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Info-Pac, Inc. Announces Acquisition.

VANCOUVER, British Columbia--(BUSINESS WIRE)--May 11, 1998-- Info-Pac Inc.(NASDAQ:IOPS) Acquisition Info-Pac, Inc. (the "Company") is pleased to announce that it has entered into an agreement (the "Share Exchange Agreement") to purchase all of the issued and outstanding shares of Digital Armor Inc. ("Digital"), an Alberta private company (the "Acquisition").

Digital has developed a unique, low-cost, proprietary Compact Disk ("CD") protection system called "CD Armor" for use with audio CDs, CD-ROMs and CD-Rs. CD Armor is an optically clear, protective shield that is attached to both sides of a CD and remains on the CD in storage and during play. CD Armor protects the CD from scrapes, scratches or scuffs which would otherwise result in the loss of data and audio quality. If the protected CD is damaged, the damage will be sustained by CD Armor which can easily be removed and replaced. CD Armor is applied to both sides of a CD in a matter of seconds using a proprietary installer to attach the shields. The shields are held onto each side of the CD by an interlocking clasp system without the use of adhesives.

Patent applications for both the shields and the installer have been filed in the United States and Canada and a PCT application has been filed for world-wide coverage. In addition, Trademark applications have been filed in the United States and Canada for "CD Armor" and "Digital Armor". Digital has recently been advised that certain of its patent applications in the United States for the proprietary clasp system have been allowed and the other applications continue under process.

Digital has executed an exclusive manufacturing agreement with South Texas Manufacturing L.L.C. ("South Texas") of Brownsville, Texas, for the turnkey production, assembly and packaging of the installers and shields for sales in North, Central and South America. The initial production tooling and injection molds are completed, and the first orders will be shipped in May 1998.

Digital engages consulting expertise as needed and is currently working with Cheryl Hirsch Communications, a public relations and communications firm specializing in product publicity, to assist in effectively introducing CD Armor to the market and KARO Design Resources Inc. as a strategic marketing partner to create effective product literature, retail packaging, print ads, point of purchase displays and trade show materials.

Under the terms of the Share Exchange Agreement, the Company, through its wholly-owned Alberta subsidiary, Digital Armor Holdings Ltd. (the "Subsidiary"), will acquire from the stockholders of Digital (the "Stockholders") all of the issued and outstanding Class "A" Common Shares of Digital in consideration of the Subsidiary issuing 6,539,144 Class "D" Exchangeable Shares in its capital stock (the "Exchangeable Shares"). In addition, the Company will issue to the Stockholders 6,539,144 Class "A" Non-Participating Voting Shares (the "Voting Shares") for consideration of $0.001 per Voting Share, and grant the Stockholders the right, for a period of five years from the closing of the Acquisition, to exchange all or any part of the Exchangeable Shares for an equivalent number of common shares in the common stock of the Company. On the exchange of any Exchangeable Shares for an equal number of common shares in the common stock of the Company, and equivalent number of Voting Shares will be canceled.

On the closing of the Acquisition, Digital and South Texas will cause all of the existing issued and outstanding Class "C" Preferred Shares in its capital stock, being 500,000 Class "C" Preferred Shares (the "Preferred Shares") issued to South Texas, to be canceled and the Company will enter into an agreement with South Texas granting South Texas an option to purchase, up to and including December 31, 2001, a total of 500,000 common shares in the common stock of the Company (the "Initial Option") at a price of Cdn$1.00 per share (the "Exercise Price"). The terms of the agreement will provide for each Cdn$1.00 of the Exercise Price 5to be satisfied, in whole or part, by delivering to the Company, clear title to a portion of the dies and forming devices, injection molds and assembly jigs used for the production of the CD Armor installers and shields (the "Tooling") with an original cost of Cdn$1.00.

Digital and South Texas will cause all of the outstanding Class "C" Warrants issued to South Texas (the "Class "C" Warrants") entitling South Texas to purchase, up to and including December 31, 2000, a total of 500,000 common shares in the capital stock of Digital at a price of Cdn.$1.00 per share until December 31, 1998, Cdn.$1.25 per share until December 31, 1999 and Cdn.$1.50 per share until December 31, 2000 to be canceled. The Company will enter into an agreement with South Texas granting to South Texas, subject to South Texas exercising the Initial Option, an additional option to purchase a total of 500,000 common shares in the common stock of the Company on the identical terms and conditions as the Class "C" Warrants (the "Additional Option"). The terms of the Additional Option will provide South Texas the right, in whole or in part, to satisfy the exercise price by delivering to the Company clear title to a portion of the Tooling with an original cost equal to the option exercise price.

In addition, Digital will cause all outstanding stock options to be canceled in return for the Company agreeing to issue stock options entitling the holders thereof to acquire a total of 125,000 common shares in the common stock of the Company at a price of $0.20Cdn per share and 1,000,000 common shares in the common stock of the Company at a price of $0.75Cdn per share on the identical terms and conditions as the canceled stock options.

Certain existing stockholders of Digital will acquire 828,500 of the issued and outstanding shares of the Company from existing stockholders of the Company, and all of the current officers and directors of the Company will resign in favor of the current officers and directors of Digital.

Holders of Exchangeable Shares will not be entitled to receive notice of, or to attend any meeting of the stockholders of the Subsidiary, or to vote at any such meeting. In the event of the liquidation, dissolution or winding up of the Company, the holders of the Exchangeable Shares shall be entitled to participate equally with all of the holders of all classes of the shares of the Subsidiary entitled in the distribution of the property or assets of the Subsidiary. The Exchangeable Shares are subject to adjustment or modification in the event of a stock split or other changes to the capital structure of the Company, so as to maintain the initial one-to-one ratio between the Exchangeable Shares and the Company's common stock.

Holders of the Voting Shares will be entitled to receive notice of, and attend any meeting of the Company, and to vote at any such meeting. All rights to exercise votes attached to the Voting Shares will cease upon the exchange of all such holder's Exchangeable Shares for common shares in the common stock of the Company. The Voting Shares will not be entitled to dividends. In the event of liquidation, dissolution or winding-up of the Company the holders of the Voting Shares shall only be entitled to receive the amount paid up on such share and shall not be entitled to share in any further distribution of the property or assets of the Company. Debt Conversion

The Company has entered into agreements with certain creditors of Digital to assume certain financial obligations of Digital totaling $1,187,500Cdn (the "Indebtedness"). The Company has agreed to repay $787,500Cdn of the Indebtedness (the "First Debt") on or before July 11, 1998 and the balance being $400,000Cdn (the "Remaining Debt") on or before August 15, 1998. Digital has further granted to the holders of the First Debt the right for a period of 30 days from May 11, 1998 to convert all or part of the First Debt into common shares in the common stock of the Company at $0.75Cdn per share and to the holders of the Remaining Debt the right for a period of 60 days from May 11, 1998 to convert all or a part of the Remaining Debt into common shares in the common stock of the Company at $1.25Cdn per share. Both of the aforementioned debt conversions will be undertaken by the Company in accordance with Rule 504 of Regulation D of the Securities Act of 1933 as amended. On Behalf of the Board Brent Shaw, Director

CONTACT: Info-Pac Inc.

Brent Shaw, 318/964-2288
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Publication:Business Wire
Date:May 11, 1998
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