SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
[x] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ATR SEARCH CORPORATION
------------------------
Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No:
(3) Filing Party:
(4) Date Filed:
/1/
ATR SEARCH CORPORATION
2 Penn Plaza, 15th Floor, Ste. 53
NEW YORK, NEW YORK 10121
May 15, 2002
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders (the
"Special Meeting") of ATR Search Corporation, which will be held at 29 E. 31st
St., 2nd Floor, New York, NY 10016, on Monday, June 17, 2002, at 10:00 a.m. For
directions to the Special Meeting, please call (212) 292-4957.
Details of the business to be conducted at the Special Meeting are given in the
attached Notice of Special Meeting and Proxy Statement.
If you do not plan to attend the Special Meeting, please complete, sign, date
and return the enclosed proxy promptly in the accompanying reply envelope. If
you decide to attend the Special Meeting and wish to change your proxy vote,
you may do so automatically by voting at the Special Meeting.
We look forward to seeing you at the Special Meeting.
----------------------------
Robert Cox, Chief Executive Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign, and date the enclosed proxy as promptly as possible and return
it in the enclosed envelope (to which no postage need be affixed if mailed in
the United States).
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
URGED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY
AS POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE PROVIDED TO ENSURE YOUR
REPRESENTATION AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU
SEND IN YOUR PROXY CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO
VOTE YOUR SHARES IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE
N ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE PROXY STATEMENT.
/2/
ATR SEARCH CORPORATION
2 Penn Plaza, 15th Floor, Ste. 53
NEW YORK, NEW YORK 10121
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 2002
The Special Meeting of Stockholders (the "Special Meeting") of ATR Search
Corporation, a Nevada corporation ("Suitor"), will be held at 2 Penn Plaza,
15th Floor, Ste. 53, New York, NY 10016, on Monday, June 17, 2002, at 10:00am
for the following purposes:
1. To consider and vote upon the Merger Agreement, dated as of April 30, 2002,
by and among ATR Search Corporation, a Nevada corporation ("Suitor") and
Medicius, Inc., a Nevada corporation ("Target"), as it may be amended from
time to time (the "Merger Agreement"), and the transactions contemplated
thereby (collectively, the "Merger").
2. In connection with the proposed Merger, to consider and vote upon a proposal
to approve the name change of Suitor to CareDecision Corporation, as
contemplated by the Merger Agreement.
3. In connection with the proposed Merger, to consider and vote upon a proposal
to increase the authorized shares of Suitor to 200,000,000.
4. Other business may be transacted at the Special Meeting.
The items of business set forth above are more fully described in the Proxy
Statement accompanying this Notice. Pursuant to our Bylaws, we have fixed
the time and date for the determination of stockholders entitled to notice of
and to vote at the Special Meeting as the close of business as June 17, 2002.
Accordingly, only stockholders of record on such date and at such time will be
entitled to vote at the Special Meeting, notwithstanding any transfer of stock
on our books thereafter.
Approval of the proposed name change of our corporation and increase in
authorized shares set forth in Proposals 2 and 3 respectively is conditioned
to the closing of the Merger. There are other conditions that must also be
satisfied for the Merger to be consummated. Even if you approve Proposals 2
and 3,the name change and increase in authorized shares will not become
effective if the Merger does not occur for any reason. In that case, Suitor's
name and authorized shares will remain unchanged. The proposed Merger with
Target is discussed in more detail in the sections of the attached proxy
entitled "The Merger Agreement" and "Form of the Merger Agreement," which you
should read carefully.
Adoption of Proposals 1, 2, and 3 enumerated in this Notice requires the
affirmative vote of a majority of the votes represented by all shares of
our common stock outstanding on the record date. In order to carry on the
business of the meeting, we must have a quorum. This means at least two-thirds
of the outstanding shares of common stock must be represented at the meeting,
either by proxy or in person. Broker non-votes count for purposes of a quorum.
Broker non-votes occur when a broker returns a proxy but does not have
authority to vote on a particular proposal. If there are not enough
stockholders present or represented by proxy to constitute a quorum, the
meeting may be adjourned.
If your shares are held of record in "street name" by a broker, bank or other
nominee, follow the voting instructions that you receive from the nominee.
The Board of Directors of Suitor has approved the Proposals enumerated in
this Notice and recommends that Suitor stockholders vote FOR their adoption.
/3/
Whether or not you expect to attend the Special Meeting, please complete, sign,
date and return the enclosed proxy card promptly in the accompanying
reply envelope. If you decide to attend the Special Meeting and wish to change
your proxy vote, you may do so automatically by voting in person at the Special
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
--------------------------------------
Robert Cox, Chief Executive Officer
/4/
ATR Search Corporation
2 Penn Plaza, 15th Floor, Ste. 53
New York, New York 10016
PROXY STATEMENT
GENERAL INFORMATION
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD June 17, 2002
This Proxy Statement is furnished to stockholders of ATR Search
Corporation, a Nevada corporation (the "Suitor"), in connection with the
solicitation by the Board of Directors (the "Board" or "Board of Directors")
of the Suitor of proxies in the accompanying form for use in voting at the
Special Meeting of Stockholders of the Company (the "Special Meeting") to be
held on June 17, 2002, at 10:00 a.m., Eastern daylight time, at the offices of
the Suitor at 29 East 31st Street, 2nd Floor, New York, New York 10016, and any
adjournment or postponement thereof. The shares represented by the proxies
received, properly marked, dated, executed and not revoked will be voted at the
Special Meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by delivering to the Suitor (to
the attention of the Secretary) a written notice of revocation or a duly
executed proxy bearing a later date, or by attending the Special Meeting and
voting in person.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail and the Suitor will
bear all attendant costs. These costs will include the expense of preparing
and mailing proxy materials for the Special Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Special Meeting to beneficial owners of
Suitor's Common Stock. The Suitor may conduct further solicitation personally,
telephonically or by facsimile through its officers, directors and regular
employees, none of whom will receive additional compensation for assisting
with the solicitation. The Suitor will request brokers and nominees who hold
stock in their names to furnish proxy material to beneficial owners of the
shares and will reimburse such brokers and nominees for their reasonable
expenses incurred in forwarding solicitation material to such beneficial
owners.
The close of business on April 30, 2002 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock of the
uitor entitled to notice of and to vote at the Special Meeting.
As of the close of business on the Record Date, the Suitor had Approximately
21,505,000 shares of Common Stock outstanding. Each share of Common Stock
outstanding on the record date will be entitled to one vote on all matters.
Approval of the Merger Agreement and the changing of Suitor's name will require
the affirmative vote of the majority of the issued and outstanding shares of
Suitor's Common Stock. Because abstentions are treated as shares present or
represented and entitled to vote for the purposes of determining whether a
matter has been approved by the stockholders, abstentions have the same effect
as negative votes.
Execution of the accompanying proxy will not affect a Stockholder's right to
attend the meeting and vote in person. Any shareholder giving a proxy has the
right to revoke it by giving written notice of revocation to the Secretary of
the Suitor, or by delivering a subsequently executed proxy card, at any time
before the proxy is voted.
/5/
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
For stockholder proposals to be considered properly brought before anannual
meeting by a stockholder, the stockholder must have given timely notice
therefore in writing to the Secretary of the Suitor. The Suitor must receive
stockholder proposals submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934 and intended to be presented at the Suitor's 2002 Special
Meeting of Stockholders not later than May 27, 2002 in order to be considered
for inclusion in the Suitor's proxy materials for that meeting. A
stockholder's notice to the Secretary must set forth as to each matter the
stockholder proposes to bring before the Special meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the Company which are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
VOTING SECURITIES AND PRINCIPAL HOLDER
Security Ownership of Certain Beneficial Owners and Management. The
following table sets forth certain information known to the Suitor with respect
to the beneficial ownership of its common stock as of April 30, 2002, by (i)
each person known by the Suitor to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) each director of the Suitor, (iii) each
named executive officer, and (iv) all directors and officers as a group.
Except as otherwise indicated, the Suitor believes that the beneficial owners
of the Common Stock listed below, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable.
Common Stock
--------------
Name of Beneficial Number of % of Class -
------------------- ---------- --------------
Owner Shares Pre-Offering
------ ------- --------------
Sarcor
Management,
S.A. 3,500,000 16.28%
CEDE & Co. [Held
in Street Name] 4,101,471 19.07%
Robert Cox 1,750,000 8.14%
Michael Vogel 850,000 4.07%
PROPOSAL NO. 1
AGREEMENT AND PLAN OF MERGER
GENERAL
The following is a summary of the important aspects of the proposed Merger
and the material terms of the Merger Agreement, and may not contain all of the
information that is important to Suitor stockholders. As such, the following
discussion is qualified in its entirety by reference to the Merger Agreement,
attached hereto as Appendix C and incorporated by reference herein, which,
along with the other annexes to this proxy statement, Suitor stockholders are
urged to read carefully and in their entirety.
/6/
SUITOR'S REASONS FOR THE MERGER
In its evaluation of the Merger, the Board of Directors of Suitor reviewed
several factors, including:
a) Suitor's future financial outlook and possible alternatives to the
proposed merger, including the advantages, challenges and risks
associated with continuing as an independent company. In this regard,
the Suitor Board considered the amount and range of acquisition
consideration most likely to be offered by other prospective acquisition
candidates, the likelihood of realizing those values, the likelihood of
receiving a better financial offer from another potential acquirer and
the view of Suitor's management that the merger represented the best
strategic alternative available to Suitor under the circumstances. The
Suitor Board also considered the prospects of remaining as an
independent company, including Suitor's prospects for the success of
its business of providing premier computer consulting and staff
augmentations for financial services and technology companies in the
information technology ("IT") industry;
b) The decline in the market price of Suitor's common stock in the past and
the view of Suitor's Board of Directors and management that it could
take a long time for the market price of Suitor's common stock to reach
higher levels, if at all;
c) The potential of Suitor, under its current business model, to achieve
profitability;
d) historical information concerning Medicius, Inc. ("Target") business,
operations, financial condition, results of operations, technology,
management, competitive positions, current customers, customer pipeline
and prospects;
e) reports from Suitor's representatives as to the results of their due
diligence investigations of Target;
f) the current and historical economic and market condition and business
environment in the consulting technology services market catering to the
financial services;
g) the percentage ownership of the combined company of Suitor's
stockholders;
h) the lack of other available prospective merger candidates; and
i) the potential risks that could be incurred by Suitor if it failed to
complete a Merger or other business transaction.
The Suitor board also identified and considered a number of potentially
negative factors in its deliberations concerning the merger, including:
a) the potential disruption of Suitor's business that could result from the
announcement of the merger;
b) the uncertain current and prospective market environment for Target's
products and services;
c) the dilutive effect of the Merger on Suitor's stockholders;
d) the risk that if the Merger is not completed, Suitor would have incurred
significant costs and further reduced its financial position; and
e) the potential effect of the exclusivity covenants and termination fee
negotiated by Target in deterring other potential merger prospects for
Suitor.
/7/
In addition, Suitor's Board of Directors considered the interest that
certain affiliates and directors may have with respect to the Merger in
addition to their interests as Suitor stockholders. See "Interests of Suitor
Officers and Directors in the Merger" that begins on page 8 of this proxy
statement.
The Suitor Board determined that, on balance, the potential benefits to
Suitor and its stockholders of the Merger outweighed the risks associated with
the Merger.
The discussion of the information and factors considered by Suitor's Board
is not intended to be exhaustive. In view of the number and wide variety of
factors considered in connection with its evaluation of the Merger, and the
complexity of these matters, Suitor's board did not find it useful to, nor did
it attempt to, quantify, rank or otherwise assign relative weights to the
specific factors it considered. In addition, the Suitor Board did not
undertake to make any specific determination as to whether any particular
factor was favorable or unfavorable to the Board of Directors' ultimate
determination or assign any particular weight to any factor, but rather
conducted an overall analysis of the factors described above, including
thorough discussions with and questioning of Suitor's representatives. In
considering the factors described above, individual members of the Board of
Directors may have given different weight to different factors. Suitor's Board
of Directors considered all these factors as a whole, and overall considered
the factors to be favorable to, and to support, its determination.
For the reasons set forth above, the Suitor Board has determined that the
Merger is fair and in the best interests of Suitor and the Suitor stockholders.
Consequently, the Suitor board has approved and adopted the Merger Agreement
and recommends that the Suitor stockholders vote FOR approval and adoption of
the Merger, the proposed reverse stock split and the reincorporation of Suitor.
THERE CAN BE NO ASSURANCE THAT THE BENEFITS OR OPPORTUNITIES CONSIDERED BY THE
BOARD OF DIRECTORS OF SUITOR WILL BE ACHIEVED THROUGH CONSUMMATION OF THE
MERGER.
NO FAIRNESS OPINION
The Nevada Revised Statutes does not require us to obtain a
fairness opinion in connection with the Merger, and Suitor has not obtained
one. The terms and conditions of the Merger were negotiated at arm's-length
between the managements of Suitor and Target and were the result of a number
of factors, including but not limited to the factors listed above in "Suitor's
Reasons for the Merger".
The Board of Directors did not feel that an investment banker's opinion
was beneficial or necessary given the Board of Directors' knowledge of Suitor
and its business, nor did the Board of Directors believe that obtaining such
an opinion would be an appropriate use of corporate funds. The Board of
Directors believes that the acquisition of such an opinion would require a
substantial amount of capital and time. Given Suitor's limited resources, the
fact that Suitor is essentially being valued at an amount equal to its net
cash, and the need to complete the Merger in a timely manner, the Board of
Directors did not believe it was in the best interests of Suitor to incur the
cost of a fairness opinion.
Based on Suitor's current operating performance and prospects, including
the decline in such performance, and Target's strong interest in the Merger,
the Board of Directors felt that significantly better terms and conditions
could not be obtained in the foreseeable future.
Accordingly, there can be no assurance that consummation of the Merger
will be fair from a financial point of view to the stockholders of Suitor.
INTERESTS OF SUITOR OFFICERS, DIRECTORS IN THE MERGER
In considering the recommendation of the Suitor Board of Directors with
respect to approving the Merger, stockholders should be aware that certain
members of the Board of Directors and management of Suitor have interests in
the Merger that are in addition to the interests of stockholders of Suitor
generally. The Suitor Board of Directors was aware of these interests and
considered them, among other matters, in approving the principal terms of the
Merger and the Merger Agreement.
/8/
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material U.S. federal income tax
considerations of the Merger that are expected to apply generally to
stockholders of Suitor and Target in connection with the merger. This summary
is based upon current provisions of the Code, existing regulations under the
Code and current administrative rulings and court decisions, all of which are
subject to change. Any change, which may or may not be retroactive, could alter
he tax consequences to Suitor, Target or the stockholders of Suitor and Target
as described in this summary. No attempt has been made to comment on all
federal income tax consequences of the Merger that may be relevant to
particular stockholders, including stockholders:
a) who are subject to special tax rules such as dealers in securities,
foreign persons, mutual funds, insurance companies, tax-exempt entities;
b) who are subject to the alternative minimum tax provisions of the Code;
c) who acquired their shares in connection with stock option or stock
purchase plans or in other compensatory transactions;
d) who hold their shares as a hedge or as part of a hedging, straddle or
other risk reduction strategy; or
e) who do not hold their shares as capital assets.
In addition, the following discussion does not address the tax
consequences of the Merger under state, local and foreign tax laws.
Furthermore, the following discussion does not address (i) the tax consequences
of transactions effectuated before, after or at the same time as the Merger,
whether or not they are in connection with the Merger, including, without
limitation, transactions in which Suitor shares are acquired, (ii) the tax
consequences to holders of options issued by Target which are assumed,
exercised or converted, as the case may be, in connection with the merger,
(iii) the tax consequences of the receipt of Suitor shares other than in
exchange for Target shares, or (iv) the tax implications of a failure of the
Merger to qualify as a reorganization. Accordingly, stockholders are advised
and expected to consult their own tax advisers regarding the federal income tax
consequences of the Merger in light of their personal circumstances and the
consequences under state, local and foreign tax laws.
No ruling from the Internal Revenue Service has been or will be requested
in connection with the Merger. No tax opinion has been or will be requested in
connection with the Merger.
The Merger is intended to qualify as a tax-free reorganization under
Section 368(a) of the Code. As a result, provided it does so qualify, in
general:
a) Suitor and Target will not recognize any gain or loss as a result of the
Merger;
b) a holder of Suitor common stock will not recognize any gain or loss as a
result of the Merger;
c) shareholders of Target will not recognize any gain or loss upon the
receipt of Suitor common stock in exchange for their Target common
stock, other than with respect to cash received in lieu of fractional
shares of Suitor common stock;
d) the aggregate tax basis of the shares of Suitor common stock received by
Target shareholders in the Merger (including any fractional share deemed
received) will be the same as the aggregate basis of the shares of
Target common stock surrendered in exchange therefor;
e) the holding period of the Suitor common stock received by Target
shareholders in the Merger will include the period during which the
Target stock surrendered in exchange therefore was held, provided that
the Target stock so surrendered is held as a capital asset at the time
of the Merger; and
/9/
f) Target shareholders will be required to attach a statement to their
federal income tax returns for the year of the Merger that contains the
information listed in Treasury Regulation Section 1.368-3(b). Such
statement must include the shareholder's tax basis in the shareholder's
Target common stock and a description of the Suitor common stock
received.
Irrespective of the Merger's status as a reorganization, a Target
shareholder will recognize gain to the extent shares of Suitor common stock
received in the Merger are treated as received in exchange for services or
property other than solely Target common stock. All or a portion of any such
gain could be taxable as ordinary income. Gain also will be recognized to the
extent a Target shareholder is treated as receiving (directly or indirectly)
consideration other than Suitor common stock in exchange for Target common
stock or to the extent the Target common stock surrendered in the Merger is not
equal in value to the Suitor common stock received in exchange therefor.
DISSENTERS' RIGHTS
Summary of Nevada's Dissenters' Rights
--------------------------------------
Certain transactions proposed by a Nevada corporation (such as the
Company) which require stockholder approval may entitle the stockholders to
dissent from the proposed transaction and obtain payment from the corporation
of the fair value of such dissenting stockholder's shares, as provided by
Chapter 92A (and specifically, 92A.300 through 92A.500) of the Nevada Revised
Statutes. A copy of these provisions of Chapter 92A is attached hereto as
XHIBIT K, and the following discussion is qualified in its entirety by
reference to EXHIBIT K. Under these provisions, a stockholder who has been
given notice of dissenters' rights and who wishes to assert dissenters' rights
must cause the Suitor to receive, before the vote on the Merger Proposal is
taken, written notice of the stockholder's intention to demand payment for the
stockholder's shares if the proposed corporate action is effectuated. Any such
notice is to be delivered to the Suitor at 29 East 13st St., 2nd Floor,
New York, New York 10016, Attention: Corporate Secretary. Chapter 92A also
provides that appraisal rights are not available to holders of shares: (a)
listed on a national securities exchange; (b) included in the national market
system by the National Association of Securities Dealers; or (c) held of record
by at least 2,000 stockholders, unless holders of stock are required to accept
in the merger anything other than any combination of cash, owner's interests or
owner's interests and cash in lieu of fractional shares of: (i) the surviving
or acquiring entity in the merger, or (ii) another entity that, at the
effective date of the merger, will be: (A) listed on a national securities
exchange, (B) included in the national market system by the National
Association of Securities Dealers, or (C) held of record by at least 2,000
stockholders. Accordingly, because the Company Common Stock is listed on the
OTCBB, the holders of Company Common Stock are not entitled to appraisal rights
in connection with the reincorporation.
GOVERNMENTAL APPROVALS
Suitor and Target are not aware of any license or regulatory permit which
is material to the business of either company and which is likely to be
adversely affected by the Merger, or of any approval or other action by any
state, federal or foreign government or governmental agency that would be
required prior to the Merger, other than compliance with any applicable state
securities laws.
/10/
RESTRICTIONS ON RESALES
The shares of Suitor Common Stock to be issued to Target shareholders in
the Merger will be restricted securities and may only be sold pursuant to an
effective registration statement under the Securities Act or an exemption
therefrom. The restricted securities and any shares of capital stock received
in respect thereof, whether by reason of a stock split, share reclassification
or stock dividend, shall not be transferable except upon the conditions
specified herein.
Each certificate for the Suitor common stock issued in the Merger and any
shares of capital stock received in respect thereof, and each certificate for
any such securities issued to subsequent transferees of any such certificate
shall contain a legend to the effect that:
"The Restricted Securities covered by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of, unless
registered pursuant to the provisions of that Act or an opinion of counsel to
Suitor is obtained stating that such disposition is in compliance with an
available exemption from such registration."
[ Balance of this page intentionally left blank.]
/11/
MERGER AGREEMENT
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
April 30, 2002, between ATR Search Corp., a Nevada corporation ("Suitor"), and
Medicius, Inc., a Nevada corporation ("Target").
RECITALS
AGREEMENT
NOW, THEREFORE, in consideration of the terms, conditions, agreements and
covenants contained herein, and in reliance upon the representations and
warranties contained in this Agreement, the parties hereto agree as follows:
Article 1
1.1 THE MERGER
------------
Upon the terms and subject to the conditions hereof, as promptly as
practicable following the satisfaction or waiver of the conditions set forth in
Article V hereof, but in no event later than two days thereafter, unless the
parties shall otherwise agree, a certificate of merger (the "Certificate of
Merger") providing for the merger of Target with and into the Suitor (the
"Merger") shall be duly prepared, executed and filed by the Suitor, in
accordance with the relevant provisions for a Nevada Corporation and the
parties hereto shall take any other actions required by law to make the Merger
effective. Both the Target and Suitor will be the surviving corporations in
the Merger. However, following the Merger, the operations of Target will be
conducted through Suitor and the operations of Suitor will be conducted through
CareTechnologies LLC, which at the time of the closing of the transactions
described herein, shall be a wholly owned subsidiary of the Suitor.
1.2 EFFECTIVE TIME
----------------
If all of the conditions precedent to the obligations of each of the
parties hereto as hereinafter set forth shall have been satisfied or shall have
been waived, the Merger shall become effective (the time of such effectiveness
is referred to herein as the "Effective Time") upon the filing of an agreement
of merger, in the form set forth as Exhibit C hereto (the "Agreement of
Merger"), with the Secretary of State of Nevada. This shall take place on the
Closing Date (as defined herein).
1.3 CONSIDERATION FOR THE MERGER
------------------------------
(a) On the Effective Date, Target will merge with and into the Suitor.
The separate existence of Target will continue. Both the Suitor and Target
will be the surviving and operating entities in the Merger and both will
continue to be governed by the laws of the State of Nevada. The Certificate of
Incorporation and Bylaws of the Suitor in effect as of the Effective Date will
not be affected by the Merge.
(b) On the Effective Date, without any action on the part of the holders
hereof, the capital stock of Target issued and outstanding immediately prior to
the Effective Date will be converted into the right to receive Suitor Common
Stock as follows:
(i) Series A Preferred Exchange Rate. Each share of Target Series
A Preferred Stock will be converted into 3.50 Merger Shares (the "Series A
Preferred Exchange Ratio") and .75 Merger Warrants.
(ii) Common Exchange Rate. Each share of Target Common Stock will be
/12/
converted into 3.0 Merger Shares ("Common Exchange Ratio") and .5 Merger
Warrants.
(c) After the Effective Date, all Target common stock purchase warrants
that remain unexercised on the Effective Date and any Target Convertible Notes
that remain unconverted or unpaid on the Effective Date will be exercisable for
or convertible into the number of Merger Shares (the "Reserved Merger Shares")
based on the Common Exchange Ratio, as provided in paragraphs [b(i) and b(ii)]
of this Section.
(d) The shareholders of Target will not be entitled to fractional Merger
Shares as a result of the Merger, and the holders of Target common stock
purchase warrants that remain unexercised on the Effective Date and any Target
Convertible Notes that remain unconverted or unpaid on the Effective Date will
not be entitled to any fractional Reserved Merger Shares upon exercise or
conversion of those instruments. Any fractional share of Suitor Common Stock
that may result from the application of the exchange rates in Section 1.3(b)
shall be rounded up or down to the nearest whole Merger Share, and any
fractional share of Suitor Common Stock that may result from the application
of the exchange rates in Section 1.3(c) shall be rounded up or down to the
nearest whole Reserved Merger Share.
(e) The Merger shall have all the other effects provided by the Nevada
Revised Statutes ("NRS").
(f) On the Effective Date, the Suitor shall assume all outstanding Target
Warrants listed within this section, which will thereafter become exercisable
for the number of Reserved Merger Shares that the option holders would have
received in the Merger at the Common Exchange Rate in exchange for the shares
of Target Common Stock issuable upon exercise thereof prior to the Effective
Date, on the same terms and conditions in effect immediately prior to the
Merger. As soon as practicable after the Effective Date, the Suitor shall
execute and deliver warrant agreements reflecting the foregoing to holders of
outstanding Target Warrants, listed on Schedule WA-1 of Exhibit L, added and
attached hereto and made a part hereof.
(g) Prior to the Effective Date, Target will use its best efforts to
encourage conversion of the Target Convertible Notes. To the extent the Target
Convertible Notes remain unconverted or unpaid on the Effective Date, (i) the
indebtedness evidenced thereby shall be assumed by the Suitor, and (ii) they
will become convertible after the Effective Date into the number of Reserved
Merger Shares that the holders would have received in the Merger at the Common
Exchange Rate in exchange for the shares of Target Common Stock issuable upon
conversion thereof prior to the Effective Date, on the same terms and
conditions in effect immediately prior to the Merger, said Target Convertible
Note holders listed on Exhibit M as Schedule TCN-1 of Exhibit M, added and
attached hereto and made a part hereof.
(h) NO FRACTIONAL SHARES OR OPTIONS: Unless otherwise required by
Section 407 of the NRS, no fractional shares of Suitor Common Stock shall
be issued in connection with the Merger, and no certificate or scrip for any
such fractional shares shall be issued.
(i) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES: No dividends or
other distributions with respect to Suitor Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered
certificate with respect to the shares of Target Common Stock represented
thereby until the holder of record of such certificate shall surrender such
certificate. Subject to applicable law, following surrender of any such
certificate, there shall be paid to the record holder of the certificates
representing whole shares of Suitor Common Stock issued in exchange therefor,
without interest at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such shares of Suitor Common Stock.
1.4 EFFECT OF MERGER
------------------
As of the Effective Time, the effect of the Merger shall be as provided in
this Agreement, the Agreement of Merger and the applicable provisions of the
NRS, and each of the following shall occur:
/13/
(a) The separate existence and corporate organization of Target shall
continue. Suitor as one of the corporations surviving the Merger, shall
possess the rights, privileges, powers and franchises, and be subject to all
the restrictions, disabilities and duties of, the constituent corporations in
the manner specified in the NRS.
(b) Except as otherwise agreed by the parties, the Articles of
Incorporation of Suitor, as in effect immediately subsequent to the Effective
Time, shall be amended and restated to read as set forth on Exhibit A attached
hereto.
(c) The By-laws of Target, as in effect immediately prior to the
Effective Time, shall continue in effect without change or amendment.
(d) Suitor shall enter into mutually acceptable employment agreements on
customary industry terms with Keith Berman, William Lyons and any other members
of Target management designated by Mr. Berman within five days prior to the
Closing. The members of Target Management or their designees and any other
members of the current staff of Target designated by Mr. Berman (collectively,
the "Management Designees") will be entitled to receive signing bonuses in the
form of options to purchase an aggregate of 2.5 million shares of Suitor Common
Stock at the closing price of the Suitor Common Stock on the business day
immediately preceding the Effective Date, vesting one-half of the total options
granted on the day of their grant and then the remaining options in one-third
cumulative annual installments commencing on the first anniversary of the
Effective Date (the "Management Options"). The names of the Management
Designees and the number of Management Options issuable to each Management
Designee will be furnished by Mr. Berman to the Company not less than five days
prior to the Closing.
(e) Suitor shall entitle Robert Cox to receive options to purchase an
aggregate of 1.5 million shares of Suitor Common Stock at the closing price of
the Suitor Common Stock on the business day immediately preceding the Effective
Date, vesting one-half of the total options granted on the day of their grant
and then the remaining options in one-third cumulative annual installments
commencing on the first anniversary of the Effective Date (the "Management
Options").
1.5 DISSENTING SHARES:
-------------------
Notwithstanding anything to the contrary contained in this Agreement, any
shares of capital stock of Target that, as of the Effective Time, are or may
become "dissenting shares" under the NRS ("Dissenting Shares"), shall
not be converted into or represent the right to receive Suitor Merger Stock in
accordance with this Agreement, and the holder or holders of such shares shall
be entitled only to such rights as may be granted to such holder or holders
under the NRS law; provided, however, that if the status of any such shares as
"dissenting shares" shall not be perfected, or if any such shares shall lose
their status as "dissenting shares," then, as of the later of the Effective
Time or the time of the failure to perfect such status or the loss of such
status, such shares shall automatically be converted into and shall represent
only the right to receive (upon the surrender of the certificate or
certificates representing such shares) Suitor Common Stock in accordance with
this Agreement.
1.6 FURTHER ACTION
----------------
If, at any time after the Effective Time, any further action is determined
by Suitor to be necessary or desirable to carry out the purposes of this
Agreement, the officers and directors of Suitor shall be fully authorized (in
the name of Target) to take such action.
ARTICLE 2
2. CONDUCT OF BUSINESS PENDING CLOSING; SHAREHOLDER APPROVAL
-----------------------------------------------------------
Target and Suitor covenant that between the date hereof and the Closing Date
(as hereinafter defined):
/14/
2.1 ACCESS/DUE DILIGENCE
----------------------
Each party shall afford the others and their respective legal counsel,
accountants and other representatives' full access, during normal business
hours, throughout the period prior to the Closing Date;
(a) to all of the books, contracts and records of such party and shall
furnish the other party during such period with all information concerning such
party that the other parties may reasonably request; and
(b) to its business premises and properties in order to conduct
inspections at the requesting party's expense.
2.2 CONDUCT OF BUSINESS
---------------------
During the period from the date hereof to the Closing Date, Target's
business shall be operated by Target in the usual and ordinary course of such
business and in material compliance with the terms of this Agreement. Without
limiting the generality of the foregoing:
(a) Target shall use its commercially reasonable efforts, consistent
with past practice and policy, to: (i) keep available the services of the
present employees and agents of Target; (ii) complete or maintain all existing
material arrangements including but not limited to filings, licenses, affiliate
arrangements, leases and other arrangements referred to in Sections 3.6(a) and
3.6(b) in full force and effect in accordance with their existing terms; (iii)
maintain the integrity of all confidential information of Target; (iv) comply
in all material respects with all applicable laws; and (v) preserve the
goodwill of Target's business and contractual relationships with, suppliers,
customers and others having business relations with Target;
(b) Neither Suitor nor Target shall: (i) sell or transfer any of its
assets or property; (ii) shall make any distribution, whether by dividend or
otherwise, to any of its shareholders or employees except for compensation to
employees and payments to associated companies for goods and services, in the
usual and ordinary course of business; (iii) declare any dividend or other
distribution; (iv) redeem or otherwise acquire any shares of its capital stock
or other securities; (v) incur any material debt or other obligation; or (vi)
agree to do any of the foregoing; and
( c) Notwithstanding the provisions of Section 2.2(b) above, immediately
prior to the Closing, Suitor will be a clean public company with no legal
liabilities of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise.
2.3 EXCLUSIVITY
------------
During the period from the date of this Agreement until the earlier of
termination of this Agreement or the Effective Time, each party agrees that
without the other's prior written consent, it shall not and it shall not allow
anyone acting on their behalf to, (A) directly or indirectly merge or
consolidate with another entity or engage in a sale of substantial assets, sale
of shares of capital stock (including without limitation by way of a tender
offer, but excluding sales pursuant to any exercise of outstanding stock
options) or similar transaction other than the transactions contemplated or
expressly permitted by this Agreement and (B) solicit, entertain or encourage
inquiries or proposals, or enter into, pursue, continue or carry on any
discussions or negotiations, with respect to any transaction of the types
referred to in clause (A) above with any person or entity. Each party signing
this Agreement will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
in respect of any such transaction. Notwithstanding the foregoing, if an offer
unsolicited by a party hereto ("Recipient"), their investment bankers or their
representatives, agents or others is received prior to the Effective Time,
consistent with the fiduciary obligation that Recipient may then owe to its
shareholders, but only to the extent required by applicable law, such offer
may be communicated to the Board of Directors of Recipient and approved by the
Board consistent with their fiduciary duty, provided, however, that
/15/
Recipient will not, except as required by applicable law, provide information
to such offeror; Recipient will promptly (within 24 hours of receipt of any
proposal or request for non-public information in connection with a potential
proposal) advise such other party of the identity of such offeror, communicate
to it the terms of any proposal which it may receive and deliver to it a copy
of any such offer or request in writing.
2.4 FILING OF CURRENT REPORTS ON FORM 8-K
---------------------------------------
Promptly after execution of this Agreement, Suitor shall file a Current
Report on Form 8-K with the Commission to report the proposed Merger and the
terms thereof.
2.5 VOTING AGREEMENTS
------------------
The shareholders of Suitor identified in Exhibit D shall execute
agreements in the form of Exhibit D-1 hereto to vote their shares of Suitor
stock at any meeting of the shareholders of Suitor, at which this Agreement is
placed before the shareholders for approval, in favor of the Agreement and in
favor of the consummation of the Merger.
2.6 VOTING AGREEMENTS
------------------
The shareholders of Target identified in EXHIBIT D hereto shall execute
agreements in the form of Exhibit D-2 hereto to vote their shares of Target
stock at any meeting of the shareholders of Target, at which this Agreement is
placed before the shareholders for approval, in favor of the Agreement and in
favor of the consummation of the Merger.
ARTICLE 3
3. REPRESENTATIONS AND WARRANTIES OF TARGET
-----------------------------------------
Except as set forth in Target's Disclosure Schedule, Target represents
and warrants, as of the date hereof and as of the Closing to Suitor as follows,
with the knowledge and understanding that Suitor is relying materially upon
such representations and warranties (The term "Knowledge" as used in this
Agreement with respect to a party's awareness of the presence or absence of a
fact, event or condition shall mean (a) actual knowledge, or (b) the knowledge
that would be obtained if such party conducted itself faithfully and exercised
a sound discretion in the management of his own affairs):
3.1 ORGANIZATION AND STANDING
---------------------------
Target is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. Target has all requisite
corporate power to carry on its business as it is now being conducted and is
duly qualified to do business as a domestic corporation and is in good standing
in the jurisdiction where such qualification is necessary under applicable law
except where the failure to qualify (individually or in the aggregate) will not
have any material adverse effect on the business or prospects of Target. The
copies of the Articles of Incorporation, By-laws and minute books of Target,
as amended to date and delivered to Suitor, are true and complete copies of
these documents as now in effect. The minute books of Suitor are accurate in
all material respects.
3.2 CAPITALIZATION
---------------
(a) Target is authorized to issue 55,000,000 shares of Common Stock, par
value $.001 per share, of which 8,193,310 are issued and outstanding, and
5,000,000 shares of Preferred Stock, of which 750,000 of Series A Preferred
Stock, are issued and outstanding. The record holders thereof are as set forth
in Section 1.3(g) above. All of such shares of capital stock that are issued
and outstanding are duly authorized, validly issued and outstanding, fully paid
and nonassessable, and were not issued in violation of the preemptive rights of
any person. Other than as set forth in Section 1.3(g), there are no
subscriptions, warrants, rights or calls or other commitments or agreements to
which Target is a party or by which it is bound, calling for any issuance,
transfer, sale or other disposition of any class of securities of Target.
/16/
Other than as set forth in Section 1.3(g), there are no outstanding securities
convertible into or exchangeable for Common Stock or any other securities of
Target. There are no outstanding warrants to purchase Target Common Stock and,
except as set forth in this Section 3.2(a), there are no other securities
convertible or exchangeable into Target Common Stock or other securities.
(b) All outstanding shares of Target Common Stock and all outstanding
Target Options and other securities have been issued and granted in compliance
with (i) all applicable securities laws and other applicable legal
requirements, and (ii) all material requirements set forth in applicable
Contracts, (as hereinafter defined), or as described within this Agreement.
3.3 SUBSIDIARIES
-------------
Target owns no subsidiaries nor does it own or have an interest in any
other corporation, partnership, joint venture or other entity.
3.4 AUTHORITY
----------
Target has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been, or will have been by the Closing,
duly authorized by all necessary corporate action on the part of Target subject
to the approval of the Merger by Target's shareholders. The Board of Directors
of Target has unanimously (i) approved this Agreement and the Merger, (ii)
determined that in its opinion the Merger is in the best interests of the
shareholders of Target, and is on terms that are fair to such shareholders
(iii) recommended that the shareholders of Target approve this Agreement and
the Merger. This Agreement constitutes, and all other agreements contemplated
hereby will constitute, when executed and delivered by Target in accordance
herewith, the valid and binding obligations of Target, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to creditors' rights generally, and (ii) general
principles of equity.
3.5 ASSETS
-------
Target has good and marketable title to or licenses to all of the assets
and properties, which it purports to own as reflected on the most recent
balance sheet comprising a portion of the Target's Financial Statements (as
hereinafter defined), or thereafter acquired, or are otherwise useful in the
business of Target. No material portion of the assets of Target is subject to
any governmental decree or order to be sold or is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefore, nor, to its Knowledge, has any such condemnation,
expropriation or taking been proposed. None of the material assets of Target
are subject to any restriction that would prevent continuation of the use
currently made thereof or materially adversely affect the value thereof.
3.6 CONTRACTS AND OTHER COMMITMENTS
---------------------------------
Target is not a party to or bound by any of the following:
(i) employment or consulting agreement that has an aggregate future
liability in excess of $100,000 and is not terminable by Target upon notice of
not more than 60 days for a cost of less than $100,000;
(ii) employee collective bargaining agreement or other contract with
any labor union;
(iii) covenant of Target not to compete or otherwise restricting the
operations of Target;
(iv) agreement, contract or other arrangement with any current or
ormer officer,
/17/
director or employee of Target or any Affiliate of Target other than employment
agreements covered by clause (i) above;
(v) lease or similar agreement with any person under which (A) Target
is lessee of or holds or uses any machinery, equipment, vehicle or other
tangible personal property owned by any other Person or (B) Target is a lessor
or sublessor of, or makes available for use by any other Person, any tangible
personal property owned or leased by Target, which in any case or in the
ggregate have a total future liability or receivable, as the case may be, in
excess of $100,000 and are not terminable by Target upon notice of not more
than 60 days for a cost of less than $100,000;
(vi) (A) continuing contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other similar
type of contract or (C) advertising agreement or arrangement, which in any case
or in the aggregate have a total future liability in excess of $100,000 and are
not terminable by Target upon notice of not more than 60 days for a cost of
less than $100,000;
(vii) material license, option or other agreement relating in whole or
in part to (A) Target Intellectual Property, including any license or other
agreement under which Target is licensee or licensor thereof, or (B) trade
secrets, confidential information or other proprietary rights and processes of
Target;
(viii) agreement, contract or other instrument under which Target has
borrowed any money from, or issued any note, bond, debenture or other evidence
of indebtedness to any other Person that in any individual case is in excess of
$50,000;
(ix) agreement, contract or other instrument under which (A) any Person
has directly or indirectly guaranteed indebtedness, liabilities or obligations
of Target or (B) Target has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any other Person that in any individual case is
in excess of $50,000;
(x) agreement, contract or other instrument under which Target has,
directly or indirectly, made any advance, loan, extension of credit or capital
contribution to, or other investment in, any other Person that in any
individual case is in excess of $50,000;
(xi) agreement, contract or other instrument providing for
indemnification of any Person with respect to liabilities relating to any
current or former business of Target; or
(xii) other agreement, contract or other instrument to which Target is
a party or by or to which it or any of its assets or business is bound or
subject that has an aggregate future liability to any other Person in excess of
$100,000 and is not terminable by Target upon notice of not more than 60 days
for a cost of less than $100,000.
3.7 LITIGATION
------------
There is no claim, action, proceeding, or investigation pending or, to its
Knowledge, threatened against or affecting Target before or by any court,
arbitrator or governmental agency or authority which, in its reasonable
judgment, could have a material adverse effect on the operations or prospects
of Target. There is no strike or unresolved labor dispute relating to Target's
employees who, in its judgment, could have a material adverse effect on the
business or prospects of Target. There are no decrees, injunctions or orders
of any court, governmental department, agency or arbitration outstanding
against Target or asserted against Target that has not been paid.
/18/
3.8 TAXES
------
For purposes of this Agreement, (A) "Tax" (and, with correlative meaning,
Taxes") shall mean any federal, state, local or foreign income, alternative or
add- on minimum, business, employment, franchise, occupancy, payroll, property,
sales, transfer, use, value added, withholding or other tax, levy, impost, fee,
imposition, assessment or similar charge together with any related addition to
tax, interest, penalty or fine thereon; and (B) "Returns" shall mean all
returns (including, without limitation, information returns and other material
information), reports and forms relating to Taxes.
(a) Target has duly filed all Returns required to be filed by it other
than Returns (individually and in the aggregate) where the failure to file
would have no material adverse effect on the business or prospects of Target.
All such Returns were, when filed, and to the Knowledge of Target are,
accurate and complete in all material respects and were prepared in conformity
with applicable laws and regulations. Target has paid or will pay in full or
has adequately reserved against all Taxes otherwise assessed against it through
the Closing Date.
(b) Target is not a party to any pending action or proceeding by any
governmental authority for the assessment of any Tax, and, to the Knowledge of
Target, no claim for assessment or collection of any Tax related to Target has
been asserted against Target that has not been paid. There are no Tax liens
upon the assets of Target (other than liens for taxes not yet due and payable).
(c) Neither Target nor any of its subsidiaries has taken, agreed to take
or will take any action that would reasonably be expected to prevent the Merger
from constituting a reorganization within the meaning of Section 368(a) of the
Code.
3.9 COMPLIANCE WITH LAWS AND REGULATIONS
-------------------------------------
Target has complied and is presently complying, in all material respects,
ith all laws, rules, regulations, orders and requirements (federal, state local
and foreign) applicable to it the Nevada jurisdiction where the business of
Target is conducted or to which Target is subject, including, without
limitation, all applicable federal and state securities laws, civil rights and
equal opportunity employment laws and regulations, and all federal, antitrust,
antimonopoly and fair trade practice laws, except where the failure to comply
could not reasonably be expected to have a material adverse effect on Target.
There has been no assertion by any party that Target is in violation in any
material respect of any such laws, rules, regulations, orders, restrictions
or requirements with respect to its operations and no notice in that regard has
been received by Target.
3.10 ENVIRONMENTAL MATTERS
----------------------
(a) Except as to the extent that it has not had, and could not reasonably
be expected to have, individually or in the aggregate, a material adverse
affect on Target, (i) Target is not in violation of any Environmental Law
applicable to either of them
(b) For purposes of this Agreement, "Environmental Law" means any
federal, state, local or foreign laws and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to: (A) releases or threatened
releases of Hazardous Substances or materials containing Hazardous Substances;
(B) the manufacture, handling, transport, use, treatment, storage or disposal
of Hazardous Substances or materials containing Hazardous Substances; or
(C) otherwise relating to pollution or protection of the environment, health,
safety or natural resources.
(c) For purposes of this Agreement, "Hazardous Substances" means: (i)
those substances defined in or regulated under the following federal statutes
and their state counterparts and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe
/19/
Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide,
and Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum
products, including crude oil and any fractions thereof; (iii) natural gas,
synthetic gas, and any mixtures thereof; (iv) polychlorinated biphenyls,
asbestos and radon; (v) any other contaminant; and (vi) any substance, material
or waste regulated by any federal, state, local or foreign Governmental Entity
pursuant to any Environmental Law.
3.11 NO CONFLICTS
-------------
The making and performance of this Agreement will not (i) conflict with or
violate the Articles of Incorporation or the By-laws of Target, (ii) violate
any laws, ordinances, rules, or regulations, or any order, writ, injunction or
decree to which Target is a party or by which Target or any of its businesses,
or operations may be bound or affected or (iii) result in any breach or
termination of, or constitute a default under, or constitute an event which,
with notice or lapse of time, or both, would become a default under, or result
in the creation of any encumbrance upon any material asset of Target under, or
create any rights of termination, cancellation or acceleration in any person
under, any Contract, except in the case of (ii) or (iii) for any such
conflicts, violations, defaults, terminations, cancellations or accelerations
which would not have a material adverse effect on Target.
3.12 EMPLOYEES
----------
Target has no employees that are represented by any labor union or
collective bargaining unit.
3.13 FINANCIAL STATEMENTS
---------------------
The Target Disclosure Schedule contains an audited balance sheet of Target
as of December 31, 2001 and related audited income statement of Target for the
year then ended and an unaudited balance sheet dated as of March 31, 2002 and
related unaudited income statement of Target for the period ended at such date
(collectively the "Financial Statements"). The Financial Statements present
fairly, in all material respects, the financial position on the dates thereof
and results of operations of Target for the periods indicated, prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied. There are no assets of Target, the value of which is materially
overstated in said balance sheets.
3.14 ABSENCE OF CERTAIN CHANGES OR EVENTS
-------------------------------------
Since December 31, 2001 (the "Target Balance Sheet Date"), there has not
been:
(a) any material adverse change in the financial condition, properties,
assets, liabilities or business of Target;
(b) any material damage, destruction or loss of any material properties
of Target, whether or not covered by insurance;
(c) any material adverse change in the manner in which the business of
Target has been conducted;
(d) any material adverse change in the treatment and protection of trade
secrets or other confidential information of Target; and
(e) any occurrence not included in paragraphs (a) through (d) of this
Section 3.14 which has resulted, or which Target has reason to believe, might
be expected to result in a material adverse change in the business or prospects
of Target.
3.15 GOVERNMENT LICENSES, PERMITS, AUTHORIZATIONS
----------------------------------------------
Target has all material governmental licenses, permits, authorizations and
approvals necessary for the conduct of its business as currently conducted
("Licenses and Permits").
/20/
3.16 EMPLOYEE BENEFIT PLANS
-----------------------
(a) The Target has no, material deferred compensation, material incentive
compensation, stock purchase, stock option, severance pay, termination pay,
hospitalization, medical, insurance, supplemental unemployment benefits, profit
-sharing, pension or retirement plan, program or material agreement.
(b) Target has not maintained, sponsored or contributed to, any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or any similar pension
benefit plan under the laws of any foreign jurisdiction.
(c) Neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any bonus, golden parachute, severance or other
similar payment or obligation to any current or former employee or director of
Target, or result in any acceleration of the time of payment, provision or
vesting of any such benefits. Without limiting the generality of the foregoing
the consummation of the Merger will not result in the acceleration of vesting
of any unvested Target Options.
3.17 BUSINESS LOCATIONS
-------------------
Other than as set forth in the Target Disclosure Schedule, Target does not
own or lease any material real or personal property in any state or country.
3.18 INTELLECTUAL PROPERTY
Any and all of Target's intellectual property, including computer
software, trademarks, trade names, service marks, service names, brand names,
copyrights and patents, registrations thereof and applications therefore,
applicable to or used in the business of Target, together with a complete list
of all material licenses granted by or to Target with respect to any of the
above. All such trademarks, trade names, service marks, service names, brand
names, copyrights and patents are owned by Target, free and clear of all liens,
claims, security interests and encumbrances of any nature whatsoever. Target
is not currently in receipt of any notice of any violation or infringements of,
and Target is not knowingly violating or infringing, the rights of others in
any trademark, trade name, service mark, copyright, patent, trade secret, know-
how or other intangible asset. The proprietary assets listed on Exhibit H
constitute all the proprietary assets necessary to enable Target to conduct
their business in the manner in which such business has been and is being
conducted. Target has not (i) licensed any of the material proprietary assets
to any person or entity on an exclusive basis, or (ii) entered into any
covenant not to compete or agreement limiting its ability to exploit fully any
proprietary asset or to transact business in any market or geographical area or
with any person or entity.
3.19 EXISTING ARRANGEMENT
---------------------
Target has no Knowledge that, either as a result of the actions
contemplated hereby or for any other reason (exclusive of expiration of a
contract upon the passage of time), any entity having an arrangement with
Target will not continue to conduct business with Suitor after the Closing Date
in substantially the same manner as it has conducted business with Target in
the past.
3.20 GOVERNMENTAL APPROVALS
-----------------------
Except as set forth in Section 1.2 as to the filing of the Agreement of
Merger, no authorization, license, permit, franchise, approval, order or
consent of, and no registration, declaration or filing by Target with, any
governmental authority, domestic or foreign, federal, state or local, is
required in connection with Target's execution, delivery and performance of
this Agreement.
/21/
3.21 TRANSACTIONS WITH AFFILIATES
-----------------------------
Target is not indebted for money borrowed, either directly or indirectly,
from any of its officers, directors, or any Affiliate (as defined below), in
any amount whatsoever; nor are any of its officers, directors, or Affiliates
indebted for money borrowed from Target; nor are there any transactions of a
continuing nature between Target and any of its officers, directors, or
Affiliates not subject to cancellation which will continue beyond the Effective
Time, including, without limitation, use of the assets of Target for personal
benefit with or without adequate compensation. For purposes of this Agreement,
the term "Affiliate" shall mean any person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified. As used in the foregoing definition,
the term (i) "control" shall mean the power through the ownership of voting
securities, contract or otherwise to direct the affairs of another person and
(ii) "person" shall mean an individual, firm, trust, association, corporation,
partnership, government (whether federal, state, local or other political
subdivision, or any agency or bureau of any of them) or other entity.
3.22 NO DISTRIBUTIONS
-----------------
Target has not made nor has any intention of making any distribution or
payment to any of its shareholders in respect of Target stock.
3.23 LIABILITIES
------------
Target has no material direct or indirect indebtedness, liability, claim,
loss, damage, deficiency, obligation or responsibility, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise ("Liabilities"), whether or not of a kind
required by generally accepted accounting principles to be set forth on a
financial statement, other than (i) Liabilities fully and adequately reflected
or reserved against on the Target Balance Sheet, (ii) Liabilities incurred
since the Target Balance Sheet Date in the ordinary course of the business of
Target, or (iii) Liabilities otherwise disclosed in this Agreement, including
the exhibits hereto and the Target Disclosure Schedule.
3.24 ACCOUNTS RECEIVABLE
---------------------
All accounts receivable of Target reflected on the Balance Sheet are valid
receivables subject to no material setoffs or counterclaims and are current
and, to the Knowledge of Target, collectible (within 90 days after the date on
which it first became due and payable), net of the applicable reserve for bad
debts reflected in the financial statements provided to Suitor. To Target's
Knowledge, all accounts receivable reflected in the financial or accounting
records of Target are valid receivables and are collectible subject to no
material setoffs or counterclaims.
3.25 NO OMISSIONS OR UNTRUE STATEMENTS
----------------------------------
To the best of its Knowledge, no representation or warranty made by Target
to Suitor in this Agreement, the Target Disclosure Schedule or in any
certificate of a Target's officer required to be delivered to Suitor pursuant
to the terms of this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements
contained herein or therein not misleading as of the date hereof.
3.26 INSURANCE
----------
Target acknowledges that it has maintained all required material insurance
policies and all material self-insurance programs and arrangements relating to
the business, assets and operations of Target. Each of such insurance policies
is in full force and effect.
/22/
ARTICLE 4
4 REPRESENTATIONS AND WARRANTIES OF SUITOR
-----------------------------------------
Except as set forth in the Suitor Disclosure Schedule, Suitor represents
and warrants to Target as follows, as of the date hereof, and as of the Closing
Date:
4.1 ORGANIZATION AND STANDING OF SUITOR
------------------------------------
Suitor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has the corporate power to
carry on its business as now conducted and to own its assets and is duly
qualified to transact business as a foreign corporation in each state where
such qualification is necessary except where the failure to qualify will not
have a material adverse effect on the business or prospects of Suitor. The
copies of the Articles of Incorporation, By-laws and minutes of Suitor, as
amended to date, and delivered to Target, are true and complete copies of
those documents as now in effect. The minute books of Suitor are accurate in
all material respects.
4.2 ORGANIZATION AND STANDING OF SUBSIDIARIES
------------------------------------------
At the closing of the transactions described herein, ATR Search, LLC (ATR
Search) and ATR Technologies, LLC (ATR Tech.) are or shall be corporations duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and have the corporate power to carry on their business as now
conducted and to own their assets and are duly qualified to transact business
as a foreign corporation in each state where such qualification is necessary
except where the failure to qualify will not have a material adverse effect on
the business or prospects of either ATR Search or ATR Tech. The copies of the
Certificate of Incorporation, By-laws and minutes of ATR Search and the
Articles of Incorporation, By-laws and minutes of ATR Tech., as amended to
date, and delivered to Target, are true and complete copies of those documents
as now in effect. Since its incorporation, ATR Tech. has not conducted and
currently is not conducting any business. The minute books of ATR Search and
ATR Tech are accurate in all material respects.
4.3 SUBSIDIARIES
-------------
Other than ATR Search and ATR Tech, Suitor owns no subsidiaries nor does
it own or have an interest in any other corporation, partnership, joint venture
or other entity.
4.4 CAPITALIZATION OF SUITOR
------------------------
(a) The authorized capital stock of Suitor consists of 100,000,000 shares
of Common Stock, par value $.001 and 5,000,000 shares of Preferred Stock, par
value $.001. As of the date hereof, 21,505,000 shares of Common Stock and no
shares of Preferred stock were issued and outstanding. Such outstanding shares
of Common Stock are duly authorized, validly issued, fully paid, and non-
assessable. The Suitor Merger Stock to be issued pursuant to this Agreement,
when issued in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable.
4.5 AUTHORITY
----------
Suitor has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been, or will have been by the Closing,
duly authorized by all necessary corporate action on the part of Suitor subject
to the approval of the Merger by Suitor's shareholders. The Board of Directors
of Suitor have unanimously (i) approved this Agreement and the Merger, (ii)
determined that in its opinion the Merger, subject to the terms of this
Agreement, is in the best interests of the shareholders of Suitor,
respectively, and is on terms that are fair to such shareholders (iii)
recommended that the shareholders of Suitor approve this Agreement and the
Merger. This Agreement constitutes, and all other agreements contemplated
hereby will constitute, when executed and delivered by
/24/
Suitor in accordance herewith, the valid and binding obligations of Suitor,
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to creditors' rights generally, and (ii) general
principles of equity.
4.6 ASSETS
-------
Suitor, ATR Search and ATR Tech have good and marketable title to all of
the respective party's assets and properties which it purports to own as
reflected on the balance sheet included in the Suitor Financial Statements (as
hereinafter defined), or thereafter acquired. No material portion of the assets
of Suitor are subject to any governmental decree or order to be sold or is
being condemned, expropriated or otherwise taken by any public authority with
or without payment of compensation therefore, nor, to its Knowledge, has any
such condemnation, expropriation or taking been proposed. None of the material
assets of Suitor are subject to any restriction that would prevent continuation
of the use currently made thereof or materially adversely affect the value
thereof.
4.7 CONTRACTS AND OTHER COMMITMENTS
--------------------------------
Suitor is not a party to or bound by any of the following:
(i) employment or consulting agreement that has an aggregate future
liability in excess of $10,000 and is not terminable by Suitor upon notice of
not more than 60 days for a cost of less than $5,000;
(ii) employee collective bargaining agreement or other contract with
any labor union;
(iii) covenant of Suitor not to compete or otherwise restricting the
operations of Suitor;
(iv) agreement, contract or other arrangement with any current or
former officer, director or employee of Suitor or any Affiliate of Suitor other
than employment and consulting agreements covered by clause (i) above;
(v) lease or similar agreement with any person under which (A) Suitor
is lessee of or holds or uses any machinery, equipment, vehicle or other
tangible personal property owned by any other Person or (B) Suitor is a lessor
or sublessor of, or makes available for use by any other Person, any tangible
personal property owned or leased by Suitor, which in any case or in the
aggregate have a total future liability or receivable, as the case may be, in
excess of $10,000 and are not terminable by Suitor upon notice of not more
than 60 days for a cost of less than $10,000;
(vi) (A) continuing contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other similar
ype of contract or (C) advertising agreement or arrangement, which in any case
or in the aggregate have a total future liability in excess of $10,000 and are
not terminable by Suitor upon notice of not more than 60 days for a cost of
less than $10,000;
(vii) material license, option or other agreement relating in whole or
in part to (A) the Suitor Intellectual Property, including any license or other
agreement under which Suitor is licensee or licensor thereof, or (B) trade
secrets, confidential information or other proprietary rights and processes of
Suitor;
(viii) agreement, contract or other instrument under which Suitor has
borrowed any money from, or issued any note, bond, debenture or other evidence
of indebtedness to, any other Person that in any individual case is in excess
of $15,000;
(ix) agreement, contract or other instrument under which (A) any Person
has directly
/25/
or indirectly guaranteed indebtedness, liabilities or obligations
of Suitor or (B) Suitor has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any other Person that in any individual case is
in excess of $15,000;
(x) agreement, contract or other instrument under which Suitor has,
directly or indirectly, made any advance, loan, extension of credit or capital
contribution to, or other investment in, any other Person that in any
individual case is in excess of $15,000;
(xi) agreement, contract or other instrument providing for
indemnification of any Person with respect to liabilities relating to any
current or former business of Suitor; or
(xii) other agreement, contract or other instrument to which Suitor is
a party or by or to which it or any of its assets or business is bound or
subject that has an aggregate future liability to any other Person in excess
of $10,000 and is not terminable by Suitor upon notice of not more than 60 days
for a cost of less than $10,000.
ule are valid and binding upon Suitor, as applicable, and, to its Knowledge,
the other parties thereto and are in full force and effect and enforceable, in
accordance with their respective terms, and Suitor, to its Knowledge, any other
party to any Suitor Contract has breached any provision of, and no event has
occurred which, with the lapse of time or action by a third party, could result
in a material default under, the terms thereof.
4.8 LITIGATION
------------
There is no material claim, action, proceeding, or investigation pending
or, to their Knowledge, threatened against or affecting Suitor, ATR Search or
ATR Tech. before or by any court, arbitrator or governmental agency or
authority. There are no material decrees, injunctions or orders of any court,
governmental department, agency or arbitration outstanding against Suitor, ATR
Search or ATR Tech.
4.9 TAXES
-------
Suitor has duly filed all Returns required to be filed by it other than
Returns which the failure to file would have no material adverse effect on the
business of Suitor. All such Returns were, when filed, and to Suitor's
Knowledge are, accurate and complete in all material respects and were prepared
in conformity with applicable laws and regulations. Suitor has paid or will
pay in full prior to the Effective Time, or has adequately reserved against all
Taxes otherwise assessed against it through the Closing Date. Suitor is not a
party to any pending action or proceeding by any governmental authority for the
assessment of any Tax, and, to the Knowledge of Suitor, no claim for assessment
or collection of any Tax has been asserted against Suitor that have not been
paid. There are no Tax liens upon the assets of Suitor. Neither Suitor nor
any of its subsidiaries has taken, agreed to take or will take any action that
would reasonably be expected to prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
4.10 COMPLIANCE WITH LAWS AND REGULATIONS
--------------------------------------
Suitor, ATR Search and ATR Tech. have complied and are presently
complying, in all material respects, with all laws, rules, regulations, orders
and requirements (federal, state local and foreign) applicable to them in all
jurisdictions in which their operations are conducted or to which they are
subject, including, without limitation, all applicable federal and state
securities laws, civil rights and equal opportunity employment laws and
regulations, and all federal, antitrust, antimonopoly and fair trade practice
laws. There has been no assertion by any party that Suitor, ATR Search or ATR
Tech. is inviolation in any material respect of any such laws, rules,
regulations, orders, restrictions or requirements with respect to its
operations and no notice in that regard has been received by Suitor, ATR Search
or ATR Tech.
4.11 ENVIRONMENTAL MATTERS
----------------------
(i) Neither Suitor nor its subsidiaries are in violation of any
Environmental Law applicable to either of them; (ii) none of the properties
formerly owned, leased or operated by Suitor or its subsidiaries (including,
without limitation, soils and surfaces and ground waters) are contaminated with
any Hazardous Substance; (iii) neither Suitor nor its subsidiaries are liable
for any off-site contamination by Hazardous Substances; (iv) neither Suitor nor
its subsidiaries are liable for any violation under any Environmental Law
(including, without limitation, pending or threatened liens); (v) Suitor and
its subsidiaries have all material
/25/
Environmental Permits; and (vi) neither the execution of this Agreement nor the
consummation of the transactions contemplated herein will require any
investigation, remediation or other action with respect to Hazardous
Substances, or any notice to or consent of Governmental Entities or third
parties, pursuant to any applicable Environmental Law or Environmental Permit.
4.12 NO CONFLICT
------------
The making and performance of this Agreement will not (i) conflict with
the Articles of Incorporation, Certificate of Incorporation or the By-laws of
Suitor, ATR Search and ATR Tech., (ii) violate any laws, ordinances, rules,or
regulations, or any order, writ, injunction or decree to which Suitor, ATR
Search or ATR Tech. is a party or by which Suitor any of its material assets,
business, or operations may be bound or affected or (iii) result in any breach
or termination of, or constitute a default under, or constitute an event which,
with notice or lapse of time, or both, would become a default under, or result
in the creation of any encumbrance upon any material asset of Suitor, ATR
Search or ATR Tech., or create any rights of termination, cancellation, or
acceleration in any person under, any material agreement, arrangement, or
commitment, or violate any provisions of any laws, ordinances, rules or
regulations or any order, writ, injunction, or decree to which Suitor, ATR
Search or ATR Tech. is a party or by which Suitor, ATR Search or ATR Tech.,or
any of their material assets may be bound, except in the case of (ii) or (iii)
for any such conflicts, violations, defaults, terminations, cancellations or
accelerations which would not have a material adverse effect on Suitor, ATR
Search or ATR Tech.
4.13 EMPLOYEES
----------
Neither Suitor nor its subsidiaries have any employees that are
represented by any labor union or collective bargaining unit.
4.14 BUSINESS LOCATIONS
-------------------
Neither Suitor nor its subsidiaries owns or leases any real or personal
property in any state or country.
4.15 INTELLECTUAL PROPERTY
----------------------
Neither Suitor nor its subsidiaries is currently in receipt of any notice
of any violation or infringements of, and neither Suitor nor its subsidiaries
is knowingly violating or infringing, the rights of others in any trademark,
trade name, service mark, copyright, patent, trade secret, know-how or other
intangible asset.
4.16 GOVERNMENTAL APPROVALS
-----------------------
Except as set forth in Section 1.2 as to the filing of the Agreement of
Merger, no authorization, license, permit, franchise, approval, order or
consent of, and no registration, declaration or filing by Suitor or its
subsidiaries with, any governmental authority, domestic or foreign, federal,
state or local, is required in connection with execution, delivery and
performance of this Agreement.
4.17 TRANSACTIONS WITH AFFILIATES
------------------------------
Neither Suitor nor its subsidiaries is indebted for money borrowed, either
directly or indirectly, from any Affiliate, in any amount whatsoever; nor are
any of its officers, directors, or Affiliates indebted for money borrowed from
Suitor or its subsidiaries; nor are there any transactions of a continuing
nature between Suitor or its subsidiaries and any of its officers, directors,
or Affiliates not subject to cancellation which will continue beyond the
Effective Time, including, without limitation, use of the assets of Suitor or
its subsidiaries for personal benefit with or without adequate compensation.
/26/
4.18 EXISTING ARRANGEMENTS
----------------------
Suitor and its subsidiaries have no Knowledge that, either as a result of
the actions contemplated hereby or for any other reason (exclusive of
expiration of a contract upon the passage of time), any entity having an
arrangement with Suitor or its subsidiaries identified in Schedule 4.8 will not
continue to conduct business with Suitor or its subsidiaries after the Closing
Date in substantially the same manner as it has conducted business with Suitor
or its subsidiaries in the past.
4.19 NO DISTRIBUTIONS
-----------------
Neither Suitor nor its subsidiaries has made nor has any intention of
making any distribution or payment to any of its shareholders in respect of
Suitor stock.
4.20 ACCOUNTS RECEIVABLE
--------------------
All accounts receivable of Suitor and its subsidiaries reflected on the
Suitor Balance Sheet are valid receivables subject to no material setoffs or
counterclaims and are current and, to Suitor's Knowledge, collectible (within
90 days after the date on which it first became due and payable), net of the
applicable reserve for bad debts reflected in the financial statements provided
to Target or in the Suitor Disclosure Schedule. To the Knowledge of Suitor and
its subsidiaries, all accounts receivable reflected in the financial or
accounting records of Suitor and its subsidiaries are valid receivables and are
collectible subject to no material setoffs or counterclaims.
4.21 SEC DISCLOSURES
----------------
(a) Suitor has delivered or made available to Target (including through
the SEC EDGAR system) accurate and complete copies (excluding copies of
exhibits) of each report, registration statement and definitive proxy statement
filed by Suitor with the SEC between September 30, 2001 and the date of this
Agreement (the "Suitor SEC Documents"). Since September 30, 2001, all
statements, reports, schedules, forms and other documents required to have been
filed by Suitor with the SEC have been so filed. As of the time it was filed
with the SEC (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing): (i) each of the Suitor SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act of 1933 (the "Securities Act") or the Securities and
Exchange Act of 1934 (the "Exchange Act") (as the case may be); and (ii) none
of the Suitor SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) he consolidated financial statements (including any related notes)
contained in the Suitor SEC Documents: (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to such financial statements and, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC, and except that
unaudited financial statements may not contain footnotes and are subject to
year-end audit adjustments); and (iii) fairly present the consolidated
financial position of Suitorand its subsidiaries as of the respective dates
thereof and the consolidated results of operations of Suitor and its
subsidiaries for the periods covered thereby.
4.22 ABSENCE OF CERTAIN CHANGES OR EVENTS
-------------------------------------
Since December 31, 2001 (the "Suitor Balance Sheet Date"), there has not
been:
(a) any material adverse change in the financial condition, properties,
assets, liabilities or business of Suitor or its subsidiaries;
/27/
(b) any material damage, destruction or loss of any material properties
of Suitor or its subsidiaries, whether or not covered by insurance;
(c) any material adverse change in the manner in which the business of
Suitor or its subsidiaries has been conducted;
(d) any material adverse change in the treatment and protection of trade
secrets or other confidential information of Suitor or its subsidiaries; and
(e) any occurrence not included in paragraphs (a) through (d) of this
Section 4.23 which has resulted, or which Suitor or its subsidiaries has reason
to believe, might be expected to result in a material adverse change in the
business or prospects of Suitor or its subsidiaries.
4.23 LIABILITIES
------------
Neither Suitor, ATR Search nor ATR Tech. have any material direct or
indirect Liabilities, as that term is defined in Section 3.23 ("Suitor
Liabilities"), whether or not of a kind required by generally accepted
accounting principles to be set forth on a financial statement, other than
(i) Suitor Liabilities fully and adequately reflected or reserved against on
the Suitor Balance Sheet and (ii) Suitor Liabilities otherwise disclosed in
this Agreement, including the exhibits hereto and the Suitor Disclosure
Schedule.
4.24 GOVERNMENTAL LICENSES, PERMITS AND AUTHORIZATIONS
---------------------------------------------------
Neither Suitor, ATR Search and ATR Tech. have all governmental licenses,
permits, authorizations and approvals necessary for the conduct of its business
as currently conducted. All such licenses, permits, authorizations and
approvals are in full force and effect, and no proceedings for the suspension
or cancellation of any thereof is pending or threatened.
4.25 EMPLOYEE BENEFIT PLANS
------------------------
(a) The Suitor Disclosure Schedule identifies each salary, bonus,
material deferred compensation, material incentive compensation, stock
purchase, stock option, severance pay, termination pay, hospitalization,
medical, insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or material agreement.
(b) Neither Suitor, ATR Search nor ATR Tech. has maintained, sponsored or
contributed to, any employee pension benefit plan (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
any similar pension benefit plan under the laws of any foreign jurisdiction.
(c) Neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any bonus, golden parachute, severance or other
similar payment or obligation to any current or former employee or director of
Neither Suitor, ATR Search or ATR Tech., or result in any acceleration of the
time of payment, provision or vesting of any such benefits. Without limiting
the generality of the foregoing the consummation of the Merger will not result
in the acceleration of vesting of any unvested Suitor Options.
4.26 NO OMISSION OR UNTRUE STATEMENT:
---------------------------------
To the best of their Knowledge no representation or warranty made by
Suitor, ATR Search or ATR Tech., to Target Systems in this Agreement, in the
Suitor Disclosure Schedule or in any certificate of a Suitor officer required
to be delivered to Target pursuant to the terms of this Agreement contains any
untrue statement of a material fact, or omits to state a material fact
necessary to make the statements contained herein or therein not misleading as
of the date hereof.
/28/
ARTICLE 5
5. CLOSING
--------
5.1 DATE AND TIME
--------------
Subject to this Agreement and the Merger receiving all requisite
shareholder approvals and subject to the other provisions of this Agreement,
the parties shall hold a closing (the "Closing") on the next business day (or
such later date as the parties hereto may agree) following the later of (a) the
date of the meeting of shareholders of Suitor to consider and vote upon this
Agreement and the Merger, or receipt by Target of consent approving the
Merger, or (b) the business day on which the last of the conditions set forth
in Sections 6 and 7 hereof is fulfilled or waived (such later date, the
"Closing Date"), at the offices of Target or such other time and place as the
parties may agree upon.
5.2 TARGET'S CLOSING DELIVERIES
----------------------------
At the Closing, in addition to documents referred to elsewhere, Target
shall deliver, or cause to be delivered, to Suitor:
(a) a certificate, dated as of the Closing Date, executed by the Chief
Executive Officer of Target, to the effect that the representations and
warranties contained in this Agreement are true and correct in all material
respects at and as of the Closing Date and that Target has complied with or
performed in all material respects all terms, covenants and conditions to be
complied with or performed by Target on or prior to the Closing Date;
(b) Certified Resolutions of the Board of Directors and a majority of
the Shareholders of Target approving the transactions set forth herein; and
(c) such other documents as Suitor or its counsel may reasonably require.
5.3 SUITOR CLOSING
---------------
At the Closing, in addition to documents referred to elsewhere, Suitor
shall deliver to Target:
(a) a certificate of Merger dated as of the Closing Date, executed by the
President or Chief Executive Officer of Suitor to the effect that the
representations and warranties of Suitor and its subsidiaries contained in
this Agreement are true and correct in all material respects and that Suitor
has complied with or performed in all material respects all terms, covenants,
and conditions to be complied with or performed by Suitor or prior to the
Closing Date; and
(b) Certified Resolutions of the Board of Directors and a majority of
the Shareholders of Suitor approving the transactions set forth herein; and
(c) such other documents as Target or its counsel may reasonably require.
ARTICLE 6
6. CONDITIONS TO OBLIGATIONS OF TARGET
------------------------------------
The obligation of Target to consummate the Closing is subject to the
following conditions, any of which may be waived by it in its sole discretion:
6.1 COMPLIANCE BY SUITOR
---------------------
On or before the Closing, Suitor shall have performed and complied in all
material respects with the following:
/29/
(a) Suitor shall have preformed and complied in all material respects
with all other agreements and conditions required by this Agreement to be
performed or complied with by Suitor prior to or on the Closing Date.
6.2 ACCURACY OF SUITOR'S REPRESENTATIONS
-------------------------------------
Suitor's representations and warranties contained in this or any schedule,
certificate, or other instrument delivered pursuant to the provisions hereof or
in connection with the transactions contemplated hereby shall be true and
correct in all material respects at and as of the Closing Date (except for such
changes permitted by this Agreement).
6.3 MATERIAL ADVERSE CHANGE
------------------------
No material adverse change shall have occurred subsequent to December 31,
2001 in the financial position, results of operations, assets, liabilities, or
prospects of Suitor or its subsidiaries, nor shall any event or circumstance
have occurred which would result in a material adverse change in the financial
position, results of operations, assets, liabilities, or prospects of Suitor or
its subsidiaries; provided, however, that the following events or occurrences
shall not be deemed to be events or occurrences having a material adverse
effect for purposes of this Section 6.3: (i) reductions or increases in the
trading price of Suitor Common Stock between the date hereof and the Closing
Date; (ii) events or occurrences related directly to the Merger or the other
transactions contemplated by this Agreement.
6.4 DOCUMENTS
----------
All documents and instruments required hereunder to be delivered by Suitor
to Target at the Closing shall be delivered in form and substance reasonably
satisfactory to Target and its counsel.
6.5 LITIGATION
----------
No litigation, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal or regulatory restraint seeking to enjoin the transactions
contemplated by this Agreement or to obtain damages on account hereof
shall be pending or to Target's Knowledge be threatened.
6.6 APPROVAL OF SHAREHOLDERS
-------------------------
Target shall have received the approval of a majority of its shareholders
of this Agreement and the transactions contemplated.
6.7 CONSENTS
---------
All other authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
governmental entity the failure to obtain or comply with which would be
reasonably likely to have a material adverse effect on Target or a material
adverse effect on the consummation of the transactions contemplated hereby
shall have been filed, occurred or been obtained.
ARTICLE 7
7. CONDITIONS TO SUITOR'S OBLIGATIONS
-----------------------------------
Suitor's obligation to consummate the Closing is subject to the following
conditions, any of which may be waived by either party in its sole discretion:
7.1 COMPLIANCE BY TARGET
---------------------
Target shall have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or
complied with by Target prior to or on the Closing Date.
/30/
7.2 ACCURACY OF REPRESENTATIONS OF TARGET
--------------------------------------
The representations and warranties of Target contained in this Agreement
(including the exhibits hereto and the Target Disclosure Schedule) or any
schedule, certificate, or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be true
and correct in all material respects at and as of the Closing Date (except for
changes permitted by this Agreement).
7.3 MATERIAL ADVERSE CHANGE
------------------------
No material adverse change shall have occurred subsequent to December 31,
2001 in the financial position, results of operations, assets, liabilities, or
prospects of Target, nor shall any event or circumstance have occurred which
would result in a material adverse change in the financial position, results
of operations, assets, liabilities, or prospects of Target (including but not
limited to a material deviation in the audited financial statements of Target
from the unaudited financial statements provided by Target to Suitor; provided,
however, that the following shall not be deemed to be material deviations:
(a) material deviations which do not materially affect Target's revenues, net
income, costs of goods sold, inventory or accounts receivable; and (b)
deviations in the tax provisions of such financials relating to transactions
involving its foreign subsidiaries and the appropriate reserve with respect to
any tax liabilities relating thereto; provided, however, that deviations
materially affecting net income in part (a) of the foregoing shall not include
those as a result of such tax provisions of such financials relating to
transactions involving its foreign subsidiaries and the tax liabilities
relating thereto). Notwithstanding anything to the contrary set forth herein,
the following events or occurrences shall not be deemed to be events or
occurrences having a material adverse effect for purposes of this Section 7.3:
(i) events or occurrences affecting the environmental, health and safety
industry that do not have a disproportionate impact on Target, taken as a
whole; or (ii) events or occurrences related directly to the Merger or the
other transactions contemplated by this Agreement.
7.4 LITIGATION
-----------
No litigation, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal or regulatory restraint seeking to enjoin the transactions
contemplated by this Agreement or to obtain damages on account hereof shall be
pending or to Suitor's Knowledge be threatened.
7.5 DOCUMENTS
----------
All documents and instruments required hereunder to be delivered by Target
to Suitor at the Closing shall be delivered in form and substance reasonably
satisfactory to Suitor and its counsel.
7.6 SHAREHOLDER APPROVAL
---------------------
This Agreement shall have been duly adopted and approved, and the Merger
shall have been duly approved, by the shareholders of Target. The holders of
not more than 10% of the shares of Target Common Stock shall have exercised
dissenters' rights pursuant to NRS.
7.7 APPROVAL OF SHAREHOLDERS OF SUITOR
-----------------------------------
Suitor shall have received the approval of a majority of its shareholders
of this Agreement and the transactions contemplated hereby.
7.8 FINANCIAL STATEMENTS
--------------------
Target shall have provided Suitor with financial statements and other
information satisfactory in all respects to allow Suitor to comply with any and
all applicable requirements under the Securities Act and the Exchange Act.
/31/
7.9 CONSENTS
---------
All other authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
governmental entity the failure to obtain or comply with which would be
reasonably likely to have a material adverse effect on Suitor or a material
adverse effect on the consummation of the transactions contemplated hereby
shall have been filed, occurred or been obtained.
ARTICLE 8
8. TERMINATION
------------
8.1 TERMINATION PRIOR TO CLOSING:
------------------------------
(a) If the Closing has not occurred by April 30, 2002 (as may be extended
as set forth below, the "Termination Date") any party may terminate this
Agreement at any time thereafter by giving written notice of termination to the
other, provided, however, that no party may terminate this Agreement if such
party has willfully or materially breached any of the terms and conditions
hereof. Notwithstanding the above, the parties may extend the deadline
provided herein by mutual written consent. If the Closing has not occurred
by April 30, 2002 and Suitor's Proxy Statement as referenced in Section 11
hereof is then under review from the SEC (as defined) or the Closing was unable
to occur by April 30, 2002 due to a delay caused by such review, such
Termination Date shall be automatically extended until the date thirty (30)
business days following the date on which the SEC advises Suitor that it has no
further comments with respect to such Proxy Statement.
(b) Prior to the Termination Date, any party may terminate this Agreement
following the insolvency or bankruptcy of the other party hereto, or if any one
or more of the conditions to Closing set forth in Section 5 or 6 shall become
incapable of fulfillment or there shall have occurred a breach of this
Agreement which breach would reasonably be expected to have a material adverse
effect on the other party hereto and either such condition or breach shall not
have been waived by the party for whose benefit the condition, representation
or warranty was established, then either Target (in the case of a condition in
Section 5) or Suitor (in the case of a condition specified in Section 6) may
terminate this Agreement.
8.2 BREAK-UP FEE
-------------
If this Agreement is terminated and the transactions contemplated hereby
are abandoned as provided in this Section, this Agreement shall become void
and of no further force or effect.
(a) If Suitor terminates this Agreement, Target shall be entitled to (i)
receive a break-up fee in the amount of $10,000 from Suitor or its successor
within five days after completion of the Competing Transaction referred to
therein and (ii) accelerate the maturity of the Bridge Loans, if any, to a date
not less than 30 days after completion of the Competing Transaction.
(b) If Target terminates this Agreement, Suitor shall be entitled to (i)
receive a break-up fee in the amount of $20,000 from Target or its successor
within five days after completion of the Competing Transaction referred to
therein and (ii) accelerate the maturity of the Bridge Loans, if any, to a date
not less than 30 days after completion of the Competing Transaction.
(c) If this Agreement is terminated by either party, each party shall
return all documents and other material received from or on behalf of the other
party in connection with the transactions contemplated hereby, whether so
obtained before or after the execution hereof. All Confidential Information
received by a party with respect to the business of the other party shall be
treated in accordance with the restrictions set forth herein, which shall
remain in full force and effect notwithstanding the termination of this
Agreement.
/32/
8.3 CONSEQUENCES OF TERMINATION
----------------------------
Upon termination of this Agreement in accordance with this Section 8 or
any other express right of termination provided elsewhere in this Agreement,
the parties shall be relieved of any further obligation to the others except
as specified in Section 8.2; provided, however, that no termination of this
Agreement, in accordance with this Section 8 hereof or under any other express
right of termination provided elsewhere in this Agreement shall operate to
release any party from any liability to any other party incurred before the
date of such termination or from any liability resulting from any willful
misrepresentation made in connection with this Agreement or willful breach
hereof.
ARTICLE 9
9. ADDITIONAL COVENANTS
---------------------
9.1 MUTUAL COOPERATION
-------------------
The parties hereto will cooperate with each other, and will use all
reasonable efforts to cause the fulfillment of the conditions to the parties'
obligations hereunder and to obtain as promptly as possible all consents,
authorizations, orders or approvals from each and every third party, whether
private or governmental, required in connection with the transactions
contemplated by this Agreement.
9.2 CHANGES IN REPRESENTATIONS AND WARRANTIES OF A PARTY
-----------------------------------------------------
A party shall promptly give written notice to the other party upon
becoming aware of (A) any fact which, if known on the date hereof, would have
been required to be set forth or disclosed pursuant to this Agreement and (B)
any impending or threatened breach in any material respect of any of the
representations and warranties contained in this Agreement and with respect to
the latter shall use all reasonable efforts to remedy same.
9.3 REGISTRATION STATEMENTS
------------------------
Suitor shall within a reasonable time period after the Effective Time, or
at such time prior to September 30, 2002, file a registration statement on Form
SB-2 or on such other form as is then available under the Securities Act
covering the Convertible securities per the terms of this Agreement so as to
facilitate the resale thereof, to be kept effective until such date as is the
earlier of (i) the date on which the securities registered under such
registration statement have been sold; or (ii) the date on which the securities
registered under such registration statement may be sold to the public without
registration or restriction (including without limitation, restrictions as to
volume).
9.4 BOARD REPRESENTATION
---------------------
Target has the right to appoint one (1) additional member to Target's
Board of Directors.
ARTICLE 10
10 FEES
-----
Each party hereto hereby represents and warrants that no brokers, finders
or investment bankers that may be entitled to any brokerage fee, finder's fee,
commission or investment banking fee have acted for that party in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE 11
11. SECURITIES; SHAREHOLDER APPROVAL
---------------------------------
11.1 TARGET
-------
Target, acting through its board of directors, in accordance with
pplicable law, its Articles of Incorporation, as amended, and Bylaws, as
amended, will:
/33/
(a) duly call, give notice of, convene and hold a special meeting of its
shareholders, to be held as soon as practicable after the date of this
Agreement, for the purpose of submitting this Agreement, the Merger and the
other transactions contemplated hereby, as a single proposal (the "Target
Proposal") for adoption and approval by the required vote of the holders of
Target Common Stock;
(b) cooperate with Suitor in preparing and filing with the Securities
and Exchange Commission (the "SEC") as promptly as practicable after the date
of this Agreement the Proxy Statement with respect to such shareholders meeting
satisfying the requirements of the Securities Act and the Exchange Act, respond
promptly to any comments raised by the SEC with respect to the preliminary
version of the Proxy Statement, use all its reasonable efforts to cause the
definitive version of the Proxy Statement to be mailed to its shareholders as
soon as it is legally permitted to do so;
(c) provide Suitor with the information concerning Target required to be
included in the Proxy Statement;
(d) and include in the Proxy Statement the recommendation of the board of
directors of Target that the shareholders of Target vote in favor of adoption
and approval of the Target Proposal.
11.2 INFORMATION OF TARGET IN PROXY STATEMENT:
-----------------------------------------
The information supplied by Target for inclusion in the Proxy Statement
shall not, at (i) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the shareholders of Suitor, (ii) the
time of each of the shareholders' meetings and (iii) the Effective Time,
contain any untrue statement of a material fact or fail to state any 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. If, at any time prior to the Effective Time, any event or
circumstance relating to Target or any subsidiary of Target, or their
respective officers or directors, that should be set forth in an amendment or a
supplement to the Proxy Statement is discovered by Target, Target shall
promptly inform Suitor.
11.3 SUITOR
-------
Suitor, acting through its board of directors, in accordance with
applicable law, its Articles of Incorporation and Bylaws, will:
(a) duly call, give notice of, convene and hold an annual meeting of its
shareholders, to be held as soon as practicable after the date of this
Agreement, for the purpose of submitting, each as a single proposal, the
proposals adopted by the board of directors of Suitor to effectuate the Merger
and issue the Suitor Merger Stock pursuant to the Merger (the "Share
Issuance");
(b) file with the SEC as promptly as practicable after the date of this
Agreement the Proxy Statement complying in all material respects with the
Securities Act and the Exchange Act, respond promptly to any comments raised by
the SEC with respect to the preliminary version of the Proxy Statement, use all
its reasonable efforts to cause the definitive version of the Proxy Statement
to be mailed to its shareholders as soon as it is legally permitted to do so;
(c) provide Target with the information concerning Suitor required to be
included in the Proxy Statement; and
(d) include in the Proxy Statement the recommendation of the board of
directors of Suitor that the shareholders of Suitor vote in favor of adoption
and approval of the Suitor Proposals.
11.4 INFORMATION OF SUITOR IN PROXY STATEMENT
-----------------------------------------
The information on Suitor in the Proxy Statement shall not, at (i) the
time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the shareholders of Target, (ii) the time of each of the
shareholders' meetings and (iii) the Effective Time, contain any untrue
statement of a material
/34/
fact or fail to state any 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. If, at any time prior
to the Effective Time, any event or circumstance relating to Suitor or any
subsidiary of Suitor, or their respective officers or directors, that should be
set forth in an amendment or a supplement to the Proxy Statement is discovered
by Suitor, Suitor shall promptly inform Target.
11.5 COOPERATION
------------
Each party will promptly advise the other of its receipt of, and will
promptly furnish the other party with copies of, all comments received from the
SEC with respect to the Proxy Statement and will consult with the other party
in responding to such comments.
11.6 RESTRICTION ON TRANSFER
------------------------
Target acknowledges that the shares of Suitor Common Stock are restricted
securities and may only be sold pursuant to an effective registration statement
under the Securities Act or an exemption therefrom. The Restricted Securities
and any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend thereon or
otherwise, shall not be transferable except upon the conditions specified
herein.
11.7 RESTRICTIVE LEGENDS
--------------------
Each certificate for the Suitor Common Stock issued in the Merger and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall contain a legend to the effect that:
"The Restricted Securities covered by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold, offered for
sale, assigned, transferred or otherwise disposed of, unless registered
pursuant to the provisions of that Act or an opinion of counsel to Suitor is
obtained stating that such disposition is in compliance with an available
exemption from such registration."
ARTICLE 12
12. MISCELLANEOUS
--------------
12.1 EXPENSES
---------
Target and Suitor shall each pay its own expenses incident to the
negotiation, preparation, and carrying out of this Agreement, including legal
and accounting and audit fees.
12.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
------------------------------------------------------
All statements contained in this Agreement or in any certificate delivered
by or on behalf of Target or Suitor pursuant hereto, or in connection with the
actions contemplated hereby shall be deemed representations, warranties and
covenants by Suitor or Target, as the case may be, hereunder. All
representations, warranties, and covenants made by Target or Suitor in this
Agreement, or pursuant hereto, shall terminate at the Closing.
12.3 PUBLICITY
----------
Target and Suitor shall not issue any press release or make any other
public statement, in each case, relating to, in connection with or arising out
of this Agreement or the transactions contemplated hereby, without obtaining
the prior approval of the other, which shall not be unreasonably withheld or
delayed, except that prior approval shall not be required if, in the reasonable
judgment of Suitor, prior approval by Target would prevent the timely
dissemination of such release or statement in violation of applicable Federal
securities laws, rules or regulations or policies of the NASD OTC Bulletin
Board.
/35/
12.4 SUCCESSION AND ASSIGNMENTS AND THIRD PARTY BENEFICIARIES
---------------------------------------------------------
This Agreement may not be assigned (either voluntarily or involuntarily)
by any party hereto without the express written consent of the other party.
Any attempted assignment in violation of this Section shall be void and
ineffective for all purposes. In the event of an assignment permitted by this
Section, this Agreement shall be binding upon the heirs, successors and assigns
of the parties hereto. There shall be no third party beneficiaries of this
Agreement.
12.5 NOTICES
--------
All notices, requests, demands, or other communications with respect to
this Agreement shall be in writing and shall be (i) sent by facsimile
transmission, (ii) sent by the United States Postal Service, registered or
certified mail, return receipt requested, or (iii) personally delivered by a
nationally recognized express overnight courier service, charges prepaid, to
the following addresses (or such other addresses as the parties may specify
from time to time in accordance with this Section)
(a) To ATR Search Corporation: 2 Penn Plaza, 15th Floor, Ste. 53
New York, New York 10121
Phone No: (212) 292-4959
Fax No: (212) 292-4957
Attn: Robert Cox, President
(b) Medicius, Inc: 2660 Townsgate Road, Ste., 310
Westlake Village, California 91361
Phone No: (805) 446-1973
Fax No: (805) 446-1983
Attn: Keith Berman, President and CEO
Any such notice shall, when sent in accordance with the preceding
sentence, be deemed to have been given and received on the earliest of (i) the
day delivered to such address or sent by facsimile transmission, (ii) the fifth
(5th) business day following the date deposited with the United States Postal
Service, or (iii) 24 hours after shipment by a such courier service.
12.6 CONSTRUCTION
-------------
This Agreement shall be construed and enforced in accordance with the
internal laws of the State of Nevada without giving effect to the principles
of conflicts of law thereof.
12.7 COUNTERPARTS
-------------
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, but all of which shall together constitute
one and the same Agreement.
/36/
12.8 NO IMPLIED WAIVER; REMEDIES
----------------------------
No failure or delay on the part of the parties hereto to exercise any
right, power, or privilege hereunder or under any instrument executed pursuant
hereto shall operate as a waiver nor shall any single or partial exercise of
any right, power, or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. All rights, powers,
and privileges granted herein shall be in addition to other rights and remedies
to which the parties may be entitled at law or in equity.
12.9 ENTIRE AGREEMENT
-----------------
This Agreement, including the Exhibits and Disclosure Schedules attached
hereto, sets forth the entire understandings of the parties with respect to the
subject matter hereof, and it incorporates and merges any and all previous
communications, understandings, oral or written as to the subject matter
hereof, and cannot be amended or changed except in writing, signed by the
parties.
12.10 HEADINGS
--------
The headings of the Sections of this Agreement, where employed, are for
the convenience of reference only and do not form a part hereof and in no way
modify, interpret or construe the meanings of the parties.
12.11 SEVERABILITY
------------
To the extent that any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted hereof and the remainder of such
provision and of this Agreement shall be unaffected and shall continue in full
force and effect.
12.12 ATTORNEYS FEES
--------------
In the event any legal action is brought to interpret or enforce this
Agreement, the party prevailing in such action shall be entitled to recover
its attorneys' fees and costs in addition to any other relief that it is
entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
Suitor: ATR Search Corporation
By: /s/ Robert Cox
-------------------------------
Robert Cox, President
Target: Medicius, Inc.
By: /s/ Keith Berman
-------------------------------
Keith Berman, President
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE MERGER AGREEMENT
AS LISTED ABOVE.
/37/
PROPOSAL NO. 2
Corporate Name Change
The Suitor's officers and directors propose to amend the Articles of
incorporation to reflect Suitor's name change from ATR Search Corporation,
to CareDecission Corporation.
PROPOSAL NO. 3
Suitor to Increase Authorized shares.
The Suitor's officers and directors propose to amend the Articles of
incorporation to reflect the increase of Suitor's authorized shares to
200,000,000.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE CHANGING OF THE
SUITOR'S NAME AS LISTED ABOVE.
OTHER MATTERS
The Suitor knows of no other matter to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of proxy to vote the shares they
represent as the Board of Directors may recommend.
ANNUAL REPORT
Included with this proxy statement, see Exhibit I, is a copy of the
Suitor's annual report for the year ended December 31, 2001. This annual
report is taken from the Suitor's Form 10-KSB, filed with the United States
Securities and Exchange Commission on March 15, 2001, with certain exhibits
excluded. The entire filings, with all exhibits attached, are available online
at the SEC's website, www.sec.gov, or at FreeEdgar, www.FreeEdgar.com. (Note
that some of those exhibits are not attached to the Form 10-KSB but are
included in other Forms filed with the SEC; those Forms are referenced from the
Form 10-KSB, and are also available online at the addresses mentioned above.)
/38/
PROXY
OF
ATR SEARCH CORPORATION
A Nevada Corporation
KNOW ALL PERSONS BY THESE PRESENTS, that, pursuant to Nevada Revised
Statutes 78.355, the undersigned, [NAME OF STOCKHOLDER], hereby appoints [PROXY
HOLDER] proxy with power of substitution and revocation to vote the common
shares of [NAME OF STOCKHOLDER], which the undersigned is entitled to vote at
the [SPECIAL] meeting of stockholders to be held on June 17, 2002, at 10:00am
at 2 Penn Plaza, 15th Floor, Ste. 53, New York, NY 10121, and at any
adjournment thereof, with all the powers the undersigned would posses if
present,
(PLEASE SIGN AND DATE THE PROXY ATACHED)
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
YES NO ABSTAIN
1. Including authority to vote for the Merger Agreement
2. For the Corporate name Change
3. Increase the Company's authorized common stock to
200,000,000
4. Upon any other matter which may properly come before
the meeting
Every properly signed proxy will be voted in accordance with the
specifications made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR EACH ITEM LISTED ABOVE. All prior proxies are hereby revoked. This
proxy will also be voted in discretion of the proxies or proxy on any other
business. Receipt is hereby acknowledged of the Notice of Special Meeting and
Proxy Statement.
This proxy is revocable at any time, and the undersigned reserve the right
to attend the meeting and vote in person. The undersigned hereby revokes any
proxy heretofore given in respect of the shares of the Company.
/39/
THE BOARD OF DIRECTORS URGES THAT YOU FILL OUT AND DATE THE PROXY AND PROXY
CARD ATTACHED, AND RETURN THEM PROMPTLY BY MAIL IN THE ENCLOSED ENVELOPE, NO
POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
NO. OF SHARES ___________________________
SIGNATURE *____________________ SIGNATURE IF HELD JOINTLY*__________________
DATE ____________________, 2002
*NOTE: Please sign exactly as name(s) appear on your Stock Certificate.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If more than one name is shown, as in the case of
joint tenancy, each party must sign.
This proxy is not valid after the expiration of three (3) months from the date
of its creation.
DATED this May 25, 2002.
This proxy is not valid after the expiration of three (3) months from the date
of its creation.
/40/
TABLE OF EXHIBITS
EXHIBIT A: AMENDED ARTICLES OF ATR SEARCH CORPORATION
EXHIBIT B: FORM ATR SEARCH CORPORATION NEVADA BYLAWS
EXHIBIT C: FORM OF AGREEMENT OF MERGER
EXHIBIT D: VOTING AGREEMENTS
EXHIBIT H TARGET'S INTELECTUAL PROPERTY
EXHIBIT I SUITOR AUDIT
EXHIBIT J TARGET AUDIT
EXHIBIT K SELECTED NEVADA REVISED STATUTES
EXHIBIT L TARGET WARRANT HOLDERS
EXHIBIT M TARGET CONVERTIBLE NOTE HOLDERS
/41/
EXHIBIT A
AMENDED ARTICLES OF ATR SEARCH CORPORATION
/42/
Certificate of Amendment to Articles of Incorporation
-----------------------------------------------------
For Nevada Profit Corporations
------------------------------
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
-------------------------------------------------------------
-Remit in Duplicate -
---------------------
1. Name of corporation: ATR Search Corporation. (C5191-2001)
--------------------------------------
2. The articles have been amended as follows (provide article numbers, if
available):
ARTICLE I is amended to read as follows:
1. Name of Company:
CareDecision Corporation
------------------------
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater portion of the voting power as may be required in the case of a vote
by classes or series, or may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is:
-----------------------
4. Signatures:
-----------------------
Michael Vogel, Director
---------------------
Robert Cox, Director
IMPORTANT: Failure to include any of the above information and remit the
proper fees may cause this filing to be rejected.
Nevada Secretary of Slate Form 78.385 PROFIT AMEND199901
Revised on' 07121/01
/43/
Certificate of Amendment to Articles of Incorporation
-----------------------------------------------------
For Nevada Profit Corporations
------------------------------
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
-------------------------------------------------------------
-Remit in Duplicate -
---------------------
1. Name of corporation: ATR Search Corporation. (C5191-2001)
--------------------------------------
2. The articles have been amended as follows (provide article numbers, if
available):
ARTICLE 4 is amended to read as follows:
4. Authorized Shares:
The aggregate number of shares which the corporation shall have authority to
-------------------------------------------------------------------------------
issue shall consist of 200,000,000 shares of Common Stock having a $.001 par
-------------------------------------------------------------------------------
value, and 5,000,000 shares of Preferred Stock having a $.001 par value. The
-------------------------------------------------------------------------------
Common Stock and Preferred Stock of the Company may be issued from time to time
-------------------------------------------------------------------------------
without prior approval by the stockholders. The Common Stock and Preferred
-------------------------------------------------------------------------------
Stock may be issued for such consideration as may be fixed from time to time by
-------------------------------------------------------------------------------
the Board of Directors. The Board of Directors may issue such share of Common
-------------------------------------------------------------------------------
Stock and Preferred Stock in one or more series, with such voting powers,
-------------------------------------------------------------------------------
designations, preferences and rights or qualifications, limitations or
-------------------------------------------------------------------------------
restrictions thereof as shall be stated in the resolution or resolutions.
-------------------------------------------------------------------------------
33. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater portion of the voting power as may be required in the case of a vote
by classes or series, or may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is:
-----------------------
4. Signatures:
-----------------------
Michael Vogel, Director
---------------------
Robert Cox, Director
IMPORTANT: Failure to include any of the above information and remit the
proper fees may cause this filing to be rejected.
Nevada Secretary of Slate Form 78.385 PROFIT AMEND199901
Revised on' 07121/01
/44/
EXHIBIT B
FORM ATR SEARCH CORPORATION NEVADA BYLAWS
/45/
BYLAWS
OF
ATR SEARCH CORPORATION
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Nevada shall be
located in Las Vegas, County of Clark. The Corporation may have such other
offices, either within or without the State of Nevada, as the Board of
Directors may designate or as the business of the Corporation may require from
time to time.
ARTICLE II
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall
-------------- be held on the 1st day in the month of March
in each year, beginning with the year 2002, at the hour of 10 o'clock a.m.,
for the purpose of electing Directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday, such meeting shall be held on the next
business day. If the election of Directors shall not be held on the day
designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as soon as
conveniently may be.
SECTION 2. Special Meetings. Special meetings of the shareholders, for any
---------------- purpose or purposes, unless otherwise prescribed
by statute, may be called by the President or by the Board of Directors, and
shall be called by the President at the request of the holders of not less
than fifty percent (50%) of all the outstanding shares of the Corporation
entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors may designate any place,
---------------- either within or without the State of Nevada,
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Nevada, unless otherwise prescribed by statute,
as the place for the holding of such meeting. If no designation is made, the
place of the meeting will be the principal office of the Corporation.
SECTION 4. Notice of Meeting. Written notice stating the place, day and hour
----------------- of the meeting and, in case of a special meeting,
the purpose or purposes for which the meeting is called, shall unless otherwise
prescribed by statute, be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail, addressed to the
shareholder at his/her address as it appears on the stock transfer books of
the Corporation, with postage thereon prepaid.
/46/
SECTION 5. Closing of Transfer Books or Fixing of Record. For the purpose of
--------------------------------------------- determining
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors of the Corporation may provide that the
stock transfer books shall be closed for a stated period, but not to exceed in
any case fifty (50) days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten (10) days
mmediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than fifty (50) days and, in case of a meeting of shareholders, not less than
ten (10) days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
SECTION 6. Voting Lists. The officer or agent having charge of the stock
------------ transfer books for shares of the Corporation shall
make a complete list of the shareholders entitled to vote at each meeting of
shareholders or at any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each. Such list shall
be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the Corporation
------ entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may vote
------- in person or by proxy executed in writing by the
shareholder by his/her duly authorized attorney-in-fact. Such proxy shall be
filed with the secretary of the Corporation before or at the time of the
meeting.
SECTION 9. Voting of Shares. Each outstanding share entitled to vote shall be
---------------- entitled to one vote upon each matter submitted to
a vote at a meeting of shareholders.
/47/
SECTION 10. Voting of Shares by Certain Holders. Shares standing in the name
-----------------------------------of another corporation may be
voted by such officer, agent or proxy as the Bylaws of such corporation may
prescribe or, in the absence of such provision, as the Board of Directors of
such corporation may determine. Shares held by an administrator, executor,
guardian or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name
of a trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such shares
into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and the shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his name, if authority
to do so be contained in an appropriate order of the court by which such
receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time.
SECTION 11. Informal Action by Shareholders. Unless otherwise provided by
------------------------------- law, any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTCLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The Board of Directors shall be responsible for
--------------the control and management of the affairs, property
and interests of the Corporation and may exercise all powers of the Corporation
except as are in the Certificate of Incorporation or by statute expressly
conferred upon or reserved to the shareholders.
SECTION 2. Number, and Qualifications. The business affairs of the
-------------------------- corporation shall be managed by a Board
of one (1) Director. The number of directors of the Corporation shall be fixed
by the Board of Directors, but in no event shall be less than one (1). Each
director shall hold office until the next annual meeting of shareholders and
until his/her successor shall have been elected and qualified.
SECTION 3. Regular Meetings. A regular meeting of the Board of Directors
---------------- shall be held without other notice than this Bylaw
immediately after, and at the same place as, the annual meeting of
shareholders. The Board of Directors may provide, by resolution, the time and
place for the holding of additional regular meetings without notice other than
such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of Directors may
---------------- be called by or at the request of the President or
any two directors. The person or persons authorized to call special
/48/
meetings of the Board of Directors may fix the place for holding any special
meeting of the Board of Directors called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at least one
------(1) day previous thereto by written notice delivered
personally or mailed to each director at his business address, or by telegram.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid. If notice be
given by telegram, such notice shall be deemed to be delivered when the notice
be given to the telegraph company. Any directors may waive notice of any
meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6. Quorum. A majority of the number of directors fixed by Section 2
------of this Article shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. Telephonic Meeting. A meeting of the Board of Directors may be had
------------------by means of a telephone conference or similar
communications equipment by which all persons participating in the meeting can
hear each other, and the participation in a meeting under such circumstances
shall constitute presence at the meeting.
SECTION 8. Manner of Acting. The act of the majority of the directors present
---------------- at a meeting at which a quorum is present shall be
the act of the Board of Directors.
SECTION 9. Action Without a Meeting. Any action that may be taken by the
------------------------- Board of Directors at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so to
be taken, shall be signed before such action by all of the directors.
SECTION 10. Vacancies. Any vacancy occurring in the Board of Directors may be
--------- filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors, unless
otherwise provided by law. A director elected to fill a vacancy shall be
elected for the unexpired term of his/her predecessor in office. Any
directorship to be filled by reason of an increase in the number of directors
may be filled by election by the Board of Directors for a term of office
continuing only until the next election of directors by the shareholders.
SECTION 11. Resignation. Any director may resign at any time by giving
----------- written notice to the Board of Directors, the
President or the Secretary of the Corporation. Unless otherwise specified in
such written notice such resignation shall take effect upon receipt thereof by
the Board of Directors or such officer, and the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 12. Removal. Any director may be removed with or without cause at any
------- time by the affirmative vote of shareholders holding of
record in the aggregate at least a majority of the outstanding shares of stock
of the Corporation at a special meeting of the shareholders called for that
purpose, and may be removed for cause by action of the Board.
/49/
SECTION 13. Compensation. By resolution of the Board of Directors, each
------------ director may be paid for his/her expenses, if any,
of attendance at each meeting of the Board of Directors, and may be paid a
stated salary as director or a fixed sum for attendance at each meeting of the
Board of Directors or both. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 14. Contracts. No contract or other transaction between this
--------- Corporation and any other corporation shall be impaired,
affected or invalidated, nor shall any director be liable in any way by reason
of the fact that one or more of the directors of this Corporation is or are
interested in, or is a director or officer, or are directors or officers of
such other corporations, provided that such facts are disclosed or made known
to the Board of Directors, prior to their authorizing such transaction. Any
director, personally and individually, may be a party to or may be interested
in any contract or transaction of this Corporation, and no directors shall be
liable in any way by reason of such interest, provided that the fact of such
interest be disclosed or made known to the Board of Directors prior to their
authorization of such contract or transaction, and provided that the Board of
Directors shall authorize, approve or ratify such contract or transaction by
the vote (not counting the vote of any such Director) of a majority of a
quorum, notwithstanding the presence of any such director at the meeting at
which such action is taken. Such director or directors may be counted in
determining the presence of a quorum at such meeting. This Section shall not
be construed to impair, invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
SECTION 15. Committees. The Board of Directors, by resolution adopted by a
---------- majority of the entire Board, may from time to time
designate from among its members an executive committee and such other
committees, and alternate members thereof, as they may deem desirable, with
such powers and authority (to the extent permitted by law) as may be provided
in such resolution. Each such committee shall serve at the pleasure of the
Board.
SECTION 16. Presumption of Assent. A director of the Corporation who is
--------------------- present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his/her dissent shall be entered
into the minutes of the meeting or unless he/she shall file written dissent to
such action with the person acting as the Secretary of the meeting before the
adjournment thereof, or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
uch right to dissent shall not apply to a director who voted in favor of such
action.
ARTICLE IV
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a President, one
------- or more Vice Presidents, a Secretary, and a Treasurer, each
of whom shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by
the Board
/50/
of Directors, including a Chairman of the Board. In its discretion,
the Board of Directors may leave unfilled for any such period as it may
determine any office except those of President and Secretary. Any two or more
offices may be held by the same person. Officers may be directors or
shareholders of the Corporation.
SECTION 2. Election and Term of Office. The officers of the Corporation to be
--------------------------- elected by the Board of Directors shall
be elected annually by the Board of Directors at the first meeting of the Board
of Directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Each officer shall hold office
until his/her successor shall have been duly elected and shall have qualified,
or until his/her death, or until he/she shall resign or shall have been removed
in the manner hereinafter provided.
SECTION 3. Resignation. Any officer may resign at any time by giving written
----------- notice of such resignation to the Board of Directors,
or to the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or by such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 4. Removal. Any officer or agent may be removed by the Board of
------- Directors whenever, in its judgment, the best interests of
he Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights, and such appointment shall be terminable at will.
SECTION 5. Vacancies. A vacancy in any office because of death, resignation,
--------- removal, disqualification or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term.
SECTION 6. President. The President shall be the principal executive officer
-------- of the Corporation and, subject to the control of the
Board of Directors, shall in general supervise and control all of the business
and affairs of the Corporation. He/she shall, when present, preside at all
meetings of the shareholders and of the Board of Directors, unless there is a
Chairman of the Board, in which case the Chairman will preside. The President
may sign, with the Secretary or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates for shares of the
Corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
SECTION 7. Vice President. In the absence of the President or in event of his
-------------- /her death, inability or refusal to act, the Vice
President shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice President shall perform such other duties as from time to
time may be assigned by the President or by the Board of Directors.
/51/
If there is more than one Vice President, each Vice President shall succeed to
the duties of the President in order of rank as determined by the Board of
Directors. If no such rank has been determined, then each Vice President shall
succeed to the duties of the President in order of date of election, the
earliest date having first rank.
SECTION 8. Secretary. The Secretary shall: (a) keep the minutes of the
--------- proceedings of the shareholders and of the Board of
Directors in one or more minute book provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws
or as required by law; (c) be custodian of the corporate records and of the
seal of the Corporation and see that the seal of the Corporation is affixed to
all documents, the execution of which on behalf of the Corporation under its
seal is duly authorized; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the president certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general perform all duties incident to the office of
the Secretary and such other duties as from time to time may be assigned by the
President or by the Board of Directors.
SECTION 9. Treasurer. The Treasurer shall: (a) have charge and custody of and
--------- be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of Article VI of these
Bylaws; and (c) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
SECTION 10. Salaries. The salaries of the officers shall be fixed from time
-------- to time by the Board of Directors, and no officer shall
be prevented from receiving such salary by reason of the fact that he/she is
also a director of the corporation.
SECTION 11. Sureties and Bonds. In case the Board of Directors shall so
------------------ require any officer, employee or agent of the
Corporation shall execute to the Corporation a bond in such sum, and with such
surety or sureties as the Board of Directors may direct, conditioned upon the
faithful performance of his/her duties to the Corporation, including
responsibility for negligence for the accounting for all property, funds or
securities of the Corporation which may come into his/her hands.
SECTION 12. Shares of Stock of Other Corporations. Whenever the Corporation
------------------------------------- is the holder of shares of
stock of any other corporation, any right of power of the Corporation as such
shareholder (including the attendance, acting and voting at shareholders'
meetings and execution of waivers, consents, proxies or other instruments) may
be exercised on behalf of the Corporation by the President, any Vice President
or such other person as the Board of directors may authorize.
/52/
ARTICLE V
INDEMNITY
The Corporation shall indemnify its directors, officers and employees as
follows:
Every director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities, including
counsel fees, reasonably incurred by or imposed upon him/her in connection with
any proceeding to which he/she may be made a party, or in which he/she may
become involved, by reason of being or having been a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of the Corporation,
partnership, joint venture, trust or enterprise, or any settlement thereof,
whether or not he/she is a director, officer, employee or agent at the time
such expenses are incurred, except in such cases wherein the director, officer,
employee or agent is adjudged guilty of willful misfeasance or malfeasance in
the performance of his/her duties; provided that in the event of a settlement
the indemnification herein shall apply only when the Board of Directors
approves such settlement and reimbursement as being for the best interests
of the Corporation.
The Corporation shall provide to any person who is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
equest of the Corporation as a director, officer, employee or agent of the
corporation, partnership, joint venture, trust or enterprise, the indemnity
against expenses of a suit, litigation or other proceedings which is
specifically permissible under applicable law.
The Board of Directors may, in its discretion, direct the purchase of
liability insurance by way of implementing the provisions of this Article.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any officer or
--------- officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
----- and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for the
------ payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation, shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall from
time to time be determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
-------- shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board
of Directors may select.
/53/
ARTICLE VII
SHARES OF STOCK
SECTION 1. Certificates for Shares. Certificates representing shares of the
------------------------ Corporation shall be in such a form as
shall be determined by the Board of Directors. Such certificates shall be
signed by the President and by the Secretary or by such other officers
authorized by law and by the Board of Directors to do so, and sealed with the
corporate seal. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in the
case of a lost, destroyed or mutilated certificate, a new one may be issued
therefor upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation shall be
------------------- made only on the stock transfer books of the
Corporation by the holder of record thereof or by his/her legal representative,
who shall furnish proper evidence of authority to transfer, or by his/her
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes. Provided, however, that upon any action undertaken
by the shareholders to elect S Corporation status pursuant to Section 1362 of
the Internal Revenue Code and upon any shareholders' agreement thereto
restricting the transfer of said shares so as to disqualify said S Corporation
status, said restriction on transfer shall be made a part of the Bylaws so long
as said agreement is in force and effect.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of January
and end on the thirty first day of December of each year.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal".
/54/
ARTICLE XI
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation or under
the provisions of the applicable Business Corporation Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
The above Bylaws are certified to have been adopted by the Board of
Directors of the Corporation on March 16, 2001.
/s/ Michael Vogel
-----------------
Secretary
/55/
EXHIBIT C
FORM OF AGREEMENT OF MERGER
/56/
FORM OF
AGREEMENT OF MERGER
This Agreement of Merger (the "Agreement") is entered into as of April 30,
2002, by and among Medicius, Inc., a Nevada corporation ("Target"), and ATR
Search Corporation, a Nevada corporation ("Suitor").
RECITALS
A. Target and Suitor have entered into a Merger Agreement dated April 30,
2002 (the "Merger Agreement"), providing, among other things, for the execution
and filing of this Agreement of Merger;
B. The respective Board of Directors of each of Target and Suitor deem it
advisable and in the best interests of such corporation and its respective
shareholders that Target be merged with and into Suitor and such Board of
Directors have approved this Agreement and the Merger (as hereinafter defined);
C. The Merger Agreement has been approved by the respective shareholders of
Target and Suitor;
D. Target and Suitor have agreed to merge Target into Suitor according to
the terms and conditions set forth herein.
AGREEMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
1.1 THE CONSTITUENT CORPORATIONS.
(a) Suitor: Suitor is a Nevada corporation duly incorporated and
existing under the laws of the State of Nevada.
(b) Target: Target is a Nevada corporation duly incorporated and
existing under the laws of the State of Nevada.
1.2 MERGER AND SURVIVAL OF SUITOR AND TARGET: Upon the satisfaction or
waiver of all of the conditions precedent to the obligations of each of the
parties to the Merger Agreement and upon the filing of this Agreement with
the Secretary of State of Nevada (the "Effective Time"), Target shall be merged
with and into Suitor in accordance with the provisions of, and with the effect
provided in the Nevada Private Corporations General Provisions ("NGCL"). Both
the Target and Suitor will be the surviving corporations in the Merger.
However, following the Merger, the operations of Target will be conducted
through CareTechnologies LLC, which is a wholly owned subsidiary of the Suitor.
1.3 CONSIDERATION FOR THE MERGER.
(a) On the Effective Date, Target will merge with and into the Suitor.
The separate existence of Target will continue. Both the Suitor and Target
will be the surviving and operating entities in the Merger and both will
continue to be governed by the laws of the State of Nevada. The Certificate of
Incorporation and Bylaws of the Suitor in effect as of the Effective Date will
not be affected by the Merge.
(b) On the Effective Date, without any action on the part of the
holders thereof, the capital stock of Medicius issued and outstanding
immediately prior to the Effective Date will be converted into the right to
receive Suitor Common Stock as follows:
/57/
(i) Series A Preferred Exchange Rate. Each share of Medicius Series
A Preferred Stock will be converted into 3.50 Merger Shares (the "Series A
Preferred Exchange Ratio") and .75 Merger Warrants.
(ii) Common Exchange Rate. Each share of Medicius Common Stock will
be converted into 3.0 Merger Shares ("Common Exchange Ratio") and .5 Merger
Warrants.
(c) After the Effective Date, all Medicius common stock purchase
warrants that remain unexercised on the Effective Date and any Medicius
Convertible Notes that remain unconverted or unpaid on the Effective Date will
be exercisable for or convertible into the number of Merger Shares (the
"Reserved Merger Shares") based on the Common Exchange Ratio, as provided in
paragraphs (f) and (g) of this Section.
(d) The shareholders of Medicius will not be entitled to fractional
Merger Shares as a result of the Merger, and the holders of Medicius common
stock purchase warrants that remain unexercised on the Effective Date and any
Medicius Convertible Notes that remain unconverted or unpaid on the Effective
Date will not be entitled to any fractional Reserved Merger Shares upon
exercise or conversion of those instruments. Any fractional share of Suitor
Common Stock that may result from the application of the exchange rates in
Section 1.3(b) shall be rounded up or down to the nearest whole Merger Share,
and any fractional share of Suitor Common Stock that may result from the
application of the exchange rates in Section 1.3(c) shall be rounded up or down
to the nearest whole Reserved Merger Share.
(e) The Merger shall have all the other effects provided by the NGCL.
(f) On the Effective Date, the Suitor shall assume all outstanding
Medicius Warrants, which will thereafter become exercisable for the number of
Reserved Merger Shares that the option holders would have received in the
Merger at the Common Exchange Rate in exchange for the shares of Medicius
Common Stock issuable upon exercise thereof prior to the Effective Date, on
he same terms and conditions in effect immediately prior to the Merger. As
soon as practicable after the Effective Date, the Suitor shall execute and
deliver option agreements reflecting the foregoing to holders of outstanding
Medicius Warrants.
(g) Prior to the Effective Date, Medicius will use its best efforts to
encourage conversion of the Medicius Convertible Notes. To the extent the
Medicius Convertible Notes remain unconverted or unpaid on the Effective Date,
(i) the indebtedness evidenced thereby shall be assumed by the Suitor, and (ii)
they will become convertible after the Effective Date into the number of
Reserved Merger Shares that the holders would have received in the Merger at
the Common Exchange Rate in exchange for the shares of Medicius Common Stock
issuable upon conversion thereof prior to the Effective Date, on the same terms
and conditions in effect immediately prior to the Merger.
(h) NO FRACTIONAL SHARES OR OPTIONS: Unless otherwise required by
Section 407 of the NGCL, no fractional shares of Suitor Common Stock shall be
issued in connection with the Merger, and no certificate or scrip for any such
fractional shares shall be issued.
(i) NO LIABILITY: Notwithstanding anything to the contrary in this
Section 1.3, none of the parties hereto nor any exchange agent with respect to
the Suitor Merger Stock shall be liable to any person for any amount properly
paid to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(j) ISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES: No dividends or
other distributions with respect to Suitor Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered
certificate with respect to the shares of Target Common Stock represented
thereby until the holder of record of such certificate shall surrender such
certificate. Subject to applicable law, following surrender of any such
certificate, there shall be paid to the record holder of the certificates
representing whole shares of Suitor Common Stock issued in exchange therefor,
without interest at the time of such surrender, the amount of any such
dividends or other distributions with a record
/58/
date after the Effective Time theretofore payable (but for the provisions of
this Section 1.3(e)) with respect to such shares of Suitor Common Stock.
1.4 EFFECT OF MERGER: As of the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Agreement of Merger and the
applicable provisions of the NGCL, and each of the following shall occur:
(a) The separate existence and corporate organization of Target shall
continue. Suitor as one of the corporations surviving the Merger, shall
possess the rights, privileges, powers and franchises, and be subject to all
the restrictions, disabilities and duties of, the constituent corporations in
the manner specified in the NGCL.
(b) Except as otherwise agreed by the parties, the Articles of
Incorporation of Suitor, as in effect immediately subsequent to the Effective
Time, shall be amended and restated to read as set forth on Exhibit A attached
hereto.
(c) The By-laws of Target, as in effect immediately prior to the
Effective Time, shall continue in effect without change or amendment.
(d) Suitor shall enter into mutually acceptable employment agreements
on customary industry terms with Keith Berman, William Lyons and any other
members of Target management designated by Mr. Berman within five days prior
to the Closing. The members of Target Management or their designees and any
other members of the current staff of Target designated by Mr. Berman
(collectively, the "Management Designees") will be entitled to receive signing
bonuses in the form of options to purchase an aggregate of 2.5 million shares
of Suitor Common Stock at the closing price of the Suitor Common Stock on the
business day immediately preceding the Effective Date, vesting one-half of the
total options granted on the day of their grant and then the remaining options
in one-third cumulative annual installments commencing on the first anniversary
of the Effective Date (the "Management Options"). The names of the Management
Designees and the number of Management Options issuable to each Management
Designee will be furnished by Mr. Berman to the Company not less than five days
prior to the Closing.
(e) Suitor shall entitle Robert Cox to receive options to purchase an
aggregate of 1.5 million shares of Suitor Common Stock at the closing price of
the Suitor Common Stock on the business day immediately preceding the Effective
Date, vesting one-half of the total options granted on the day of their grant
and then the remaining options in one-third cumulative annual installments
commencing on the first anniversary of the Effective Date (the "Management
Options").
1.5 DISSENTING SHARES: Notwithstanding anything to the contrary contained
in this Agreement, any shares of capital stock of Target that, as of the
Effective Time, are or may become "dissenting shares" under the NGCL
("Dissenting Shares"), shall not be converted into or represent the right to
receive Suitor Merger Stock in accordance with this Agreement, and the holder
or holders of such shares shall be entitled only to such rights as may be
granted to such holder or holders under the NGCL; provided, however, that if
the status of any such shares as "dissenting shares" shall not be perfected,
or if any such shares shall lose their status as "dissenting shares," then,
as of the later of the Effective Time or the time of the failure to perfect
such status or the loss of such status, such shares shall automatically be
converted into and shall represent only the right to receive (upon the
surrender of the certificate or certificates representing such shares) Suitor
Common Stock in accordance with this Agreement.
1.6 FURTHER ACTION: If, at any time after the Effective Time, any further
action is determined by Suitor to be necessary or desirable to carry out the
purposes of this Agreement, the officers and directors of Suitor shall be fully
authorized (in the name of Target) to take such action.
/59/
1.7 MISCELLANEOUS.
(a) AMENDMENTS: This Agreement cannot be amended or changed except in
writing, signed by the parties.
(b) COUNTERPARTS: This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
(c) CONSTRUCTION: This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Nevada without giving effect
to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Medicius, Inc. ATR Search Corporation
/s/ Keith Berman /s/ Robert Cox
----------------------- ---------------------
Keith Berman, President Robert Cox, President
/60/
EXHIBIT D
VOTING AGREEMENTS
/61/
EXHIBIT D1
VOTING AGREEMENT (ATR SEARCH CORPORATION SHAREHOLDERS)
THIS VOTING AGREEMENT (this "Agreement") is made as of April 30, 2002, by and
between Medicius, Inc. ("Target"), and (in each
-------------------------------
of the capacities set forth on the signature page hereto, "Shareholder").
RECITALS
WHEREAS, as of the date hereof, Shareholder beneficially owns the number of
shares of common stock, par value $0.001 per share ("Company Common Shares"),
of ATR Search Corporation, a Nevada corporation (the "Company") set forth
opposite his/her name on Schedule I attached hereto (the "Shares" and, together
with any other shares of capital stock of the Company acquired by Shareholder
on or after the date hereof and during the term of this Agreement, the "Subject
Shares");
WHEREAS, the Company and Target, a Nevada corporation have entered into a
Merger Agreement, dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"), providing for the merger of Target with
and into Company (the "Merger"), upon the terms and subject to the conditions
set forth in the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger Agreement,
Target has requested that Shareholder enter into this Agreement pursuant to
which Shareholder shall, among other things, vote in favor of adopting and
approving the Merger Agreement and the Merger in accordance with the terms
hereof and thereof.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Representations and Warranties of Shareholder. Shareholder hereby
represents and warrants to Target as follows:
(a) Authority. Shareholder has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Shareholder
and, assuming the due authorization, execution and delivery by Target,
constitutes a valid and binding obligation of Shareholder enforceable against
Shareholder in accordance with its terms.
(b) Subject Shares. Shareholder is the record and beneficial owner of
the Shares, and at the time of the Company Shareholder Meeting (as defined in
the Merger Agreement) will be the record and beneficial owner of the Subject
Shares, in each case free and clear of any Liens (as defined in the Merger
Agreement), other than such Liens that would not, individually or in the
aggregate, prevent or impair the ability of the Shareholder to perform its
obligations under this Agreement. Shareholder does not own, of record or
beneficially, any shares of capital stock of the Company other than the Shares.
Shareholder has the sole right to vote such Shares, and none of such Shares is,
and none of the Subject Shares will be, subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of such Shares
or Subject Shares, except as contemplated by this Agreement.
2. Representations and Warranties of Target. Target hereby represents and
warrants to Shareholder that Target has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by Target and, assuming the due authorization, execution and delivery
by Shareholder, constitutes a valid and binding obligation of Target
enforceable against Target in accordance with its terms. The execution
/62/
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, result in any violation of, or constitute (with or without
notice or lapse of time or both) a default under, any provisions of the
restated Articles of Incorporation or Bylaws of Target.
3. Covenants of Shareholder. Subject to Section 6 hereof, Shareholder
agrees as follows:
(a) At any meeting of Shareholders of the Company, however called, or
at any adjournment thereof or in any other circumstances upon which a vote,
consent or other approval (including written consent) of shareholders of the
Company is sought with respect to any of the matters described in (i) or (ii)
below, or any actions related thereto, Shareholder shall vote (or cause to be
voted) the Subject Shares (which number of shares may be greater or less than
the number of shares as of the date hereof):
(i) in favor of the Merger, the approval and adoption by the Company
of the Merger Agreement and approval of the other transactions contemplated by
the Merger Agreement; and
(ii) against (A) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantially
ll of the Company's assets, sale or issuance of securities of the Company or
its subsidiaries, reorganization, joint venture, recapitalization, dissolution,
liquidation or winding up of or by the Company or its subsidiaries and (B) any
amendment of the Company's articles of incorporation or bylaws, any other
proposal or transaction involving the Company or any of its subsidiaries or
any action or agreement which amendment, other proposal or transaction or
action or agreement would or could reasonably be expected to impede, frustrate,
delay, prevent, nullify or result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under or with respect to, the Merger, the Merger Agreement or any
of the transactions contemplated by the Merger Agreement or by this Agreement.
(b) Shareholder shall not, except as contemplated by this Agreement or
with the prior written consent of Target grant any proxies or powers of
attorney with respect to the Subject Shares, deposit the Subject Shares into a
voting trust or enter into a voting agreement with respect to the Subject
Shares.
4. Certain Events. Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Subject Shares and shall be binding
upon any person or entity to which legal or beneficial ownership of such
Subject Shares shall pass, whether by operation of law or otherwise,
including Shareholder's successors. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Company Common Shares, or the
issuance to or acquisition by Shareholder of additional Company Common Shares
or other voting securities of the Company (whether by purchase, conversion or
otherwise), the number of Subject Shares shall be adjusted appropriately and
this Agreement and the obligations hereunder shall attach to any additional
or fewer Company Common Shares or other voting securities of the Company issued
to or acquired by Shareholder.
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by Shareholder, on the one hand,
without the prior written consent of Target nor by Target, on the other hand,
without the prior written consent of Shareholder. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
6. Termination. This Agreement shall terminate, and the provisions hereof
shall be of no further force or effect, and no party shall have any further
obligations or liabilities hereunder, upon the earlier of (i) the Effective
Time (as defined in the Merger Agreement) or (ii) the termination of the Merger
Agreement in accordance with its terms pursuant to Section 8 thereof.
7. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
/63/
(b) Notice. All notices, requests and other communications given to
any party hereunder shall be in writing (including facsimile or similar
writing) and shall be effective upon receipt, by Target at the address
specified in accordance with Section 12.5 of the Merger Agreement or by
Shareholder at its address set forth on the Company's stock ledger (or at such
other address for a party as shall be specified by like notice).
(c) Counterparts; Effectiveness; No Third Party Beneficiaries. This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures on each counterpart were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
(d) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Nevada, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
(e) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the
parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
(f) Severability. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (i) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (ii) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (iii)
the invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
(g) Entire Agreement. This Agreement (together with the Schedules
hereto) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
ubject matter hereof.
(h) Shareholder Capacity. Shareholder enters into this Agreement
solely in Shareholder's capacity as the record and beneficial owner of the
Shares. If Shareholder is or becomes during the term hereof a director or
officer of the Company, Shareholder makes no agreement or understanding in this
Agreement in Shareholder's capacity as such director or officer. Nothing in
this Agreement shall limit or affect any actions taken by Shareholder in
Shareholder's capacity as an officer or director of the Company.
/64/
(i) No Ownership Interest. Except as expressly set forth in this
Agreement, nothing contained in this Agreement shall be deemed to vest in
Target any direct or indirect ownership or incidence of ownership of or with
respect to any Subject Shares. All rights, ownership and economic benefits of
and relating to any Subject Shares shall remain and belong to Shareholder, and
Target shall not have any authority to exercise any power or authority to
manage, direct, superintend, restrict, regulate, govern or administer any of
the policies or operations of the Company or exercise any power or authority
to direct Shareholder in the voting of any of the Subject Shares, except as
otherwise expressly provided in this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed or caused this
Agreement to be duly executed as of the date first written above.
SHAREHOLDER: __________________________
Signature of Shareholder
__________________________
Print or Type Name of Shareholder
TARGET: Medicius, Inc.
By:________________________
Name:______________________
Title:_____________________
/65/
SCHEDULE I
NAME OF SHAREHOLDER NUMBER OF SHARES
------------------- ----------------
/66/
EXHIBIT D2
VOTING AGREEMENT (MEDICIUS, INC. SHAREHOLDERS)
THIS VOTING AGREEMENT (this "Agreement") is made as of April 30, 2002, by and
between ATR Search Corporation ("Suitor"), and (in each of
---------------------
the capacities set forth on the signature page hereto, "Shareholder").
RECITALS
WHEREAS, as of the date hereof, Shareholder beneficially owns the number of
shares of common stock, par value $0.001 per share ("Company Common Shares"),
of Medicius, a Nevada corporation (the "Company") set forth opposite his/her
name on Schedule I attached hereto (the "Shares" and, together with any other
shares of capital stock of the Company acquired by Shareholder on or after the
date hereof and during the term of this Agreement, the "Subject Shares");
WHEREAS, the Company and Suitor, a Nevada corporation have entered into a
Merger Agreement, dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"), providing for the merger of Company with
and into Suitor (the "Merger"), upon the terms and subject to the conditions
set forth in the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger Agreement,
Suitor has requested that Shareholder enter into this Agreement pursuant to
which Shareholder shall, among other things, vote in favor of adopting and
approving the Merger Agreement and the Merger in accordance with the terms
hereof and thereof.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Representations and Warranties of Shareholder. Shareholder hereby
represents and warrants to Suitor as follows:
(a) Authority. Shareholder has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Shareholder
and, assuming the due authorization, execution and delivery by Suitor,
constitutes a valid and binding obligation of Shareholder enforceable against
Shareholder in accordance with its terms.
(b) Subject Shares. Shareholder is the record and beneficial owner of
the Shares, and at the time of the Company Shareholder Meeting (as defined in
the Merger Agreement) will be the record and beneficial owner of the Subject
Shares, in each case free and clear of any Liens (as defined in the Merger
Agreement), other than such Liens that would not, individually or in the
aggregate, prevent or impair the ability of the Shareholder to perform its
obligations under this Agreement. Shareholder does not own, of record or
beneficially, any shares of capital stock of the Company other than the Shares.
Shareholder has the sole right to vote such Shares, and none of such Shares is,
and none of the Subject Shares will be, subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of such Shares
or Subject Shares, except as contemplated by this Agreement.
2. Representations and Warranties of Suitor. Suitor hereby represents and
warrants to Shareholder that Suitor has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by Suitor and, assuming the due authorization, execution and delivery
by Shareholder, constitutes a valid and binding obligation of Suitor
enforceable against Suitor in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, result in any violation of, or constitute (with or
/67/
without notice or lapse of time or both) a default under, any provisions of
the restated Articles of Incorporation or Bylaws of Suitor.
3. Covenants of Shareholder. Subject to Section 6 hereof, Shareholder
agrees as follows:
(a) At any meeting of Shareholders of the Company, however called, or
at any adjournment thereof or in any other circumstances upon which a vote,
consent or other approval (including written consent) of shareholders of the
Company is sought with respect to any of the matters described in (i) or (ii)
below, or any actions related thereto, Shareholder shall vote (or cause to be
voted) the Subject Shares (which number of shares may be greater or less than
the number of shares as of the date hereof):
(i) in favor of the Merger, the approval and adoption by the Company
of the Merger Agreement and approval of the other transactions contemplated by
the Merger Agreement; and
(ii) against (A) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantially
ll of the Company's assets, sale or issuance of securities of the Company or
its subsidiaries, reorganization, joint venture, recapitalization, dissolution,
liquidation or winding up of or by the Company or its subsidiaries and (B) any
amendment of the Company's articles of incorporation or bylaws, any other
proposal or transaction involving the Company or any of its subsidiaries or
any action or agreement which amendment, other proposal or transaction or
action or agreement would or could reasonably be expected to impede, frustrate,
delay, prevent, nullify or result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under or with respect to, the Merger, the Merger Agreement or any
of the transactions contemplated by the Merger Agreement or by this Agreement.
(b) Shareholder shall not, except as contemplated by this Agreement or
with the prior written consent of Target grant any proxies or powers of
attorney with respect to the Subject Shares, deposit the Subject Shares into a
voting trust or enter into a voting agreement with respect to the Subject
Shares.
4. Certain Events. Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Subject Shares and shall be binding
upon any person or entity to which legal or beneficial ownership of such
Subject Shares shall pass, whether by operation of law or otherwise,
including Shareholder's successors. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Company Common Shares, or the
issuance to or acquisition by Shareholder of additional Company Common Shares
or other voting securities of the Company (whether by purchase, conversion or
otherwise), the number of Subject Shares shall be adjusted appropriately and
this Agreement and the obligations hereunder shall attach to any additional
or fewer Company Common Shares or other voting securities of the Company issued
to or acquired by Shareholder.
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by Shareholder, on the one hand,
without the prior written consent of Suitor nor by Suitor, on the other hand,
without the prior written consent of Shareholder. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
6. Termination. This Agreement shall terminate, and the provisions hereof
shall be of no further force or effect, and no party shall have any further
obligations or liabilities hereunder, upon the earlier of (i) the Effective
Time (as defined in the Merger Agreement) or (ii) the termination of the Merger
Agreement in accordance with its terms pursuant to Section 8 thereof.
7. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices, requests and other communications given to
any party hereunder
/68/
shall be in writing (including facsimile or similar writing) and shall be
effective upon receipt, by Target at the address specified in accordance
with Section 12.5 of the Merger Agreement or by Shareholder at its address
set forth on the Company's stock ledger (or at such other address for a party
as shall be specified by like notice).
(c) Counterparts; Effectiveness; No Third Party Beneficiaries. This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures on each counterpart were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
(d) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Nevada, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
(e) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the
parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
(f) Severability. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (i) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (ii) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (iii)
the invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
(g) Entire Agreement. This Agreement (together with the Schedules
hereto) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
ubject matter hereof.
(h) Shareholder Capacity. Shareholder enters into this Agreement
solely in Shareholder's capacity as the record and beneficial owner of the
Shares. If Shareholder is or becomes during the term hereof a director or
officer of the Company, Shareholder makes no agreement or understanding in this
Agreement in Shareholder's capacity as such director or officer. Nothing in
this Agreement shall limit or affect any actions taken by Shareholder in
Shareholder's capacity as an officer or director of the Company.
/69/
(i) No Ownership Interest. Except as expressly set forth in this
Agreement, nothing contained in this Agreement shall be deemed to vest in
Target any direct or indirect ownership or incidence of ownership of or with
respect to any Subject Shares. All rights, ownership and economic benefits of
and relating to any Subject Shares shall remain and belong to Shareholder, and
Target shall not have any authority to exercise any power or authority to
manage, direct, superintend, restrict, regulate, govern or administer any of
the policies or operations of the Company or exercise any power or authority
to direct Shareholder in the voting of any of the Subject Shares, except as
otherwise expressly provided in this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed or caused this
Agreement to be duly executed as of the date first written above.
SHAREHOLDER: __________________________
Signature of Shareholder
__________________________
Print or Type Name of Shareholder
Suitor: ATR Search Corporation
By:________________________
Name:______________________
Title:_____________________
/70/
SCHEDULE I
NAME OF SHAREHOLDER NUMBER OF SHARES
------------------- ----------------
/71/
EXHIBIT H
TARGET'S INTELECTUAL PROPERTY
/72/
INTELECTUAL PROPERTY
a) All accounts, contract rights, chattel paper, documents, instruments and
general intangibles (including, but not limited to, all of Medicius,
Inc.'s now existing and hereafter arising tax and duty refunds, all now
owned and hereafter acquired franchises, licenses, permits, patents,
patent applications, trademarks, tradestyles, tradenames and copyrights,
all rights thereunder and registrations thereof, and all of Medicius,
Inc.'s now existing and hereafter arising interests in real and personal
property) relating directly or indirectly to "MD@" technologies,
including Medicius, Inc.'s interest in the goods represented thereby and
all returned, reclaimed, and repossessed goods with respect thereto; all
of Medicius, Inc.'s rights as an unpaid vendor (including stoppage in
transit, replevin and reclamation), all additional amounts due to
Medicius, Inc. from any account of Medicius, Inc. irrespective of whether
such additional amounts have been specifically assigned; all guaranties,
mortgages on real and personal property, leases, letters of credit and
other agreements or property securing or relating to any of the items
referred to above, and all monies, deposits, securities, instruments,
credits and other property now or hereafter held;
b) All inventory, including raw materials, work-in-progress, finished and
semi-finished inventory relating to Medicius, Inc.'s "MD@" technologies,
and all names and marks affixed or to be affixed thereto for purposes of
selling same for the seller, manufacturer or licensor thereof, and all
right, title and interest of Medicius, Inc. therein and thereto;
c) All machinery, equipment, furniture, fixtures, and all accessories,
fittings and parts relating to the manufacture of Medicius, Inc.'s "MD@"
technologies;
d) All of Medicius, Inc.'s books and records relating to all of the
foregoing; and
e) Any and all products and proceeds of Medicius, Inc.'s "MD@" technologies
in any form, whether from the voluntary or involuntary disposition
thereof, including without limitation accounts, contract rights, general
intangibles, chattel paper, documents, instruments, inventory, equipment,
fixtures, all insurance proceeds and all claims by Medicius, Inc. against
third parties for damage to or loss or destruction of any or all of the
foregoing.
/73/
EXHIBIT I
SUITOR 10KSB AUDIT
/74/
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED BALANCE SHEET F-2
CONSOLIDATED STATEMENT OF OPERATIONS F-3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY F-4
CONSOLIDATED STATEMENT OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6 to F-11
/75/
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.257.1984
702.362.0540(fax)
INDEPENDENT AUDITOR'S REPORT
April 15, 2002
Board of Directors
ATR Search Corporation
Las Vegas, NV
I have audited the Consolidated Balance Sheet of ATR Search
Corporation and its subsidiary (the "Company") (A Development
Stage Company), as of December 31, 2001, and the related
Consolidated Statements of Operations, Stockholders' Equity, and
Cash Flows for the period March 2, 2001 (Date of Inception) to
December 31, 2001. These financial statements are the
responsibility of the Company's management. My responsibility is
to express an opinion on these financial statements based on my
audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement
presentation. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated balance sheet
of ATR Search Corporation and its subsidiary, (A Development
Stage Company), as of December 31, 2001, and its related
consolidated statements of operations, equity and cash flows for
the period March 2, 2001 (Date of Inception) to December 31,
2001, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has had limited
operations and have not commenced planned principal operations.
This raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to these matters are
also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
/s/ G. Brad Beckstead
F-1
/76/
ATR Search Corporation
(a Development Stage Company)
Consolidated Balance Sheet
Assets December 31,
2001
------------
Current assets:
Cash and equivalents $ 25,693
Accounts receivable 168,650
Other current assets 30,766
------------
Total current assets 225,109
------------
Fixed assets, net 11,362
Acquired technology, net 1,275,000
------------
$ 1,511,471
============
Liabilities and Stockholders' Equity
Current liabilities:
Accrued interest 86,250
Accrued interest - related party 2,696
Short-term note payable 50,000
Current portion of capital lease obligation 120,000
------------
Total current liabilities 258,946
Capital lease obligation, net of current portion 1,030,000
------------
1,288,946
------------
Stockholders' Equity
Common stock, $0.001 par value, 100,000,000
shares authorized, 19,180,000 shares issued
and outstanding as of 12/31/01 19,180
Additional paid-in capital 692,095
(Defict) accumulated during development stage (488,750)
------------
222,525
------------
$ 1,511,471
============
The accompanying notes are an integral part of these financial statements.
F-2
/77/
ATR Search Corporation
(a Development Stage Company)
Consolidated Statement of Operations
March 2, 2001
(date of inception)
to December 31,
2001
--------------
Revenue $ 940,621
--------------
Cost of services:
Subcontractors 338,508
Consultants 207,619
Other costs 36,016
--------------
Total costs of services 582,143
--------------
Gross profit 358,478
--------------
Expenses:
General and administrative 366,709
Consulting fees 151,250
Amortization and depreciation 225,607
Organizational costs 12,250
--------------
Total expenses 755,816
--------------
Net operating (loss) (397,338)
Other (expenses):
Interest expense (88,716)
Interest expense - related party (2,696)
--------------
Net (loss) $ (488,750)
==============
Weighted average number of common shares
outstanding - basic and fully diluted 19,180,000
==============
Net (loss) per share - basic and fully diluted $ (0)
==============
The accompanying notes are an integral part of these financial statements.
F-3
/78/
ATR Search Corporation
(a Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During Total
Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
-------- -------- --------- ----------- ----------
Founders shares
issued for cash 12,625,000 $ 12,625 $ 51,900 $ - $ 64,525
Shares issued
for licensed
technology 3,500,000 3,500 346,500 350,000
Shares issued
for consulting 350,000 350 25,900 26,250
Shares issued
for services 650,000 650 64,350 65,000
Shares issued for
cash pursuant to
Rule 504 offering 1,340,000 1,340 132,660 134,000
Shares issued for
conversion of debt 115,000 115 11,385 11,500
Shares issued
for consulting 600,000 600 59,400 60,000
Net (loss),
March 2, 2001
(inception) to
December 31, 2001 (488,750) (488,750)
-------- -------- --------- ----------- ----------
Balance,
December 31, 2001 19,180,000 $ 19,180 $ 692,095 $ (488,750) $ 222,525
The accompanying notes are an integral part of these financial statements.
F-4
/79/
ATR Search Corporation
(a Development Stage Company)
Consolidated Statement of Cash Flows
March 2, 2001
(date of inception)
to December 31,
2001
--------------
Cash flows from operating activities
Net (loss) $ (488,750)
Shares issued to acquire technology 350,000
Shares issued for services 151,250
Amortization and depreciation 225,607
Adjustments to reconcile net income to cash
provided by operations:
(Increase) in accounts receivable (168,650)
(Increase) in other current assets (30,766)
Increase in accrued interest 86,250
Increase in accrued interest - related party 2,696
--------------
Net cash provided by operating activities 127,637
--------------
Cash flows from investing activities
Short-term note payable 50,000
Long-term debt 1,150,000
Purchased fixed assets (11,969)
Acquired technology (1,500,000)
--------------
Net cash (used) by investing activities (311,969)
--------------
Cash flows from financing activities
Issuance of common stock 210,025
--------------
Net cash provided by financing activities 210,025
--------------
Net increase in cash 25,693
Cash - beginning -
--------------
Cash - ending $ 25,693
--------------
Supplemental disclosures:
Interest paid $ 329
==============
Income taxes paid $ -
==============
Non-cash transactions:
Number of shares issued to acquire technology 3,500,000
==============
Number of shares issued for services 1,600,000
==============
The accompanying notes are an integral part of these financial statements.
F-5
/80/
ATR Search Corporation
Notes
Note 1 - Significant accounting policies and procedures
Organization
------------
The Company was organized March 2, 2001 (Date of Inception) under
the laws of the State of Nevada, as ATR Search Corporation. The
Company has a limited history of operations, and in accordance
with SFAS #7, the Company is considered a development stage
company.
As of March 14, 2001, the Company had a wholly owned subsidiary,
ATR Search, LLC.
Estimates
---------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and cash equivalents
-------------------------
The Company maintains a cash balance in a non-interest-bearing
account that currently does not exceed federally insured limits.
For the purpose of the statements of cash flows, all highly
liquid investments with an original maturity of three months or
less are considered to be cash equivalents.
Fixed Assets
-------------
The cost of fixed assets is depreciated over the following
estimated useful life of the asset utilizing the straight-line
method of depreciation:
Furniture and fixtures 5 years
Leasehold improvements 7 years
Revenue recognition
-------------------
The Company recognizes revenue on an accrual basis as it invoices
for services.
Reporting on the costs of start-up activities
---------------------------------------------
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of
Start-Up Activities," which provides guidance on the financial
reporting of start-up costs and organizational costs, requires
most costs of start-up activities and organizational costs to be
expensed as incurred. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998. With the adoption of SOP 98-
5, there has been little or no effect on the Company's financial
statements.
Earnings per share
------------------
The Company follows Statement of Financial Accounting Standards
No. 128. "Earnings Per Share" ("SFAS No. 128"). Basic earnings
per common share ("EPS") calculations are determined by dividing
net income (loss) by the weighted average number of shares of
common stock outstanding during the year. Diluted earning per
common share
/81/
calculations are determined by dividing net income (loss) by the
weighted average number of common shares and dilutive common
share equivalents outstanding. During periods when common stock
equivalents, if any, are anti-dilutive they are not considered in
the computation.
Advertising Costs
------------------
The Company expenses all costs of advertising as incurred. There
were no advertising costs included in selling, general and
administrative expenses during the period ended December 31,
2001.
Fair value of financial instruments
-----------------------------------
Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to
management as of December 31, 2001. The respective carrying
value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to
approximate carrying values for cash and payables because they
are short term in nature and their carrying amounts approximate
fair values or they are payable on demand.
Software Licenses
-----------------
The Company capitalizes the costs associated with the purchase of
licenses for major business process application software used in
providing staffing and/or placement services. Acquired
technology costs are amortized over sixty months.
Impairment of long lived assets
-------------------------------
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of the
assets might not be recoverable. The Company does not perform a
periodic assessment of assets for impairment in the absence of
such information or indicators. Conditions that would necessitate
an impairment assessment include a significant decline in the
observable market value of an asset, a significant change in the
extent or manner in which an asset is used, or a significant
adverse change that would indicate that the carrying amount of an
asset or group of assets is not recoverable. For long-lived
assets to be held and used, the Company measures fair value based
on quoted market prices or based on discounted estimates of
future cash flows. Long-lived assets to be disposed of are
carried at fair value less costs to sell. No such impairments
have been identified by management at September 30, 2001.
Segment reporting
-----------------
The Company follows Statement of Financial Accounting Standards
No. 130, "Disclosures About Segments of an Enterprise and Related
Information". The Company operates as a single segment and will
evaluate additional segment disclosure requirements as it expands
its operations.
/82/
Dividends
---------
The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid or declared since
inception.
Income taxes
------------
The Company follows Statement of Financial Accounting Standard
No. 109, "Accounting for Income Taxes" ("SFAS No. 109") for
recording the provision for income taxes. Deferred tax assets
and liabilities are computed based upon the difference between
the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or
settled. Deferred income tax expenses or benefits are based on
the changes in the asset or liability each period. If available
evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets
to the amount that is more likely than not to be realized.
Future changes in such valuation allowance are included in the
provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences
resulting from income and expense items reported for financial
accounting and tax purposes in different periods. Deferred taxes
are classified as current or non-current, depending on the
classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-
current depending on the periods in which the temporary
differences are expected to reverse.
F-7
/83/
ATR Search Corporation
Notes
Recent pronouncements
---------------------
The FASB recently issued Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of
Effective Date of FASB Statement No. 133". The Statement defers
for one year the effective date of FASB Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities".
The rule now will apply to all fiscal quarters of all fiscal
years beginning after June 15, 2000. In June 1998, the FASB
issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." The Statement will require the company to
recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value
through income, if the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings
or recognized in other comprehensive income until the hedged item
is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized
in earnings. The company does not expect SFAS No. 133 to have a
material impact on earnings and financial position.
In December 1999, the Securities and Exchange Commission released
Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements (SAB No. 101), which provides guidance on
the recognition, presentation and disclosure of revenue in
financial statements. SAB No. 101 did not impact the company's
revenue recognition policies.
Stock-Based Compensation
------------------------
The Company accounts for stock-based awards to employees in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related
interpretations and has adopted the disclosure-only alternative
of FAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and
other non-employees are accounted for using the fair value method
as prescribed by FAS No. 123.
Year end
--------
The Company has adopted December 31 as its fiscal year end.
Note 2 - Going concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which
contemplates the recoverability of assets and the satisfaction of
liabilities in the normal course of business. As noted above, the
Company is in the development stage and, accordingly, has not yet
generated a proven history of operations. Since its inception,
the Company has been engaged substantially in financing
activities and developing its product line, incurring substantial
costs and expenses. As a result, the Company incurred accumulated
net losses from March 2, 2001 (inception) through the period
ended December 31, 2001 of $(488,750). In addition, the Company's
/84/
development activities since inception have been financially
sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the
sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets
or satisfy its liabilities.
Note 3 - Fixed assets
The Company acquired the following assets during the period ended
December 31, 2001:
Furniture & fixtures $ 1,969
Leasehold improvements 10,000
--------
$ 11,969
========
Depreciation expense totaled $607 for the period ended December
31, 2001.
F-8
/85/
ATR Search Corporation
Notes
Note 4 - Intellectual Property, Patents, and Other Intangibles
On March 28, 2001, the Company acquired the rights to use
technology known as "human resource compiler based search
recognition software and hardware" from Sarcor Management, SA, a
British Virgin Islands corporation, in exchange for a lease
agreement and the issuance of 3,500,000 common shares of stock
valued at $350,000.
Amortization expense totaled $225,000 for the period ended
December 31, 2001.
The Company relies on trademark, unfair competition and copyright
law, trade secret protection and contracts such as
confidentiality and license agreements with its employees,
customers, partners and others to protect its proprietary rights.
Despite precautions, it may be possible for competitors to obtain
and/or use the proprietary information without authorization, or
to develop technologies similar to the Company's and
independently create a similarly functioning infrastructure.
Furthermore, the protection of proprietary rights in Internet-
related industries is uncertain and still evolving. The laws of
some foreign countries do not protect proprietary rights to the
same extent as do the laws of the United States. Protecting the
Company's proprietary rights in the United States or abroad may
not be adequate.
Note 5 - Stockholder's equity
The Company was originally authorized to issue 20,000,000 shares
of its $0.001 par value common stock. Effective May 7, 2001, the
Company amended its articles of incorporation increasing its
authorized shares to 100,000,000 shares of $0.001 par value
common stock.
All references to shares issued and outstanding reflect the
increase of authorization of 100,000,000 issuable shares effected
May 7, 2001.
The Company issued 12,625,000 shares of its $0.001 par value
common stock to its founders for cash of $64,525.
The Company issued 3,500,000 shares of its $0.001 par value
common stock at $0.10 per share to Sarcor Management, SA, a
British Virgin Island corporation, as a $350,000 down payment on
a technology licensing agreement.
The Company issued 350,000 shares of its $0.001 par value common
stock to Corporate Regulatory Services for consulting services
valued at $26,250.
The Company issued 150,000 shares of its $0.001 par value common
stock to Mary Lou Cox, mother of Robert Cox, the Company's
president, for consulting services valued at $15,000.
/86/
The Company issued 500,000 shares of its $0.001 par value common
stock to James De Luca, an independent consultant, for consulting
services valued at $50,000.
The Company issued 1,340,000 shares of its $0.001 par value
common stock at $0.10 per share for cash of $134,000. The shares
were sold pursuant to a Regulation D, Rule 505 of the Securities
and Exchange Commission offering.
The Company issued 115,000 shares of its $0.001 par value common
stock to extinguish promissory notes totaling $11,500.
The Company issued 600,000 shares of its $0.001 par value common
stock to Quarg, Inc. for consulting services valued at $60,000.
There have been no other issuances of common stock.
F-9
/87/
ATR Search Corporation
Notes
Note 6 - Income taxes
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"), which requires use of the liability
method. SFAS No. 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary
differences. Deferred tax assets and liabilities at the end of
each period are determined using the currently enacted tax rates
applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or
realized.
The provision for income taxes differs from the amount computed
by applying the statutory federal income tax rate to income
before provision for income taxes. The sources and tax effects
of the differences are based on a 34% US federal statutory rate.
As of December 31, 2001, the Company has a net operating loss of
approximately $(488,750). The related tax asset of approximately
$112,829 has been fully reserved and, if not used, will expire in
2021. A valuation adjustment has been made in the event the
asset is not realizable.
Note 7 - Capital lease and rent obligations
10% capital lease payable to Sarcor Management, SA with monthly
interest-only
payments beginning in April 2001 of $5,000, increasing to
$10,000 in April 2002,
$15,000 in April 2003, and $19,100 thereafter, secured by
software licensing rights, due March 2011. $1,150,000
Less current portion ( 120,000)
----------
Total long-term debt $1,030,000
==========
Summary of Future Minimum Lease Payments:
Fiscal Year Amount
2001 $ 15,000
2002 150,000
2003 180,000
2004 229,200
2005 229,200
Thereafter 1,173,000
---------
Total lease payments over
the contractual period $1,976,400
Less: Interest (476,400)
---------
Original cost 1,500,000
=========
Interest expense for the capital lease totaled $57,500 for the
period ended December 31, 2001.
/88/
Of which none has been paid as of December 31, 2001.
On April 1, 2001, the Company entered into a sublease agreement
to rent office space for a period of four years at a rate of
$2,502 per month. Rent expense totaled $23,133 at December 31,
2001.
Note 8 - Short term note payable
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000, which is due in 2 years. Interest in accrued on a
quarterly basis at an interest rate of 8% per annum. On May 5,
2003, the unpaid balance of principal and accrued interest will
convert into common stock at a ratio of one share of the
Company's $0.001 par value common stock for each $5. As of
December 31, 2001, interest expense totaled $3,025 of which $329
has been paid.
F-10
/89/
ATR Search Corporation
Notes
Note 9 - Related party transactions
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000. (See Note 8 above.)
On May 24, 2001, the Company issued 150,000 shares of its $0.001
par value common stock to Mary Lou Cox, mother of Robert Cox, the
Company's president, for consulting services valued at $15,000.
Note 10 - Warrants and options
As of December 31, 2001, there were no warrants or options
outstanding to acquire any additional shares of common stock.
Note 11 - Subsequent events
On February 17, 2002, the Company executed a business consulting
agreement with MLSA whereby the Company issued 1,350,000 shares
of its $0.001 par value common stock to Mark Lancaster for
consulting services valued at $162,000. The consulting services
are to be rendered over a period of 90 days with an automatic
three-month renewal provision.
On February 26, 2002, the Company executed a consulting agreement
with Qurag, Inc. whereby the Company issued 475,000 shares of its
$0.001 par value common stock to Chaim Drizin, a shareholder of
the Company, for consulting services valued at $30,875. The
consulting services are to be rendered over a period of 90 days
with an automatic three-month renewal provision.
On March 1, 2002, the Company executed a consulting agreement
with Corporate Regulatory Services, LLC (CRS), a shareholder of
the Company, whereby the Company issued 250,000 shares of its
$0.001 par value common stock to CRS, for consulting services
valued at $16,250. The consulting services are to be rendered
over a period of approximately 1 year.
As of March 7, 2002, the Company issued 62,500 warrants to CRS, a
shareholder of the Company, to purchase the Company's $0.001 par
value common stock on a one-for-one basis. The warrant exercise
price is $0.10 per share of common stock and substantially all
warrants will expire on or before March 7, 2007.
On March 27, 2002, the Company executed a consulting agreement
with Promark, Inc. whereby the Company issued 500,000 shares of
its $0.001 par value common stock to Ken Lowman for consulting
services valued at $50,000. The consulting services are to be
rendered over a period of 90 days with an automatic three-month
renewal provision.
F-11
/90/
EXHIBIT J
TARGET AUDIT
/91/
Medicius, Inc.
(A Development Stage Company)
Balance Sheets
as of
December 31, 2001
and
2000
and
Statements of Income,
Stockholders' Equity, and
Cash Flows
for the years ended
December 31, 2001, 2000,
and
July 6, 2000 (Inception)
To December 31, 2001
/92/
TABLE OF CONTENTS
PAGE
Independent Auditor's Report 1
Balance Sheet 2
Income Statement 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Footnotes 6
/93/
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.257.1984
702.362.0540(fax)
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Medicius, Inc.
Las Vegas, NV
I have audited the Balance Sheet of Medicius, Inc.
(the "Company") (A Development Stage Company), as of December
31, 2001, and the related Consolidated Statements of Operations,
Stockholders' Equity, and Cash Flows for the period July 6,
2000 (Date of Inception) to December 31, 2001. These financial
statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement
presentation. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Medicius, Inc., (A Development Stage Company) as of December 31,
2001 and 2000, and the results of its operations and cash flows
for the years then ended and for the period July 6, 2000 (Date of
Inception) to December 31, 2001 in conformity with generally
Accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 5 to the financial statements, the Company has had limited
operations and have not commenced planned principal operations.
This raises substantial doubt about its ability to continue as a
going concern. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
/s/ G. Brad Beckstead
January 8, 2001
/94/
Medicius Inc.
(a Development Stage Company)
Balance Sheet
Assets December 31, December 31
2001 2000
------------ -----------
Current assets:
Cash $ 4 4,978
------------ -----------
Intellectual Property, net 910,000
Technology license, net 56,000 -
------------ -----------
966,004 4,978
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Note Payable - related party 60,000 -
------------ -----------
Total current liabilities 60,000 -
------------ -----------
Stockholders' Equity
Preferred stock, $0.001 par value, 20,000,000
shares authorized, 750,000 shares issued
and outstanding 750 -
Common Stock, $0.001 par value, 55,000,000
shares authorized, 6,750,000 shares issued
and outstanding 6,750 6,000
Additional paid-in capital 1,307,695 8,695
(Defict) accumulated during development stage (409,191) (9,717)
------------ -----------
906,004 4,978
------------ -----------
$ 966,004 $ 4,978
============ ===========
The accompanying notes are an integral part of these financial statements.
F-2
/95/
Medicius, Inc.
(a Development Stage Company)
Statement of Operations
July 6, 2000 July 6, 2000
Year ended (inception) to (inception) to
December 31, December 31, December 31,
2001 2000 2001
------------- -------------- ---------------
Revenue - $ - $ -
------------- -------------- ---------------
Expenses:
Consulting Fees 325,000 - 325,000
Amortization 69,000 - 69,000
General administrative expenses 5,474 9,717 15,191
------------- -------------- ---------------
Total expenses 399,474 9,717 409,191
------------- -------------- ---------------
Net (loss) $ (399,474) $ (9,717) $ (409,191)
============= ============== ===============
Weighted average number of
common shares outstanding 6,750,000 6,000,000 6,750,000
============= ============== ===============
Net (loss) per share $ (0.06) $ (0.00) $ (0.06)
============= ============== ===============
The accompanying notes are an integral part of these financial statements.
F-3
/96/
Medicius, Inc.
(a Development Stage Company)
Statement of Changes in Stockholder's Equity
(Deficit)
Accumulated Total
Common Stock Preferred Stock Additional During Stock-
------------- --------------- Paid-in Development holders'
Shares Amount Shares Amount Capital Stage Equity
-------------------------------------------------------------------
August
2000
Shares
Issued
for Cash 6,000,000 $6,000 $ $ 8,695 $ - $ 14,695
Net (loss)
July 6,
2000
(inception)
to December
31, 2000 (9,717) (9,717)
--------------------------------------------------------------------
Balance,
12/31/00 6,000,000 $ 6,000 - - 8,695 (9,717) 4,978
--------------------------------------------------------------------
Shares
issued
for
services 500,000 500 500
Shares
Issued to
Acquire
Intellectual
Property 750,000 750 974,250 975,000
Share
Issued
For
Consulting 250,000 250 324,750 325,000
Net (loss)
Year ended
12/31/01 (399,474) (399,474)
Balance,
December,
2001 6,750,000 $ 6,750 750,000 $ 750 $1,307,695 $(409,191) $ 906,004
=================================================================
The accompanying notes are an integral part of these financial statements.
F-4
/97/
Medicius, Inc.
(a Development Stage Company)
STATEMENT OF CASH FLOWS
July July
Year 6, 2000 6, 2000
ended (Inception) (Inception)
December December December
31, 2001 31, 2000 31, 2001
---------- ---------- ----------
Cash flows from operating activities
Net (loss) $ (399,474) $ (9,717) $ (409,191)
Amortization 69,000 - 69,000
Shares issued for consulting fees 325,000 325,000
---------- ---------- ---------
Net cash (used) by operating activities (5,474) (9,717) (15,191)
---------- ---------- ----------
Cash flows from investing activities
Technology License (60,000) - (60,000)
---------- ---------- ----------
Net cash (used) by investing activities (60,000) - (60,000)
---------- ---------- ----------
Cash flows from financing activities
Note payable - related party 60,000 - 60,000
Issuance of common stock 500 14,695 15,195
---------- ---------- ----------
Net cash provided by financing activities 500 14,695 75,195
---------- ---------- ----------
Net increase in cash (4,974) 4,978 4
Cash - beginning 4,978 - -
---------- ---------- ----------
Cash - ending $ 4 $ 4,978 $ 4
========== ========== ==========
Supplemental disclosures:
Interest paid $ - $ - $ -
========== ========== ==========
Income taxes paid $ - $ - $ -
========== ========== ==========
Non-cash transactions:
Shares issued to acquire
Intellectual property 750,000 $ - 750,000
========== ========== ==========
Shares issued for services 500,000 - 500,000
========== ========== ==========
Shares issued for consulting fees 250,000 - 250,000
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
/98/
Medicius, Inc.
(A Development Stage Company)
Notes
6
Note 1 - History and organization of the company
The Company was organized July 6, 2000 (Date of Inception) under the
laws of the State of Nevada. The Company was originally named
"ProMedicius, Inc." During August 2001, the Company filed amended
articles of incorporation with the State of Nevada to change its name
to "Medicius, Inc.".
The Company has no operations and in accordance with SFAS #7, the
Company is considered a development stage company.
Note 2 - Summary of significant accounting policies
Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Cash and cash equivalents
-------------------------
The Company maintains a cash balance in a non-interest-bearing
account that currently does not exceed federally insured limits. For
the purpose of the statements of cash flows, all highly liquid
investments with an original maturity of three months or less are
considered to be cash equivalents.
Revenue recognition
-------------------
The Company recognizes revenue on an accrual basis as it invoices for
services.
Reporting on the costs of start-up activities
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of
Start-Up Activities," which provides guidance on the financial
reporting of start-up costs and organizational costs, requires most
costs of start-up activities and organizational costs to be expensed
as incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998. With the adoption of SOP 98-5, there has been
little or no effect on the Company's financial statements.
Loss per share
--------------
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number of
common shares outstanding during the period. The Company had no
dilutive common stock equivalents, such as stock options or warrants
as of December 31, 2001 or 2000.
/99/
Advertising Costs
-----------------
The Company expenses all costs of advertising as incurred. There
were no advertising costs included in selling, general and
administrative expenses as of December 31, 2001 or 2000.
Fair value of financial instruments
-----------------------------------
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of
December 31, 2001 and 2000. The respective carrying value of certain
on-balance-sheet financial instruments approximated their fair
values. These financial instruments include cash and accounts
payable. Fair values were assumed to approximate carrying values for
cash and payables because they are short term in nature and their
carrying amounts approximate fair values or they are payable on
demand.
Impairment of long lived assets
-------------------------------
Long lived assets held and used by the Company are reviewed for
possible impairment whenever events or circumstances indicate the
carrying amount of an asset may not be recoverable or is impaired.
No such impairments have been identified by management at December
31, 2001 and 2000.
Segment reporting
-----------------
The Company follows Statement of Financial Accounting Standards No.
130, "Disclosures About Segments of an Enterprise and Related
Information". The Company operates as a single segment and will
evaluate additional segment disclosure requirements as it expands its
operations.
Dividends
---------
The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid or declared since inception.
Recent pronouncements
---------------------
The FASB recently issued Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of Effective
Date of FASB Statement No. 133". The Statement defers for one year
the effective date of FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The rule now will
apply to all fiscal quarters of all fiscal years beginning after June
15, 2000. In June 1998, the FASB issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." The Statement
will require the company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income, if the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of
the hedged assets, liabilities, or firm commitments through earnings
or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's
change in fair value will be immediately recognized in earnings. The
company does not expect SFAS No. 133 to have a material impact on
earning s and financial position.
/100/
In December 1999, the Securities and Exchange Commission released
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements (SAB No. 101), which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements. SAB
No. 101 did not impact the company's revenue recognition policies.
Note 3 - Income taxes
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109"), which requires use of the liability method. SFAS No.
109 provides that deferred tax assets and liabilities are recorded
based on the differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the
currently enacted tax rates applied to taxable income in the periods
in which the deferred tax assets and liabilities are expected to be
settled or realized.
The provision for income taxes differs from the amount computed by
applying the statutory federal income tax rate to income before
provision for income taxes. The sources and tax effects of the
differences are based on a 34% US federal statutory rate. As of
December 31, 2001, the Company has a net operating loss of
approximately $(410,000). The related tax asset of approximately
$140,000 has been fully reserved and, if not used, will expire in
2019 and 2020. A valuation adjustment has been made in the event the
asset is not realizable.
Note 4 - Intellectual Property, Patents, and Other Intangibles
On June 27, 2001, the Company acquired Intellectual Property from
CareDecision.net, Inc. ("CareDecision"), a subsidiary of IT
Health.net, Inc. Pursuant to the agreement, the Company paid
CareDecision.net, Inc. the sum of $975,000 with 750,000 shares of the
Company's $.001 par value Preferred Series A stock valued at $1.30
per share.
On June 28, 2001, the Company acquired Licensed Information
Technology from CareDecision.net, Inc. ("CareDecision"), a subsidiary
of IT Health.net, Inc. Pursuant to the agreement, the Company is to
pay CareDecision cash of $60,000 plus "End-User" transaction fees
ranging from 6%-11% with a minimum monthly fee of $2,500 for a period
of 36 months.
Amortization expense totaled $69,000 for the year ended December 31,
2001.
The Company relies on trademark, unfair competition and copyright
law, trade secret protection and contracts such as confidentiality
and license agreements with its employees, customers, partners and
others to protect its proprietary rights. Despite precautions, it
may be possible for competitors to obtain and/or use the proprietary
information without authorization, or to develop technologies similar
to the Company's and independently create a similarly functioning
infrastructure. Furthermore, the
101/
protection of proprietary rights in Internet-related industries is
uncertain and still evolving. The laws of some foreign countries
do not protect proprietary rights to the same extent as do the laws
of the United States. Protecting the Company's proprietary rights in
the United States or abroad may not be adequate.
Note 4 - Stockholders' Equity
The Company is authorized to issue 55,000,000 shares of its $0.001
par value common stock and 20,000,000 shares of its $0.001 par value
preferred stock.
The Company issued 6,000,000 shares of its $0.001 par value common
stock for cash in the amount of $6,000. Of the total, $6,000 is
considered common stock and there is no additional paid-in capital.
The Company received $8,695 of cash as donated capital.
The Company issued 500,000 shares of its $0.001 par value common
stock for services rendered valued at $500.
The Company issued 750,000 shares of its $0.001 par value Preferred
Series A stock to CareDecision.net, Inc. valued at $1.30 per share as
consideration for licensed technology valued at $975,000.
The Company issued 250,000 shares of its $0.001 par value common
stock as "equity kickers" to bridge lenders of CareDecision.net, Inc.
at $1.30 per share booked as consulting fees valued at $325,000.
There have been no other issuances of common or preferred stock.
Note 5 - Going concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern which contemplates
the recoverability of assets and the satisfaction of liabilities in
the normal course of business. As noted above, the Company is in the
development stage and, accordingly, has not yet generated a proven
history of operations. Since its inception, the Company has been
engaged substantially in financing activities and developing its
product line, incurring substantial costs and expenses. As a result,
the Company incurred accumulated net losses from July 6, 2000
(inception) through December 31, 2001 of $(409,191). In addition, the
Company's development activities since inception have been
financially sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the sale
of common stock and, ultimately, the achievement of significant
operating results. The accompanying financial statements do not
include any adjustments that might be required should the Company be
unable to recover the value of its assets or satisfy its liabilities.
/102/
Note 6 - Commitments
Pursuant to a Technology Licensing Agreement ("Licensing Agreement")
signed June 28, 2001, the Company is to pay CareDecision.net, Inc.
cash of $60,000 upon signing of the licensing agreement, plus an "End-
User" transaction charge ranging from 6%-11% with a minimum monthly
fee of $2,500 for a period of 36 months. Future minimum lease
commitments are as follows:
2002 $ 30,000
2003 30,000
2004 30,000
----------
Total $ 90,000
Note 7 - Related party transactions
The president of the company is also president of CareDecision.net,
Inc.
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not
formulated a policy for the resolution of such conflicts.
Note 8 - Warrants and options
On July 29, 2001, the Company issued 375,000 warrants to bridge
lenders of CareDecision.net, Inc. The warrants are redeemable on a 1-
for-1 basis into shares of the Company's $0.001 par value common
stock at $0.20 per share for a period of 2 years. The warrants are
considered to be non-dilutive at December 31, 2001.
/103/
EXHIBIT K
SELECTED NEVADA REVISED STATUTES
/104/
EXHIBIT K
NEVADA REVISED STATUTES CHAPTER 92A - MERGERS, CONVERSIONS, EXCHANGES AND
DOMESTICATIONS RIGHTS OF DISSENTING OWNERS NRS 92A.300 DEFINITIONS. As used in
NRS 92A.300 to 92A.500, inclusive, unless the context otherwise requires, the
words and terms defined in NRS 92A.305 to 92A.335, inclusive, have the meanings
ascribed to them in those sections. (Added to NRS by 1995, 2086).
NRS 92A.305 "BENEFICIAL STOCKHOLDER" DEFINED. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or by
a nominee as the stockholder of record. (Added to NRS by 1995, 2087).
NRS 92A.310 "CORPORATE ACTION" DEFINED. "Corporate action" means the
action of a domestic corporation. (Added to NRS by 1995, 2087).
NRS 92A.315 "DISSENTER" DEFINED. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
ho exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive. (Added to NRS by 1995, 2087; A 1999, 1631).
NRS 92A.320 "FAIR VALUE" DEFINED. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. (Added to NRS by 1995, 2087).
NRS 92A.325 "STOCKHOLDER" DEFINED. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation. (Added to NRS by
1995, 2087).
NRS 92A.330 "STOCKHOLDER OF RECORD" DEFINED. "Stockholder of record"
means the person in whose name shares are registered in the records of a
domestic corporation or the beneficial owner of shares to the extent of the
rights granted by a nominee's certificate on file with the domestic
corporation. (Added to NRS by 1995, 2087).
NRS 92A.335 "SUBJECT CORPORATION" DEFINED. "Subject Corporation" means
the domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective
or the surviving or acquiring entity of that issuer after the corporate action
becomes effective. (Added to NRS by 1995, 2087).
NRS 92A.340 COMPUTATION OF INTEREST. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of
the action until the date of payment, at the average rate currently paid by
the entity on its principal bank loans or, if it has no bank loans, at a rate
that is fair and equitable under all of the circumstances. (Added to NRS by
1995, 2087).
NRS 92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.
A partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with
any merger or exchange in which the domestic limited partnership is a
constituent entity. (Added to NRS by 1995, 2088).
NRS 92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY
COMPANY. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity. (Added to NRS by
1995, 2088).
/105/
NRS 92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.
1. Except as otherwise provided in subsection 2, and unless otherwise provided
in the articles or bylaws, any member of any constituent domestic nonprofit
corporation who voted against the merger may, without prior notice, but within
30 days after the effective date of the merger, resign from membership and is
thereby excused from all contractual obligations to the constituent or
surviving corporations which did not occur before his resignation and is
thereby entitled to those rights, if any, which would have existed if there
had been no merger and the membership had been terminated or the member had
been expelled. 2. Unless otherwise provided in its articles of incorporation
or bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
CHAPTER 704 OF NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to subsection
1. (Added to NRS by 1995, 2088).
NRS 92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS
AND TO OBTAIN PAYMENT FOR SHARES. 1. Except as otherwise provided in NRS
92A.370 and 92A.390, a stockholder is entitled to dissent from, and obtain
payment of the fair value of his shares in the event of any of the following
corporate actions: (a) Consummation of a plan of merger to which the domestic
corporation is a constituent entity: (1) If approval by the stockholders is
required for the merger by NRS 92A.120 to 92A.160, inclusive, or the articles
of incorporation, regardless of whether the stockholder is entitled to vote on
the plan of merger; or (2) If the domestic corporation is a subsidiary and is
merged with its parent pursuant to NRS 92A.180. (b) Consummation of a plan of
exchange to which the domestic corporation is a constituent entity as the
corporation whose subject owner's interests will be acquired, if his shares
are to be acquired in the plan of exchange. (c) Any corporate action taken
pursuant to a vote of the stockholders to the event that the articles of
incorporation, bylaws or a resolution of the board of directors provides that
voting or nonvoting stockholders are entitled to dissent and obtain payment for
their shares. 2. A stockholder who is entitled to dissent and obtain payment
pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate
action creating his entitlement unless the action is unlawful or fraudulent
with respect to him or the domestic corporation. (Added to NRS by 1995, 2087;
A 2001, 1414, 3199).
NRS 92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN
CLASSES OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.
1. There is no right of dissent with respect to a plan of merger or exchange
in favor of stockholders of any class or series which, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at the
meeting at which the plan of merger or exchange is to be acted on, were either
listed on a national securities exchange, included in the national market
ystem by the National Association of Securities Dealers, Inc., or held by at
east 2,000 stockholders of record, unless: (a) The articles of incorporation
of the corporation issuing the shares provide otherwise; or (b) The holders of
the class or series are required under the plan of merger or exchange to accept
for the shares anything except: (1) Cash, owner's interests or owner's
interests and cash in lieu of fractional owner's interests of: (I) The
surviving or acquiring entity; or (II) Any other entity which, at the effective
date of the plan of merger or exchange, were either listed on a national
securities exchange, included in the national market system by the National
Association of Securities Dealers, Inc., or held of record by a least 2,000
holders of owner's interests of record; or (2) A combination of cash and
owner's interests of the kind described in sub-subparagraphs (I) and (II) of
subparagraph (1) of paragraph (b). 2. There is no right of dissent for any
holders of stock of the surviving domestic corporation if the plan of merger
does not require action of the stockholders of the surviving domestic
corporation under NRS 92A.130. (Added to NRS by 1995, 2088).
NRS 92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY
TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.
1. A stockholder of record may assert dissenter's rights as to fewer than all
of the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf
he asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his
other shares were registered in the names of different stockholders.
/106/
2. A beneficial stockholder may assert dissenter's rights as to shares held on
his behalf only if: E-2 (a) He submits to the subject corporation the written
consent of the stockholder of record to the dissent not later than the time the
beneficial stockholder asserts dissenter's rights; and (b) He does so with
respect to all shares of which he is the beneficial stockholder or over which
he has power to direct the vote. (Added to NRS by 1995, 2089).
NRS 92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.
1. If a proposed corporate action creating dissenters' rights is submitted to
a vote at a stockholders' meeting, the notice of the meeting must state that
stockholders are or may be entitled to assert dissenters' rights under NRS
92A.300 to 92A.500, inclusive, and be accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is taken by written
consent of the stockholders or without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430. (Added to NRS by 1995, 2089; A 1997, 730).
NRS 92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES. 1. If a
proposed corporate action creating dissenters' rights is submitted to a vote at
a stockholders' meeting, a stockholder who wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken, written
notice of his intent to demand payment for his shares if the proposed action is
effectuated; and (b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 and
NRS 92A.400 is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2089; 1999, 1631).
NRS 92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO
ASSERT RIGHTS; CONTENTS. 1. If a proposed corporate action creating
dissenters' rights is authorized at a stockholders' meeting, the subject
corporation shall deliver a written dissenter's notice to all stockholders who
satisfied the requirements to assert those rights. 2. The dissenter's notice
must be sent no later than 10 days after the effectuation of the corporate
action, and must: (a) State where the demand for payment must be sent and where
and when certificates, if any, for shares must be deposited; (b) Inform the
holders of shares not represented by certificates to what extent the transfer
of the shares will be restricted after the demand for payment is received;
(c) Supply a form for demanding payment that includes the date of the first
announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date; (d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than 60 days after
the date the notice is delivered; and (e) Be accompanied by a copy of NRS
92A.300 to 92A.500, inclusive. (Added to NRS by 1995, 2089).
NRS 92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER. 1. A stockholder to whom a dissenter's notice is sent
must: (a) Demand payment; (b) Certify whether he acquired beneficial ownership
of the shares before the date required to be set forth in the dissenter's
notice for this certification; and (c) Deposit his certificates, if any, in
accordance with the terms of the notice. 2. The stockholder who demands
payment and deposits his certificates, if any, before the proposed corporate
action is taken retains all other rights of a stockholder until those rights
are canceled or modified by the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter. (Added to NRS by 1995,
2090; A 1997, 730)
NRS 92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER
DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER. 1. The subject
corporation may restrict the transfer of shares not represented by a
certificate from the date the demand for their payment is received. 2. The
person for whom dissenter's rights are asserted as to shares not represented
by a certificate retains all other rights of a stockholder until those rights
are canceled or modified by the taking of the proposed corporate action. (Added
to NRS by 1995, 2090).
/107/
NRS 92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS. 1. Except as
otherwise provided in NRS 92A.470, within 30 days after receipt of a demand for
payment, the subject corporation shall pay each dissenter who complied with
NRS 92A.440 the amount the subject corporation estimates to be the fair value
of his shares, plus accrued interest. The obligation of the subject
corporation under this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is located; or
(b) At the election of any dissenter residing or having its registered office
in this state, of the county where the dissenter resides or has its registered
office. The court shall dispose of the complaint promptly. 2. The payment
must be accompanied by: (a) The subject corporation's balance sheet as of the
end of a fiscal year ending not more than 16 months before the date of payment,
a statement of income for that year, a statement of changes in the
stockholders' equity for that year and the latest available interim financial
statements, if any; (b) A statement of the subject corporation's estimate of
the fair value of the shares; (c) An explanation of how the interest was
calculated; (d) A statement of the dissenter's rights to demand payment under
NRS 92A.480; and (e) A copy of NRS 92A.300 to 92A.500, inclusive. (Added to
NRS by 1995, 2090).
NRS 92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF
DISSENTER'S NOTICE. 1. A subject corporation may elect to withhold payment from
a dissenter unless he was the beneficial owner of the shares before the date
set forth in the dissenter's notice as the date of the first announcement to
the news media or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares,
plus accrued interest, and shall offer to pay this amount to each dissenter
who agrees to accept it in full satisfaction of his demand. The subject
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenters' right to demand payment pursuant to NRS 92A.480.
(Added to NRS by 1995, 2091).
NRS 92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE. 1. A dissenter may notify the
subject corporation in writing of his own estimate of the fair value of his
shares and the amount of interest due, and demand payment of his estimate,
less any payment pursuant to NRS 92A.460, or reject the offer pursuant to
NRS 92A.470 and demand payment of the fair value of his shares and interestdue,
if he believes that the amount paid pursuant to NRS 92A.460 or offered pursuant
to NRS 92A.470 is less than the fair value of his shares or that the interest
due is incorrectly calculated. 2. A dissenter waives his right to demand
payment pursuant to this section unless he notifies the subject corporation of
his demand in writing within 30 days after the subject corporation made or
offered payment for his shares. (Added to NRS by 1995, 2091).
NRS 92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECt
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER. 1. If a demand for payment
remains unsettled, the subject corporation shall commence a proceeding within
60 days after receiving the demand and petition the court to determine the fair
value of the shares and accrued interest. If the subject corporation does not
commence the proceeding within the 60 day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded. 2. A subject corporation
shall commence the proceeding in the district court of the county where its
registered office is located. If the subject corporation is a foreign entity
without a resident agent in the state, it shall commence the proceeding in the
county where the registered office of the domestic corporation merged with or
whose shares were acquired by the foreign entity was located. 3. The subject
corporation shall make all dissenters, whether or not residents of Nevada,
whose demands remain unsettled, parties to the proceeding as in an action
against their shares. All parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication
as provided by law. 4. The jurisdiction of the court in which the proceeding
is commenced under subsection 2 is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or any amendment thereto. The
dissenters are entitled to the same discovery rights as parties in other civil
proceedings. 5. Each dissenter who is made a party to the proceeding is
entitled to a judgment: E-4 (a) For the amount, if any, by which the court
finds the fair value of his shares, plus interest, exceeds the amount paid by
the subject corporation; or (b) For the fair value, plus accrued interest, of
his after-acquired shares for which
/108/
the subject corporation elected to withhold payment pursuant to NRS 92A.470.
(Added to NRS by 1995, 2091).
NRS 92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS
AND FEES. 1. The court in a proceeding to determine fair value shall determine
ll of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment. 2. The court may also assess the fees and
expenses of the counsel and experts for the respective parties, in amounts the
court finds equitable: (a) Against the subject corporation and in favor of all
dissenters if the court finds the subject corporation did not substantially
comply with the requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously or not in good faith with respect to
the rights provided by NRS 92A.300 to 92A.500, inclusive. 3. If the court finds
that the services of counsel for any dissenter were of substantial benefit to
other dissenters similarly situated, and that the fees for those services
should not be assessed against the subject corporation, the court may award to
those counsel reasonable fees to be paid out of the amounts awarded to the
dissenters who were benefited. 4. In a proceeding commenced pursuant to
NRS 92A.460, the court may assess the costs against the subject corporation,
except that the court may assess costs against all or some of the dissenters
who are parties to the proceeding, in amounts the court finds equitable, to the
extent the court finds that such parties did not act in good faith in
instituting the proceeding. 5. This section does not preclude any party in a
proceeding commenced pursuant to NRS 92A.460 or 92A.490 from applying the
provisions of N.R.C.P. 68 or NRS 17.115. (Added to NRS by 1995, 2092).
/109/
EXHIBIT L
TARGET WARRANT HOLDERS
/110/
EXHIBIT L
SCHEDULE WA-1
Shares Reserved for Exercise of Warrants (issued to noteholders)
Daniel Schneierson 119,429 A warrants if exercised
Daniel Schneierson 12,500 B warrants if exercised
Benjamin Mayer 119,429 A warrants if exercised
Benjamin Mayer 12,500 B warrants if exercised
Ari Goldner 143,200 A warrants if exercised
1/05 Money Finder 814,116 C warrants if exercised
David Schwartz 90,000 A warrants if exercised
David Schwartz 180,000 C warrants if exercised
Catherine A. DeWitt 60,000 A warrants if exercised
Catherine A. DeWitt 120,000 C warrants if exercised
David Mizrahi 60,000 A warrants if exercised
David Mizrahi 120,000 C warrants if exercised
Jennifer C. Schiffman 30,000 A warrants if exercised
Jennifer C. Schiffman 60,000 C warrants if exercised
Morris Weiss 10,000 A warrants if exercised
Morris Weiss 20,000 C warrants if exercised
Leon B. Eiskowitz 25,000 A warrants if exercised
Leon B. Eiskowitz 50,000 C warrants if exercised
NY Auto Mall 304,747 C warrants if exercised
Joseph Makowsky 121,920 C warrants if exercised
Frady Makowsky 60,960 C warrants if exercised
Allen Zev Friedman 213,333 C warrants if exercised
Moshe Williger 121,920 C warrants if exercised
Marlene Kriger 53,333 C warrants if exercised
Blimi Mendlowitz 750,000 A warrants if exercised
M & E Note current 4,000,000 A warrants if exercised
M & E Note current 8,000,000 C warrants if exercised
P.R. Diamonds 50,000 A warrants if exercised
P.R. Diamonds 100,000 C warrants if exercised
David Weinstein 81,250 A warrants if exercised
David Weinstein 50,000 B warrants if exercised
David Weinstein 200,000 C warrants if exercised
Blimi Mendlowitz 1,500,000 C warrants if exercised
M & E (open portion) 1,000,000 A warrants if exercised
M & E (open portion) 2,000,000 C warrants if exercised
Total 20,653,637
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EXHIBIT M
TARGET NOTE HOLDERS
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EXHIBIT M
SCHEDULE TCN-1
Shares Reserved for Note Conversions
1/05 Bridge Notes 450,000 If not converted to ATR Preferred
M&E Note current 2,000,000 If not converted to ATR Preferred
4/02 Convert Notes 355,000 If not converted to ATR Preferred
Blimi Mendlowitz 375,000 If not converted to ATR Preferred
M&E (open portion) 500,000 If not converted to ATR Preferred
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