AGREEMENT AND PLAN OF REORGANIZATION
This Plan and Agreement of Reorganization ("Plan"), is made this 11th day
of August, 1997, between NDS Software, Inc., a Nevada corporation ("NDS"),
FOCUS: Publications, Inc., a Nevada corporation ("FOCUS"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ being the owners of record of all of the issued and
outstanding stock of FOCUS (hereinafter collectively called "Stockholders").
Whereas NDS wishes to acquire and the Stockholders wish to transfer all of
the issued and outstanding stock of FOCUS in a transaction intended to qualify
as a reorganization within the meaning of IRC Section 368(a)(1)(B), as amended;
Whereas, the parties hereto desire that FOCUS stock be exchanged for NDS
stock on the date and at the time herein provided; and,
Whereas, the parties hereto desire to set forth certain representations,
warranties and covenants herein contained;
Now, therefore, NDS and the Stockholders adopt this plan of reorganization
upon the terms and conditions as follows:
ARTICLE I
Exchange
1.1 Number of Shares. The Stockholders agree to transfer to NDS at
the Closing 100% of the shares of the common stock of FOCUS, without par value,
in exchange for an aggregate of 20,000 shares of voting common stock of NDS,
$2.50 par value per share, to be issued to the Stockholders at Closing in the
numbers shown opposite their names in Exhibit "A".
1.2 Delivery of Certificates by Stockholders. The transfer of
FOCUS shares by the Stockholders shall be effected at the Closing by the
delivery to NDS of certificates representing the
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transferred shares endorsed in blank or accompanied by stock powers executed in
blank, with all signatures guaranteed by a national bank and with all necessary
transfer tax and other revenue stamps, acquired at the Stockholder's expense,
affixed.
1.3 Restrictions on NDS Stock. The Stockholders acknowledge, and
irrespective of any other term or provision herein, that the NDS stock exchanged
hereunder is restricted stock and subject to Securities and Exchange Commission
"Rule 144". No warranties or representations by NDS are made nor shall be
implied herein that such restrictions will be removed except by compliance with
the applicable requirements of Rule 144 or the Securities Act of 1933.
1.4 Unwind Provision. The Stockholders and FOCUS acknowledge that
NDS is entering into this transaction with a concurrent expectation of obtaining
additional capital financing, and that NDS has provided the Stockholders and
FOCUS with all pertinent facts concerning the method and goals regarding NDS's
capital finance plan. If, within one hundred and twenty (120) days from the
execution hereof, NDS is unable to obtain additional capital financing, and upon
written notice thereof by NDS, the parties agree that this Plan shall be
abandoned and of no further force or effect. In the event of such abandonment,
the parties shall take whatever action and execute whatever instruments
necessary to return the parties to the status quo existing prior to the
execution of this Plan. Further, neither NDS nor FOCUS shall file "Articles of
Exchange" with the Secretary of State of Nevada unless and until NDS obtains the
capital financing and all other contingencies of this Plan have been satisfied;
provided, however, that this Plan shall be submitted, immediately after
execution hereof, for approval by the constituent corporation shareholders as
may be required by law and all other action taken by the parties to complete
this Plan, save and except for the filing of the "Articles of Exchange" and the
contingency set forth in this Paragraph 1.5. Upon the abandonment of this Plan
pursuant to this Paragraph 1.4, the rights and obligations of the parties
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shall be terminated in accordance with Paragraph 12.2 herein, and the parties
shall comply with Paragraphs 3.11 and 4.7 herein which shall survive abandonment
of this Plan as a continuing obligation of the parties.
1.5. Piggyback Registration Rights. If at any time within two (2)
years after the execution hereof, NDS disposes to register any of its shares of
common stock under the Securities Act of 1933, as amended, NDS will give written
notice of its intention to do so to Stockholders, and on the written request to
Stockholders, given within thirty (30) days after the receipt of said notice,
NDS shall use its best efforts to cause the shares of NDS common stock held by
Stockholders to be included with the securities registered. Such request by
Stockholders shall be referred to as a "Piggyback Registration" request.
Stockholders shall be limited to one such Piggyback Registration request. NDS
shall only be obligated to include the shares in the registration statement if
the underwriter of such offering determines, in its sole discretion, that the
sale of such shares will not materially adversely effect the success of the
offering, provided that the underwriter shall not unreasonably withhold its
consent to the inclusion of Stockholders's shares in the registration statement.
In addition, Stockholders will be responsible for any additional costs incurred
by NDS as a result of the Piggyback registration. Stockholders will be deemed to
have waived its rights to Piggyback registration if it does not provide timely
notice to NDS of its intentions.
1.6 Employment Agreement. The parties acknowledge that the
Stockholders and NDS will enter into an Employment Agreement whereby the
Stockholders shall become employees of NDS pursuant to the terms thereof.
Although executed contemporaneously herewith, such Employment Agreement shall
not be a part hereof and the covenants and promises herein are separately
enforceable.
ARTICLE II
Closing/Effective Date
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The Closing contemplated by Section 1.1 shall be held forty-five
(45) days from execution hereof, at the principal offices of NDS, unless another
place or time is agreed upon in writing by the parties. This Plan shall become
effective upon the filing of the "Articles of Exchange" pursuant to applicable
law and subject to the conditions set forth herein.
ARTICLE III
Representations and Warranties of the Stockholder and FOCUS
3.1 Corporate Status: FOCUS is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada.
3.2 Capitalization. The authorized capital stock of FOCUS consists
solely of two (2) shares of common stock, no par value, of which two (2) shares
are issued and outstanding, all fully paid and non-assessable, and the shares to
be transferred at the Closing constitute all of the outstanding shares of FOCUS
and FOCUS has issued no other shares.
3.3 Investment Intent. The Stockholders are acquiring the NDS shares
to be transferred to them under this Agreement for investment and not with a
view to the sale or distribution thereof, and the Stockholders have no
commitment or present intention to sell or otherwise dispose of such stock.
3.4 Financial Statements. All financial statements prepared by or
on behalf of FOCUS and submitted to NDS and all books of account and records of
FOCUS are true and correct, have been prepared in conformity with generally
accepted accounting principles, correctly reflect valid transactions and values,
and present a true and correct statement, as of their respective dates, of
FOCUS's financial condition. NDS acknowledges that the FOCUS does not have
audited financials.
3.5 Undisclosed Liabilities. FOCUS had no liabilities of any
nature except to the extent reflected or reserved against FOCUS's latest
financial statements attached hereto as EXHIBIT "B".
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3.6 Interim Changes. There has been no material adverse change in
the condition of FOCUS since the date of the financial records submitted to NDS,
except those arising from the normal and regular conduct of business of FOCUS.
3.7 Litigation. There is no litigation or proceeding pending, or
to Stockholder's knowledge threatened, against or relating to FOCUS, its
properties or business, except as set forth in a list certified by the president
of FOCUS and delivered to NDS.
3.8 Title to Property. FOCUS has good and marketable title to all
properties and assets, real, personal, and proprietary, and FOCUS's patents,
patent applications, copyrights, trade-marks and tradenames are valid and in
good standing wherever FOCUS sells products or services. FOCUS has not sold or
granted any interest, whether in total or in part, in any of its properties
described herein to any person or entity and the use of such properties do not
conflict in any way with the trade-marks, trade-names, or other proprietary
rights of any other person or entity. There are no liens, mortgages, pledge, or
encumbrance with respect to the properties described herein.
3.9 Title to Shares. The Stockholders are the owners, free and
clear of liens and encumbrances, of the number of FOCUS shares which the
Stockholders have contracted to exchange.
3.10 Access to Books and Records. From the date of this Agreement
to the Closing, the Shareholders will cause FOCUS (1) to give to NDS and its
representatives full access during normal business hours to all of its offices,
books, records, contracts, and other corporate documents and properties so that
NDS may inspect and audit them, and (2) to furnish such information concerning
FOCUS's properties and affairs as NDS may reasonably request.
3.11 Confidentiality. Until the Closing (and permanently if there is
no Closing), the Stockholders and their representatives will keep confidential
any information which they obtain from NDS concerning its properties, assets,
proprietary assets, and business. If this transaction is not completed, the
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Stockholders will return to NDS all written matter with respect to NDS obtained
by them in connection with the negotiation or consummation of this Agreement.
3.12 Corporate Authority. FOCUS has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, and will deliver to NDS at the Closing a certified copy of
resolutions of its Board of Directors authorizing execution of this Agreement by
its offcers and performance thereunder. This Agreement constitutes a valid and
binding obligation of FOCUS and performance hereunder will not violate any
provision of FOCUS's Articles of Incorporation, Bylaws, or other agreements or
commitments.
ARTICLE IV
Representations and Warranties of NDS
4.1 Corporate Status. NDS is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada.
4.2 Capitalization. The authorized capital stock of NDS consists
solely of 60,000,000 shares of capital stock consisting of 50,000,000 shares of
Common Stock 5,000,000 shares of Class A Preferred Stock 200,000 shares of Class
A Preferred Stock and 4,800,000 shares of Series C $10, 6% Convertible
Cumulative Preferred Stock. The NDS stock to be issued to Stockholders hereunder
will, upon the issuance thereon, be duly and validly issued, all fully paid and
nonassessable.
4.3 Annual Reports. NDS has heretofore delivered to the Stockholders
true and correct copies of its annual reports and consolidated financial
statements for each year. There have been have been no material adverse changes
in the condition of NDS, except those arising from the normal and regular
conduct of business of NDS, since the date of the financial documents provided
by NDS.
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4.4 InvestmentIntent NDS is acquiring the FOCUS shares to be
transferred to it under this Agreement for investment and not with a view to the
sale or distribution thereof, and NDS has no commitment or present intention to
liquidate FOCUS or to sell or otherwise dispose of its stock.
4.5 Corporate Authority. NDS has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, and will deliver to the Stockholders at the Closing a certified copy
of resolutions of its Board of Directors authorizing execution of this Agreement
by its officers and performance thereunder. This Agreement constitutes a valid
and binding obligation of NDS and performance hereunder will not violate any
provision of NDS's Articles of Incorporation, Bylaws, or other agreements or
commitments.
4.6 Access to Books and Records. From the date of this Agreement
to the Closing, NDS will (1) give to the Stockholders and their representatives
full access during normal business hours to all of its offices, books, records,
contracts, and other corporate documents and properties so that the Stockholders
may inspect and audit them, and (2) furnish such information concerning NDS's
properties and affairs as the Stockholders may reasonably request.
4.7 Confidentiality. Until the Closing (and permanently if there
is no Closing), NDS will keep confidential any information which they obtain
regarding FOCUS concerning its properties, assets, proprietary assets, and
business. If this transaction is not completed, NDS will return to FOCUS or the
Stockholders, as appropriate, all written matter with respect to FOCUS obtained
by NDS in connection with the negotiation or consummation of this Agreement.
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ARTICLE V
Actions of Parties Pending Closing
5.1 Approvals. Within five (5) days from the date of this Plan, or
such longer period as the parties shall agree upon in writing, this Plan shall
be submitted for approval and adoption by the holders of NDS and FOCUS Common
Shares if and as may be required by and pursuant to the applicable provisions of
the laws of the States of Nevada and California. If this Plan shall be so
approved and adopted, NDS and FOCUS shall, subject to the provisions herein,
immediately proceed to effectuate this Plan. If this Plan shall not be so
approved and adopted, it shall, without any further action by the parties, other
than certification to the other constituent corporation of the results of the
vote by the Secretary or Clerk, as the case may be, of the constituent
corporation the Stockholders of which shall not have approved or adopted this
Plan, be canceled without liability from either party to the other in accordance
with Paragraph 12.2 herein.
5.2 Conduct of Business. Prior to the Closing and pending the
effective date hereof, neither FOCUS, NDS, nor the Stockholders, without the
prior written consent of the other parties, will declare or pay any dividend on
any shares of its capital stock in excess of the amount paid thereon in the
preceding calendar quarter year, or make any other distribution of its assets,
except in the ordinary course of business, or increase the number of its shares
of capital stock outstanding except by reason of the conversion or redemption of
presently outstanding Class A Preferred Stock or Class B Convertible Stock of
NDS. The record dates for determining the holders of FOCUS Common Shares and the
holders of NDS Common Shares entitled to receive such dividends as the Board of
Directors of FOCUS and the Board of Directors of NDS, respectively, may, subject
to the preceding sentence, declare prior to the Closing, shall be the date
hereof, and no other dates.
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5.3 Due Diligence. Subsequent to the execution of this Plan and
prior to Closing, the parties to this Agreement shall be responsible for their
own due diligence with regard to the extent and cost thereof; provided, however,
that the parties shall disclose all information necessary to comply with the
terms and provisions otherwise set forth in this Agreement.
ARTICLE VI
Articles of Exchange
Upon the approval and adoption of this Plan as provided in Article V,
and subject to the any other provisions herein, Articles of Exchange complying
with the applicable provisions of the laws of the States of Nevada and
California, as applicable, shall be duly executed by the appropriate officers of
NDS and FOCUS and shall be filed with the appropriate offices of the States of
Nevada and California. Immediately upon the completion of such filings, this
Plan shall become effective.
ARTICLE VII
Directors and Officers
7 .1 Directors and Officers of NDS. Upon this Plan becoming
effective, the Directors and Officers of NDS shall be the same as the Directors
and Officers of NDS in office immediately prior to this Plan, and their
respective terms of office shall not be changed.
7 .2 Directors and Officers of FOCUS. Upon this Plan becoming
effective, the Directors and Officers of FOCUS shall be determined according to
the Articles of Incorporation or Bylaws of NDS, or as amended.
ARTICLE VIII
Conditions Precedent- NDS
All obligations of NDS under this agreement are subject, at NDS's
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
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8.1 Representations and Warranties True at Closing The
Stockholders' representations and warranties contained in this Agreement shall
be deemed to have been made again at and as of the Closing and shall then be
true in all material respects.
8.2 Due Performance. The Stockholders shall have performed and
complied with all the terms and conditions required by this Agreement to be
performed or complied with by them before the Closing.
8.3 Opinion of Counsel. The Stockholders shall have delivered to
NDS an opinion of FOCUS's legal counsel, dated as of the Closing, to the effect
that (1) the representations in Article III, Paragraphs 3.1, 3.2, 3.4 through
3.9, and 3.12, are correct and that counsel knows of no inaccuracy in the
representations; and (2) the stock certificates, stock powers, and other
instruments delivered to NDS at the Closing are proper in form and substance,
are validly issued, fully paid, and nonassessable, and will vest in NDS good
title to all of the issued and outstanding shares of capital stock of FOCUS,
free and clear as to all liens, charges, and encumbrances, and not subject to
any adverse claim.
8.4 Books and Records. The Stockholders shall have caused FOCUS to
make available to NDS all books and records of FOCUS as requested by NDS,
including minute books and stock transfer records.
8.5 Revocation of Prior Authorizations. The Stockholders shall
have delivered to NDS certified copies of resolutions of FOCUS's Board of
Directors revoking as of the Closing all prior authorization, powers of
attorney, designations, and appointments relating to the signing of checks,
borrowing of funds, access to corporate safe-deposit boxes and other similar
matters, to the extent requested by NDS.
8.6 Resignations. There shall have been delivered to NDS the
signed resignations of such directors of FOCUS as NDS shall request, dated as of
the Closing.
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8.7 Officer's Certificate. NDS shall have been furnished with a
certificate signed by the President and Secretary of FOCUS, dated as of the
Closing, certifying that there has been no material adverse change in the
financial condition, business, or properties of FOCUS.
ARTICLE IX
Conditions Precedent- Stockholders and FOCUS
All obligations of the Stockholders and FOCUS under this agreement
are subject, at the Stockholder's and FOCUS's option, to the fulfillment, before
or at the Closing, of each of the following conditions:
9.1 Representations and Warranties True at Closing NDS's
representations and warranties contained in this Agreement shall be deemed to
have been made again at and as of the Closing and shall then be true in all
material respects.
9.2 Due Performance. NDS shall have performed and complied with
all the terms and conditions required by this Agreement to be performed or
complied with by it before the Closing.
9.3 Officer's Certificate. NDS shall have been furnished with a
certificate signed by the President and Secretary of NDS, dated as of the
Closing, certifying that there has been no material adverse change in the
financial condition, business, or properties of NDS.
ARTICLE X
Indemnification
10. 1 Indemnification by the Stockholders. The Stockholders agree
to indemnify, defend, and hold NDS harmless from and against any loss, damage,
or expense, including attorney's fees, suffered or arising from (1) any breach
by the Stockholders of this Agreement, or (2) any inaccuracy in or breach of any
of the representations, warranties, or covenants by the Stockholders herein,
provided, however, that
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NDS shall give notice of any claims hereunder within twenty-four months
beginning on the date of the Closing. No loss, damage, or expense shall be
deemed to have been sustained by NDS to the extent of insurance proceeds paid
to, or tax benefits realizable by NDS or FOCUS as a result of the event giving
rise to such right to indemnification.
10.2 Indemnification by the Stockholders and FOCUS. The
Stockholders, FOCUS, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ personally, agree
to indemnify, defend, and hold NDS harmless from and against any loss, damage,
or expense, including attorney's fees, suffered or arising from ( 1 ) any breach
by FOCUS of this Agreement, or (2) any inaccuracy in or breach of any of the
representations, warranties, or covenants by FOCUS herein.
10.3 Indemnification by NDS. NDS agrees to indemnify, defend, and
hold the Stockholders harmless from and against any loss, damage, or expense,
including attorney's fees, suffered or arising from ( 1 ) any breach by NDS of
this Agreement, or (2) any inaccuracy in or breach of any of the
representations, warranties, or covenants by NDS herein.
10.4 Defense of claims. Upon obtaining knowledge thereof, the
indemnified party shall promptly notify the indemnifying party of any claim
which has given or could give rise to a right of indemnification under this
Agreement. If the right of indemnification relates to a claim asserted by a
third party against the indemnified party, the indemnifying party shall have the
right to employ counsel acceptable to the indemnified party to cooperate in the
defense of any such claim. If the indemnifying party does not elect to defend
any such claim, the indemnified party shall have no obligation to do so.
ARTICLE XI
Noncompetition
The Stockholders agree that for a period of two (2) years from the
Closing, they will not directly or indirectly solicit business from, engage in
business with, or divert business from any of NDS's current
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or future customers, and that they will not participate as a shareholder,
partner, employee, consultant, or otherwise in any enterprise engaging in
activities that would violate this Article if engaged in by them directly. The
Stockholders acknowledge and con firm that this covenant is made to induce NDS
to enter into this Agreement and is required by NDS for the purpose of
preserving the business and goodwill of NDS. The Stockholders and NDS represent
and confirm that no part of the NDS shares to be issued under this Agreement
have been allocated to this covenant and that no separate consideration or value
for this covenant had been otherwise agreed upon by the parties, and they agree
that they will not take any position in their federal income tax returns that is
inconsistent with this representation.
ARTICLE XII
General Provisions
12.1 Notice of Claims. Each of the parties hereto shall give the
other immediate notice of any claim, event or transaction which would or does
materially and adversely affect the business, properties, operations or
financial condition of the constituent corporations.
12.2 Termination. This Agreement may be terminated: (1) by mutual
consent in writing; (2) by either the Stockholders of NDS if there has been a
material breach of any warranty or covenant by other parties; or (3) by either
the Stockholders of FOCUS if the Closing shall not have taken place, unless
adjourned by mutual consent in writing by the date set forth in Article II
herein. In the event of termination or abandonment of this Plan, each party
shall pay the costs and expenses incurred by it in connection with this
Agreement and no party shall be liable to any other party for any cost, expense,
damage, or loss of anticipated profits whatsoever incurred or claimed, and the
obligations and liabilities assumed hereunder shall be released, except as
otherwise provided herein.
12.3 No Other Rights in Third Parties. Except as otherwise
expressly provided in this Plan, nothing expressed or implied in this Plan is
intended, or shall be construed, to confer upon or to give any
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person, firm or corporation, other than NDS and FOCUS and their respective
Stockholders, any rights or remedies under or by reason of this Plan.
12.4 Notice. Notices to or for the respective parties shall be
given in writing and delivered in person or mailed by certified or registered
mail, addressed to the respective party at the address as set out below, or at
such other address as either party may elect to provide in advance in writing,
to the other party:
NDS Software, Inc. FOCUS: Publications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, Chairman, CEO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,▇▇▇▇▇▇▇
12.5 Governing Law. This Plan shall be construed and governed by
the laws of the State of Nevada and jurisdiction shall vest exclusively in the
Ninth Judicial District Court in and for the State of Nevada, located in ▇▇▇▇▇▇▇
County. The parties acknowledge and agree that this Agreement is executed and to
be performed in ▇▇▇▇▇▇▇ County, State of Nevada.
12.6 Surrender of Rights. Upon the Closing, the holders of FOCUS
Common Shares shall cease to have any rights in respect of the stock, except
such rights, if any, as they may have under the Corporation Laws of the State of
California and except as otherwise provided herein.
12.7 Further Assurances. At any time, and from time to time, after
the Closing, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
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12.8 Waiver. Any failure on the part of either party hereto to
comply with any of their obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
12.9 Brokers, Each of the parties represents to the other parties
that no broker or finder has acted for them in connection with this Agreement
and agrees to indemnify and hold harmless the other parties against any fee,
loss, or expense arising out of claims by brokers or finders employed or alleged
to have been employed by such party.
12.10 Assignment. This Agreement and all of the terms and
conditions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their heirs, executors, administrators, successors, and
assigns; provided, however, that assignment by either party of its rights under
this Agreement without the written consent of the other party shall be null and
void.
12.11 Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto and
contains all of the covenants and agreements between the parties with respect to
this matter. Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement or promise not contained in this
Agreement shall be binding. Any modification of this Agreement will be effective
only if it is in writing, signed by the party to be charged specifically
referencing this Agreement.
12.12 Interpretation. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and effective under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed and have caused the
respective corporate seals to be affixed on this Agreement the day and year
first above written.
NDS Software, Inc., a FOCUS: Publications, Inc.,
Nevada Corporation a Nevada Corporation
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, CEO President
STOCKHOLDER
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into on this 11th day of August 1997 between
NDS SOFTWARE, INC., a Nevada Corporation, (hereinafter referred to as
"Employer") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (hereinafter
collectively referred to as "Employees"), to be effective as of August 11, 1997.
WITNESSETH:
WHEREAS. Employer and Employees (as "Stockholder") entered into a
Plan and Agreement of Reorganization of even date hereof, whereby Employer
exchanged all the stock owned by Employees in FOCUS Publications. Inc., a Nevada
corporation, and the parties agreed to retain the services of Employees as set
forth therein and,
WHEREAS, Employer and Employees desire to enter into this Employment
Agreement to employ Employees and to set forth the rights and duties of the
parties hereto.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment Agreement. The Employer hereby agrees to employ
Employees, and Employees hereby agrees to serve as such Employees upon the terms
and conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions for termination as
hereinafter provided, the term of the employment shall commence as of the date
of this Agreement and shall end five (5) years from that date. At the end the
term hereof, this agreement may be renewed by mutual agreement of the parties.
3. Employees Position and Duties. The terms of the Plan and Agreement
of Reorganization of even date hereof is hereby incorporated herein by reference
as though set forth fully, to the extent that Employees is obligated for
performance of any of the terms therein. Employees's breach of any of the terms,
or provisions thereof constitute a breach of this Agreement and will allow
Employer to terminate this
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agreement as hereinafter set forth. In addition to the obligations set forth in
said agreement, Employees agrees as follows:
a. ▇▇▇ ▇▇▇▇▇▇▇▇ shall assume responsibility as President of FOCUS, a
division of NDS and the management and supervision thereof ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall
be employed by FOCUS at the direction of ▇▇▇ ▇▇▇▇▇▇▇▇. Employees shall perform
any other duties relating to Employer's operations which may from time to time
be assigned by Employer or necessary for the successful operation of employers'
business, including but not limited to establishing a business plan for FOCUS
and establishing associated budgets as required to expand into additional
markets Employees shall be entitled to employ other Employees on terms approved
by the Board of Directors of NDS Software, Inc. (' NDS',) arid as needed to
reach the goals for the division as mutually agreed.
b. Employees shall perform all fiduciary duties related to the
management of FOCUS with the responsibility of making FOCUS a successful income
generating division of NDS.
c. During the term of this Employment Agreement, Employees shall, in
good faith, devote his best efforts and full time to their employment and
perform diligently and in good faith such duties as are or may be from time to
time required by the Employers which duties shall be consistent with his
position as set forth above, it being understood and acknowledged that the terms
"best efforts" and "full time" mean such effort and time commitment as is
necessary to achieve the success of the business.
d. It is not anticipated that Employees will assume any other duties
within NDS other than as set forth in this agreement, and any other duties
outside the scope of this Agreement will be subject to the mutual agreement of
the parties separately negotiated.
e. Employees shall not, without the prior written consent of Employer,
directly or indirectly, during the term of this agreement, whether for
compensation or otherwise render services of a business, professional or
commercial in nature to any person or firm that is engaged in a business similar
to
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that of the Employer or FOCUS, in accordance with the terms of the Plan and
Agreement for Reorganization.
4. Compensation and Benefits
During the term of employment hereunder, Employer shall compensate
Employee as follows:
a. Salary. For all services he may render to Employer during the term
of this Agreement, Employees shall each receive from Employer a base annual
salary while they are employed hereunder of Sixty-five Thousand Dollars
(S65,000) (a combined salary of One Hundred Thirty Thousand Dollars (S130,000)).
Salary is to be paid in accordance with the policy of Employer regarding payment
or salary to its other officers and directors.
b. Annual Bonus. Forty-five (45) days alter the end of each fiscal
year Employer shall pay a cash bonus to Employees equal to twenty-five (25%) of
the pre-tax net profits realized by FOCUS in excess of One Hundred Thousand
Dollars ($100,000). Net profits shall be calculated as the balance remaining
after deducting all expenses and a fee of seven percent (7%) of gross revenue to
NDS for providing payroll billing and collection services.
c. Additional Stock Option. Employees shell also receive on an annual
basis at the end of each fiscal year, stock options to purchase NDS Common Stock
in a number equal to the pre-tax profits of FOCUS divided by the market price of
NDS shares at the time when the option is vested, over the next Eve (5) years
pursuant to the fomwla described in 4.b. above. Example: a cash bonus in a year
of $100,000 would result in that amount being divided by the. market price at
the time the bonds was earned, resulting in the number of shares captioned, i e,
a stock price of $5 would remit in 90,000 shares issued. Of these pctential
options, one third options will be issued at the current market price at the
time of the Closing referred in the Agreement and Plan of Reorganization
incorporated herein, with the balance of two thirds
3
of the options issued at the market pace when earned. The options are good for
three (3) years from the date of issue.
d. Benefit. Employees shall be entitled to receive medical
insurance comparable so that offered to other members of the Board of Directors
of NDS.
e. Car Allowance. Employees under this agreement shall be entitled
to a monthly car allowance in a combined total amount of Three Hundred Dollars
($300) per month.
5. Termination Of Employment
a. For Cause. The Employment of Employees under this Employment
Agreement, and the term hereof may be terminated by the Employer and) upon a
showing of cause. upon shirt), (30) days' written notice to Employees. The
"effective date of termination" shall be the date thirty (30) days after written
notice of termination is delivered to the Employees.
For purposes hereof, the term 'for cause' is hereby defined to mean
the following as determined by a majority vote of the Board of Directors upon
reasonable investigation for determination based upon objective facts:
i. An act or omission in the course of Employees's duties which is
dishonest or fraudulent;
ii An act or omission which constitutes willful misconduct or
gross negligence in the performance of duties or assignment,
iii. A breach of this Agreement by Employees,
iv. A breach of an,' term or the Plan and Agreement of
Reorganization, including without lunitation, the non-competition
provision.
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v. The continuous substandard performance and/or inattention to
duties required by this Agreement as determined in the sole
discretion of Employer: and
vi Engaging in competition with the Employer by Employees without
the prior express written consent of Employer.
vii. The inability of FOCUS to earn a profit based on the mutually
acceptable pro forma to be presented and agreed upon within thirty
(3 0) days of the execution of this Agreement. In the event NDS is
considering terminating either Employee, NDS shall provide the
Employee written notice of the basis of termination whereupon the
Employee shall be provided a seventy-two (72) hour period in which
to respond to the basis of termination which response shall be
provided to the Board prior to the actual decision regarding
termination. The Employees response shall include a plan to cure
the Employee's breach within a fifteen day period. It is the
intent of the parties that Employee be provided a reasonable
opportunity to respond to the basis of termination prior to the
decision being made but that nothing herein is to be construed as
limiting or otherwise effecting the discretion of the Board to
terminate either employee according to the terms of this
Agreement.
b. Disability or Death. The employment of Employees under this
Employment Agreement, and the term hereof, shall be terminated by the death or
partial or total disability of Employees. For purposes hereof the term
"disability" is hereby defined to mean any mental or physical disability which
renders Employees unable to perform his duties or assignment as determined by
the Board of Directors of Employer in the sole judgment and discretion of said
Board as determined by a majority vote of the members thereof.
c. Resignation. The employment of Employees under this Employment
Agreement and the term hereof will be terminated by the voluntary resignation of
Employees.
5
6. Salary and Benefits Upon Termination. All salary and other
benefits shall terminate as of the effective date of termination and shall be
paid in accordance with Employer's normal pay period disbursements (Unless
precluded by law any medical and dental insurance coverage and life insurance
coverage and benefits shall continue tor thirty (30) days after termination or
until Employees is reemployed whichever shall first occur.
7. Reimbursable Expenses. The Employer, shall pay directly or
reimburse the Employees for the following expenses:
a. License fines and membership dues in associations or
organizations relative to the business of the Employer,
b. Subscriptions to journals or monthly service publications
relative to the business of the Employer
c. The Employees's necessary, travel, hotel, and entertainment
expenses incurred in connection with the business of the Employer or other
events that contribute to the benefit of the Employer in Amounts to be
determined and first approved by the Board of Directors
8. Non-Competition. Employees, as additional material
consideration hereunder, agree that during to term hereof and for a period of
two (2) years from termination of this Agreement, they will not directly or
indirectly solicit business from, engage in business with or divert business
from any of NDS's or FOCUS's current or future customers, and that they will not
participate as a shareholder, partner, Employees, consultant, or otherwise in
any enterprise engaging in activities that would violate this provision if
engaged in by them directly. This covenant shall be applicable to the entire
United States of America on the basis that NDS sells its products nationally and
Employees acknowledge and agree that the scope of this covenant is reasonable
given the special relationship of the parties as to the various agreements
executed by them. Employees acknowledge and confirm that this covenant is made
to induce NDS to enter
6
into this Agreement, is considered material to NDS, and is required by NDS for
the purpose of preserving the business and goodwill of FOCUS and NDS.
9. Confidentiality Provision., Employees agree that, during the
term of this Agreement or any extensions and for a period of two (2) years
thereafter, they will keep confidential any information which they obtain from
NDS or FOCUS or any of said entities' subsidiaries, sister corporations or
concerns, now or hereafter existing or created, concerning their properties,
assets, proprietary assets, source codes, copyrights, business methods, and
trade secrets. Upon termination hereof, Employees will return to Employer all
written matter with respect to such businesses obtained by them in connection
with the negotiation, consummation, or performance of this Agreement. Employees
further agree that any work performed or created by Employees during the term
hereof shall be considered work for hire and owned solely by Employer and shall
be subject to the terms of this provision.
10. Modification. No change or modification of this Agreement
shall be valid unless the same be in writing and signed by all the parties
hereto.
11. Binding Effect. The contract shall be binding upon the heirs,
executors, administrators and assigns of the Employees and any successors in
interest of the Employer.
12. Notice. Except as expressly provided to the contrary herein,
notices or other communications required, permitted, or made necessary by the
terms of this Agreement may be given orally to the respective representatives of
the Employer and the Employees designed herein. Written notices shall be
personally delivered to the Employer's representative or the Employees's
representative, as appropriate or sent by the United States registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party as designated below. Notices sent by mail shall be deemed made, delivered
and received on the date of the United States postmark thereon. Either party may
change its address or notice by giving notice of such change to the other party
in the manner specified in this section.
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For purposes of notice the addresses of the parties shall be:
If to Employer:
▇▇▇▇ ▇▇▇▇▇▇▇, Chairman/CEO
NDS Software, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Employees:
Mr. and Mrs. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
13. No Waiver. No waiver of any breach or default in any of the
terms and provisions of this Agreement shall be deemed to constitute or be
construed as a waiver of the subsequent breach or default of the same, similar
or dissimilar nature.
14. Choice of Law and Invalidity. The validity, construction,
performance and effect of this Agreement shall be governed by the laws of the
State of Nevada and jurisdiction shall vest exclusively in the Ninth Judicial
Distnct Court in and for the State of Nevada located in ▇▇▇▇▇▇▇ County. The
parties acknowledge and agree that this Agreement is executed and performance
hereof is due in ▇▇▇▇▇▇▇ County, State of Nevada In case any one or more of the
provisions contained herein shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or, unenforceable
provisions contained herein shall, for any reason, be held to be excessively
broad as to time, duration, geographical scope, activity or subject, said
provision shall be construed by limiting and reducing it so as to be enforceable
to the extent compatible with the then applicable law, it being the intent of
the parties hereto to give the maximum permitted effect to the restrictions set
forth herein.
8
15. Assignment. This Agreement is one for personal services and
the Employees shall not have a right to assign any part or all of his respective
rights, duties or obligations hereunder.
16. Interpretation. If necessary to give effect to the terns and
provisions hereof, the masculine feminine, and neuter gender in the singular and
plural number shall each be deemed to include the other whenever the context so
indicates.
17. Headings Headings in this Agreement are inserted for
convenience and identification only, and are in no way intended to descnbe.
interpret, define or limit the scope, extent or intention of this Agreement or
any provision hereof.
18. Counterparts. This Agreement may be executed in any number of
counterparts, any of which may be constituted in the agreement between the
parties hereto. Executed copies of this Agreement may be delivered by
telefacsimile, and delivery of executed telefacsimile copies to he parties and
their counsel shall be deemed to be a delivery of a duplicate original and
sufficient delivery to result in entry to this Agreement by the transmitting
party; provided, however, that within ten (10) days thereafter a signed
duplicate original shall be forwarded to the party to whom a telefacsimile copy
was forwarded.
l9. Authority. The Employer warrants and represents that it is a
corporation organized and exists under the laws of the State of Nevada, that the
undersigned is authorized to execute this Agreement on behalf of the Employer,
that the employment of the Employees under the terms of this Agreement has been
duly authorized by the Employer.
20. Inurement. Each covenant and condition in this Agreement shall
be binding on, and shall insure solely to the benefit of the parties to it,
their respective heirs, legal representatives successors and assigns.
21. Entire Agreement. Except as otherwise provided herein, this
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto and contains all of the covenants
9
and agreements between the parties with respect to this matter. Each party to
this Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party or anyone acting on
behalf of any party which are not embodied herein, and that no other agreement,
statement or promise not contained in this Agreement shall be binding.
IN WITNESS WHEREOF, the parties to this Employment Agreement have
duly executed it on the day and year first above written.
Employee: EMPLOYER:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- NDS SOFTWARE, INC.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ A Nevada Corporation
Employee:
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, CEO
----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
ARTICLES OF EXCHANGE
NDS Software, Inc.
Pursuant to NRS 92A.005 et seq., as amended, the undersigned, as the
acquiring corporation in a share exchange, hereby submits the following
information:
FIRST: The name of the acquiring and surviving corporation is NDS
Software, Inc., organized and governed under the laws of the State of Nevada.
SECOND: The name of the acquired constituent corporation is FOCUS
Publications, Inc., organized and governed under the laws of the State of
Nevada.
THIRD: A Plan of Reorganization dated the 11th day of August, 1997
(the "Plan") has been adopted by each of the above-identified constituent
corporations.
FOURTH: The Plan is not required to be submitted to the stockholders
pursuant to NRS 92A.130, however, the Plan was submitted to and duly approved by
a majority of the voting shareholders of NDS Software, Inc. as follows:
Number of
Number of Number of Votes Undisputed Shares
Voting Group Outstanding Shares Entitled to be Cast Voting Approval
------------ ------------------ ------------------- ---------------
Common Stock 5,737,568 5,737,568 1,324,825
Class A Preferred 662,500 3,312,500 3,226,425
------- --------- ---------
Total 6,400,068 9,050,068 4,551,250 (51%)
The number of votes cast for approval of the Plan was sufficient for
approval by the identified voting groups.
1
FIFTH: The Plan was submitted to and duly approved by shareholders of
FOCUS Publications, Inc. as follows:
Number of
Number of Number of Votes Undisputed Shares
Voting Group Outstanding Shares Entitled to be Cast Voting Approval
------------ ------------------ ------------------- -----------------
Common Stock 2 2 2
The number of votes cast for approval of the Plan was sufficient for approval by
the identified voting groups.
SIXTH: The Articles of Incorporation of NDS Software, Inc., without
amendment and existing as of tile date hereof, shall be the Articles of
Incorporation of the Surviving Corporation following the Effective Date of the
merger, as defined in the Plan and Agreement of Merger.
SEVENTH: A complete, executed copy of the Plan is on file at the
registered office of the acquiring corporation and will be furnished on request,
and without cost, to any owner of the parties to the Plan.
IN WITNESS WHEREOF, these Articles of Exchange of NDS Software, Inc.,
a Nevada Corporation, has been executed by the constituent entities this 20th
day of October, 1997.
FOCUS Publications, Inc., NDS Software, Inc.,
a Nevada Corporation a Nevada Corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------ ----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President ▇▇▇▇ ▇▇▇▇▇▇, President
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ----------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇▇▇▇▇▇▇, Secretary/Treasurer
2
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On November 6, 1997, before me, a notary public, personally appeared
▇▇▇ ▇▇▇▇▇▇▇▇, personally known (or proved) to me to be the person whose name is
subscribed to the above instrument who acknowledged that he executed the
instrument.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
STATE OF CALIFORNIA ) ----------------------------------
) ss. Notary public
COUNTY OF ORANGE )
On November 6, 1997, before me, a notary public, personally appeared
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ personally known (or proved) to me to be the person whose name
is subscribed to the above instrument who acknowledged that he executed the
instrument.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
STATE OF CALIFORNIA ) ----------------------------------
) ss. Notary public
COUNTY OF ORANGE )
On November 13, 1997, before me, a notary public, personally appeared
▇▇▇▇ ▇▇▇▇▇▇, personally known (or proved) to me to be the person whose name is
subscribed to the above instrument who acknowledged that he executed the
instrument.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
STATE OF NEVADA ) ----------------------------------
) ss. Notary public
COUNTY OF ▇▇▇▇▇▇▇ )
On December 3, 1997, before me, a notary public, personally appeared
▇▇▇▇ ▇▇▇▇▇▇▇, personally known (or proved) to me to be the person whose name is
subscribed to the above instrument who acknowledged that he executed the
instrument.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Notary public
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