required by law or judicial order, any Confidential
Information, and in addition agree to keep such material confidential
to the same extent as it maintains the confidentiality of its own
sensitive and confidential information. The confidentiality provisions
in this Section shall survive any termination of this Agreement and the
consummation of the Merger, except that if the Merger is consummated,
the obligations of and restrictions on ESYNCH and Acquisition Sub
hereunder shall thereupon terminate. Each party shall be responsible
on the same basis for any disclosure of Confidential Information by any
of its representatives. Kissco shall use its best efforts to (1) cause
its accountants to cooperate in ESYNCH's due diligence before the
Effective Time and performance of audits after the Effective Time and
(2) provide ESYNCH unaudited financial statements of Kissco for the
year ended and as of December 31, 1998, and for the subsequent periods
to the extent practicable.
(B) Conduct in Ordinary Course. ESYNCH and Kissco, respectively,
shall (a) conduct its business in the usual, regular and ordinary
course of business consistent with past practice (except as required by
applicable law or by this Agreement), (b) use all reasonable efforts to
maintain and preserve intact its business organization, employees and
advantageous contractual and business relationships and retain the
services of its officers and key employees (including by causing its
current insurance policies not to be cancelled or terminated or any of
the coverage thereunder to lapse prior to or upon the Closing, unless
simultaneously with such event replacement policies providing
substantially similar coverage for substantially similar (or lesser)
premiums are in full force and effect), (c) conduct relations with its
employees, excluding hiring and terminating practices, only in the
ordinary course of business and consistent with past practice, and (d)
take no action which could reasonably be expected to materially
adversely affect or delay the ability of any party to this Agreement or
any of their respective subsidiaries to obtain any necessary approvals
of any governmental or regulatory entity or other third persons
required for the Merger or for the transactions contemplated in
connection therewith, or to perform its covenants and agreements under
this Agreement.
(C) Operating Restrictions. Without the other party's prior written
consent (which consent shall not be unreasonably withheld or delayed),
and without limiting the generality of the provisions of this
Agreement, ESYNCH and Kissco, respectively, shall not, except as
contemplated by this Agreement:
(i) Amend or otherwise change its Articles of Incorporation or
bylaws;
(ii) Issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares
of capital stock of any class (in the case of ESYNCH, other than
ESYNCH's private offering or the exercise of ESYNCH's warrants or
options or conversions of ESYNCH's convertible securities in accordance
with their terms), any convertible securities or any other rights of
any kind to acquire any shares of capital stock or convertible
securities, or any other ownership interest (including, without
limitation, any phantom interest) in such party or any subsidiary;
(iii) Declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its shares of stock or propose to do any of
the foregoing (in the case of Kissco, except on terms, if any,
expressly contemplated in this Agreement);
(iv) Take, or agree in writing or otherwise to take, any of the
actions described in this Section 9(c) expressly made applicable to
such party, or any action which would make any of its representations
or warranties contained in this Agreement untrue or incorrect or
prevent it from performing or cause it not to perform its covenants in
this Agreement.
Prior to the Closing, without the written consent of ESYNCH, Kissco
shall not do, or agree to do, any of the following:
(v) (a) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof; (b) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become responsible for, the
obligations of any person or, except in the ordinary course of business
consistent with past practice or in connection with purchases of
equipment or capital improvements made in the ordinary course of
business and consistent with past practices, make any loans or
advances, (c) enter into any new or amend or terminate any existing
material contract; (d) authorize any capital expenditures or purchase
of fixed assets which are, in the aggregate, in excess of $25,000; or
(e) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section
9(c)(v);
(vi) Increase the compensation payable or to become payable to
its officers or employees, or grant any severance or termination pay
to, or enter into any employment or severance agreement with any
director, officer or other employee of the party (except as expressly
contemplated in this Agreement), or establish, adopt, enter into or
amend any collective bargaining, any employee benefit plan or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any current or former directors, officers or employees, except, in each
case, as may be required by law, and promptly disclosed in writing to
ESYNCH;
(vii) Take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable);
(viii) Make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or
foreign tax liability or agree to an extension of a statute of
limitations, except to the extent the amount of any such settlement has
been reserved for in its financial statements;
(ix) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practices of
current liabilities that have become mandatorily due and payable and
are reflected or reserved against in its financial statements; or
(x) Sell, pledge, dispose of, grant any security interest in or
encumber any assets of Kissco (except for (i) sales of assets or
inventory in the ordinary course of business and in a manner consistent
with past practice, (ii) dispositions of obsolete or worthless assets,
(iii) sales of immaterial assets not in excess of $10,000 individually
or $25,000 in the aggregate, and (iv) as otherwise expressly permitted
in this Agreement);
(D) Prior to the Closing Date, Kissco will use its reasonable efforts
to negotiate settlement agreements with all of its creditors whose
claims are disputed evidenced by agreements and documents satisfactory
to Acquisition Sub.
(E) Each respective parties' Board of Directors will, subject to their
fiduciary duties, recommend this Agreement and the transactions
contemplated hereby to its stockholders, and, subject to the
requirements of applicable law, Kissco will seek consent from holders
of Kissco Shares in writing or at a special meeting, pursuant to
materials to be delivered to Kissco's shareholders that reasonably
describes the material terms and provisions of the Merger and this
Agreement, including any other transactions contemplated by this
Agreement (the "Kissco Proxy Statement"). ESYNCH will provide, and be
responsible for, all required information about ESYNCH and its
affiliates for inclusion in the Kissco Proxy Statement. Kissco will be
responsible for all other information therein. The parties and their
respective representatives or counsel will consult each other
concerning the form and content thereof. Kissco will use its best
efforts to obtain the necessary approvals by its shareholders, note
holders and employees of this Agreement and the transactions
contemplated hereby and will otherwise comply with all legal
requirements applicable to the Merger. Kissco will provide Acquisition
Sub with a copy of the Kissco Proxy Statement and all modifications
thereto a reasonable time prior to delivery and will consult with
Acquisition Sub in connection therewith. Kissco will notify
Acquisition Sub promptly of the receipt of any material comments or
requests from the shareholders for amendments or supplements to the
Kissco Proxy Statement or for additional information and will supply
Acquisition Sub with copies of all correspondence between Kissco or any
of its representatives, on the one hand, and the shareholders their or
representatives, on the other hand, with respect to the Kissco Proxy
Statement or the Merger. If at any time prior to Kissco's shareholder
meeting or the effectiveness of a written consent of Kissco's
shareholders there shall occur any event that should be set forth in an
amendment or supplement to the Kissco Proxy Statement, Kissco will
promptly prepare and mail to its shareholders such an amendment or
supplement. Kissco has provided, and will provide, ESYNCH with true
and correct copies of current drafts of all of the correspondence
between Kissco, or its affiliates or representatives, on the one hand,
and the holders of Kissco Shares, Kissco Options, or other options or
securities, on the other hand, for the purposes contemplated in this
Agreement or indicating agreement or rejection of the proposals made by
or for Kissco.
(F) Until this Agreement is terminated, neither Kissco nor its agents
or representatives shall, without the prior consent of Acquisition Sub,
sell, agree to sell, enter into negotiations to sell , or discuss the
sale of the assets of Kissco (other than in the ordinary course) or the
stock of Kissco, to or with any party except as disclosed to
Acquisition Sub in advance and agreed upon by both parties and except
as contemplated in this Agreement or as permitted under Section 9(c).
Unless and until this Agreement is terminated in accordance with its
terms and except as contemplated by this Agreement, neither Kissco nor
any of its respective officers, directors, employees, agents or other
representatives shall (i) solicit, initiate, or encourage, or enter
into discussions or any letter of intent or agreement with respect to,
any inquiries, proposals or offers that contemplate, propose or relate
to any Acquisition Proposal (as hereinbelow defined), (ii) undertake or
consummate, any sale or other disposition of, or grant of any rights or
options with respect to, or any pledge, hypothecation or encumbrance
of, any of the outstanding shares of capital stock of Kissco or any
authorized but unissued shares of capital stock or convertible
securities of Kissco (other than those contemplated by this Agreement);
or (iii) provide information regarding Kissco or its businesses or
assets, capitalization, financial condition or operating results to any
person (other than as provided in this Agreement, or to a government
agency having jurisdiction over Kissco, or to its respective creditors
in the course of such relationship, or as otherwise contemplated in
this Agreement, or to Kissco's shareholders, note holders or employees
for purposes related to this Agreement). Kissco shall immediately
notify Acquisition Sub after receipt of any Acquisition Proposal, or
any modification of or amendment to any Acquisition Proposal, or any
request for nonpublic information relating to Kissco in connection with
a possible Acquisition Proposal or for access to the properties, books
or records of Kissco by any person or entity that informs the Board of
Directors of Kissco that it is considering making, or has made, an
Acquisition Proposal. "Acquisition Proposal" shall mean any inquiry,
proposal, term sheet, discussion draft, letter of intent or other
communication or agreement that contemplates, proposes or relates to
(i) any possible sale or disposition by Kissco of, or any mortgage,
lien or encumbrance on, any of its assets (other than sales of assets
that are made in the ordinary course of business consistent with past
practices); (ii) any sales by Kissco or its management or principal
shareholders or issuance of shares of capital stock or convertible
securities of Kissco (except as contemplated by this Agreement); (iii)
any redemption or repurchase, or any recapitalization, of any of the
outstanding Kissco Shares, Kissco Options, or of any other shares or
other securities or debts of Kissco (other than those contemplated by
this Agreement), (iv) any offer to purchase more than five percent (5%)
of the outstanding shares of capital stock of Kissco, (v) any financing
or refinancing, including any sale-leaseback of the assets of Kissco
that involves the granting of any security interest or lien on, or the
transfer of ownership of any of the assets of Kissco (other than in the
ordinary course of business), or (vi) any merger or reorganization of
Kissco with or any other business combination between Kissco and any
other entity.
(G) If any "fair price," "control share acquisition" or "moratorium"
statute or other anti-takeover or similar statute or regulation or any
state "blue sky" statute shall become applicable to the transactions
contemplated hereby, each constituent corporation and the members of
the Board of Directors of the constituent corporation shall grant such
approvals and take such actions as are necessary so that the
transactions contemplated hereby and thereby may be consummated as
promptly as practicable on the terms contemplated hereby and thereby
and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby or thereby.
(H) Each of the parties shall give prompt notice to the other party,
of: (i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement; (ii) any notice
or other communication from any governmental or regulatory entity in
connection with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting it or any of its subsidiaries which,
if pending on the date of this Agreement would have been required to
have been disclosed in a Disclosure Schedule or which relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 10. Miscellaneous Provisions.
(A) Expenses. If the Closing fails to occur, each of the parties
shall be solely responsible for all of their respective costs and
expenses incurred in connection with the transactions contemplated
herein, including, without limitation, legal fees, costs and expenses.
If the Closing occurs, Acquisition Sub shall bear all of the costs and
expenses (including reasonable legal fees and expenses) incurred by any
and all of the parties hereto in connection with this Agreement and the
transactions contemplated hereby.
(B) Binding Effect. This Agreement shall be binding upon the
successors and assigns of the respective parties hereto.
(C) Specific Performance. Each of the parties executing this
Agreement ("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 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 they may be entitled, at law or
in equity.
(D) Counterparts. This Agreement may be executed in facsimile and in
any number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the
same instrument. The execution of this Agreement by fewer than all of
the persons identified on the signature pages hereto as securityholders
of Kissco shall not detract from the enforceability or binding effect
of this Agreement as to all signatories, and each Kissco Holder who is
a signatory hereto is individually intending to be bound hereby to the
extent provided herein. Signatures on faxed agreements, instruments
and documents shall be considered originals, and shall be followed by
originals by certified mail or messenger if requested.
(E) Headings. The subject headings of the sections and subsections of
this Agreement are included for purposes of convenience only and shall
not affect the construction or interpretation of any of its provisions.
(F) Waivers. Any party to this Agreement may waive any right, breach
or default which it has the right to waive; provided, that such waiver
will not be effective against the waiving party unless it is in writing
and specifically refers to this Agreement. No waiver will be deemed to
be a waiver of any other matter, whenever occurring and whether
identical, similar or dissimilar to the matter waived.
(G) Entire Agreement. This Agreement, including the disclosure
schedules and other documents referred to herein which form a part
hereof, embodies the entire agreement and understanding of the parties
hereto, and supersedes all prior or contemporaneous agreements or
understandings (whether written or oral) among the parties, in respect
to the subject matter contained herein. Without limiting the
generality of the foregoing, this Agreement shall supersede the letter
dated December 2, 1998 from ESYNCH addressed to Kissco which comprised
the letter of intent between the parties.
(H) Arbitration. All disputes between the parties hereto shall be
determined solely and exclusively by binding arbitration under, and in
accordance with the rules then in effect of, the Judicial Arbitration
and Mediation Service, or any successors hereto ("JAMS"), in Orange
County, California, unless the parties otherwise agree in writing. The
parties shall jointly select a single arbitrator. In the event the
parties fail to agree upon an arbitrator within ten (10) days, then
each party shall select an arbitrator and such arbitrators shall then
select a third arbitrator to serve as the sole arbitrator, provided
that if either party, in such event, fails to select an arbitrator
within seven (7) days, such arbitrator shall be selected by the JAMS
upon application of either party. Judgment upon the award of the
agreed upon arbitrator or the so chosen third arbitrator, as the case
may be, shall be binding and shall be entered into by a court of
competent jurisdiction.
(I) Attorneys' Fees. In the event a dispute arises with respect to
this Agreement, the party prevailing in such dispute shall be entitled
to recover all expenses, including, without limitation, reasonable
attorneys' fees and costs, incurred in determining such party's rights,
in preparing to enforce, or in enforcing such party's rights under this
Agreement, whether or not it was necessary for such party to institute
suit and, if instituted, whether with regard to trial or appeals and
shall separately entitle the prevailing party to the costs for
collection of judgments.
(J) Severability. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such
illegality, invalidity or unenforceability, without affecting in any
way the remaining provisions hereof.
(K) Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered
by hand or by messenger, addressed to the following address, or any
address designated in writing by such party by way of notice to the
other parties:
If to ESYNCH or Acquisition Sub:
ESYNCH Corporation
4600 Campus Drive
Newport Beach, CA 92660
Attention: Thomas Hemingway
And a copy to:
Nicholas J. Yocca
Stradling, Yocca, Carlson & Rauth P.C.
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
If to Kissco: Kissco Software Corporation
5000 Birch Street
Suite 4000, West Tower
Newport Beach, CA 92660
Attention: Donald Watters, President
And a copy to:
Day Campbell & McGill, LLP
3070 Bristol, Suite 450
Costa Mesa, California 92626
Attention: Leonard J. McGill, Esq.
(L) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the CGCL, as applicable, and otherwise the laws of
the State of California without regard to any conflict of law
principles thereof.
(M) Further Assurances. Each party agrees to cooperate with the other
party to effect the transactions contemplated hereunder. Without
limiting the generality of the foregoing, each of the parties shall
execute, deliver and perform such agreements, documents and instruments
as the other party may request in order to fully perform and carry out
the terms and provisions of this Agreement. Each of the parties agrees
to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate
with the other party in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious
manner practicable the Merger and the other transactions contemplated
by this Agreement, including (i) the obtaining of all other necessary
actions or nonactions, waivers, consents and approvals from
governmental or regulatory entities and the making of all other
necessary registrations and filings, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
preparation of the Kissco Proxy Statement, and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of,
this Agreement.
(N) No Third Party Beneficiaries. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or
give any person other than the parties executing this Agreement and
their respective successors and permitted assigns any rights or
remedies under or by reason of this Agreement. Provided, however,
Section 2(b)(iii) is for the intended benefit of the Recipients, as
defined in that Section.
WHEREAS, the parties hereto have entered into the foregoing
Agreement and Plan of Merger as of the date first above written.
ESYNCH CORPORATION, ESYN KISSCO ACQUISITION
a Delaware corporation CORPORATION, a Delaware
corporation
By: By:
Thomas Hemingway, Chief Executive Thomas Hemingway, Chief
Officer and President Executive Officer
By: By:
T. Richard Hutt, Secretary T. Richard Hutt, Secretary
By: By:
James Budd, Vice President James Budd, Vice President
KISS SOFTWARE CORPORATION
By:
Donald Watters, President
By:
Sigmund A. Fidyke III,
Secretary
KISS HOLDERS:
Donald Watters
Sigmund A. Fidyke III
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
April 1, 1999
-------------------
Date of Report (Date of earliest event reported)
ESYNCH CORPORATION
-------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-26790 87-0461856
-------- ------- ----------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
Incorporation) No.)
4600 Campus Drive
Newport Beach, CA 92660
------------------------
(Address of principal executive offices)
(Zip Code)
(949) 833-1220
--------------
(Registrant's telephone number, including area code)
INNOVUS CORPORATION
----------------
(Former name or address, if changed since last report.)
<PAGE>
Item 2. Acquisition or Disposition of Assets
(a)
On April 1, 1999, the Registrant consummated an acquisition of Kiss
Software Corporation, a California corporation ("Kissco"), in exchange for
the issuance of approximately 1,528,134 shares of Common Stock, par value
$.001 per share (the "Common Stock"), of the Registrant, the issuance and
deposit into escrow of an additional 100,000 shares (which will be subject
to the Registrant's claims under an indemnity provided by Kissco), and the
assumption of options to purchase approximately 163,187 shares of Common
Stock. The purchase price was determined by negotiation between the
parties. The information set forth in Item 5 of this Report is
incorporated herein by this reference.
(b)
Kissco became a wholly-owned subsidiary of the Registrant on the
Closing of the transactions contemplated in the Agreement and Plan of
Merger dated as of February 26, 1999 (the "Agreement") among the
Registrant, Kissco, certain stakeholders of Kissco and ESYN Kissco
Acquisition Corporation, a newly formed Delaware corporation and a
wholly-owned subsidiary of the Registrant ("Merger Sub"). In the
merger, Merger Sub merged with and into Kissco, and Kissco is the
surviving corporation.
Kissco, located in Newport Beach, California, will be operated as a
wholly-owned subsidiary of the Registrant. Kissco will continue in
its present business. After the Closing, the Registrant intends to
co-locate Kissco in the Registrant's facilities.
The information set forth in Item 5 of this Report is incorporated
herein by this reference.
Item 5. Other Events
On March 1, 1999, the Registrant issued the following news release
related to the execution, not the consummation, of the Agreement:
eSynch Completes Kissco Acquisition
BusinessWire, Monday, March 01, 1999 at 07:48
NEWPORT BEACH, Calif.--(BUSINESS WIRE)--March 1, 1999--eSynch
Corp. (OTC BB:ESYN) Monday announced the completion of the purchase
of Kiss Software Corp. (Kissco), of Newport Beach.
Kissco develops, publishes and sells utility and Internet
software to a substantial list of retailers such as CompUSA, Staples,
Best Buy, and Fry's Electronics. Kissco also enjoys considerable
success with Internet commerce, international software sales, and
direct-to-consumer software sales.
Tom Hemingway, eSynch's chief executive officer, commented,
"Kissco's projected sales of $3.5 million will have a measurable
impact on our bottom line." He continued, "Their line of top-quality
software products are exceptional assets and complement our existing
product line. Plus, with the expertise of development and licensing,
there is a fast-flowing pipeline of competitive products for eSynch to
publish, market and sell."
eSynchESD (a proprietary Electronic Software Distribution and
e-commerce solution) will be offered to Kissco's reselling partners
who are hungry for Internet commerce. "This is the perfect move," said
Kissco's President Don Watters. "By combining with eSynch, Kissco can
offer more products, more resources, and now reselling partners will
also have immediate access to the opportunities afforded by
e-commerce."
This move increases eSynch's sales, enhances technical support
and adds development expertise. The combined companies will greatly
expand Internet-based marketing and sales. Further, the very
successful publishing, distribution, and sales activities for packaged
software products will continue to be managed and directed to gain
more market share.
eSynch and Kissco may be reviewed at www.esynch.com and
www.kissco.com. Visit two other Web sites, www.800Mall.com and
www.stores.yahoo.com/kissco, hosted by Yahoo! Store which is part of
Yahoo! Inc. (NASDAQ:YHOO), a global Internet media company that
offers a branded network of comprehensive information, communication
and shopping services to millions of users daily.
Statements herein express management's beliefs and expectations
regarding future performance and are forward-looking and involve risks
and uncertainties, including, but not limited to, the ability to
negotiate outstanding prior debts of acquired companies; properly
identify acquisition partners; adequately perform due diligence;
manage and integrate acquired businesses; react to quarterly
fluctuations in results; raise working capital and secure other
financing; respond to competition and rapidly changing technology;
deal with market and stock price fluctuations; and other risks. These
risks are and will be detailed, from time to time, in eSynch's
Securities and Exchange Commission filings, including Form 10-KSB for
the year ended Dec. 31, 1997 and subsequent Forms 10-QSB and 8-K.
Actual results may differ materially from management's expectations.
CONTACT: eSynch Corp., Newport Beach
Jennifer Nagel, 949/833-1220
[email protected]
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED MERGERS/ACQ
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: http://www.businesswire.com
Copyright 1999, Business Wire
Companies or Securities discussed in this article:
SymbolNameBB:ESYN
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The financial statements required by this Item 7(a) will be filed
by amendment.
(b) Pro forma financial information.
The pro forma financial information required by this Item 7(b)
will be filed by amendment.
(c) Exhibits. The following exhibits are incorporated herein by
this reference:
Exhibit No. Description of Exhibit
----------- ----------------------
2.5* Agreement and Plan of Merger dated as of
February 26, 1999 among the Registrant; Kiss
Software Corporation, a California corporation
("Kissco"); certain stakeholders,
of Kissco; and ESYN Kissco Acquisition
Corporation, a wholly-owned subsidiary of the
Registrant. Omitted from this Form 8-K filing
are the following schedules or ancillary
documents to the agreement identified immediately
above:
(A) Escrow Agreement;
(B) Disclosure Schedule of Kissco;
(C) Disclosure Schedule of the Registrant.
- ----------------
* Filed herewith.
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.
ESYNCH CORPORATION
Date: April 16, 1999. By /s/ Donald Watters
----------------------------
Donald Watters,
President
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit
----------- ----------------------
Exhibit No. Description of Exhibit
----------- ----------------------
2.5* Agreement and Plan of Merger dated as of
February 26, 1999 among the Registrant; Kiss
Software Corporation, a California corporation
("Kissco"); certain stakeholders,
of Kissco, and ESYN Kissco Acquisition
Corporation, a wholly-owned subsidiary of the
Registrant. Omitted from this Form 8-K filing
are the following schedules or ancillary
documents to the agreement identified immediately
above:
(A) Escrow Agreement;
(B) Disclosure Schedule of Kissco;
(C) Disclosure Schedule of the Registrant.
- ----------------
* Filed herewith.
