EX-3.1 3 ex3_1.txt EXHIBIT 3.1 MEMORANDUM OF TERMS PROPOSED TRANASACTION BETWEEN NEOMEDIA TECHNOLOGIES, INC. AND BSD Software, Inc. The terms set forth on the Memorandum of Terms are interdependent, and no single aspect of the Memorandum of Terms should be considered or valued on a stand-alone basis. BSD Software, Inc. (BSDS) and NeoMedia intend to consider an transaction to substantially enhance their respective shareholder values. BSDS and NeoMedia seek to: 1. Merge BSDS with NeoMedia Technologies in an exchange of common stock. 2. Centralize administrative and management functions. 3. Enhance shareholder value through the increase of cash flow from operations and patent licensing as well as by decreasing expenditures through centralization. To effectuate these goals, NeoMedia and BSDS would: Action Steps NEOMEDIA would BSDS would 1. Exchange of Shares: Obtain shareholder approvals as required. NeoMedia Obtain the necessary approval from would obtain from BSDS shareholders a legal shareholders in order to effectuate a merger majority of its shares to be exchanged for shares with NeoMedia Technologies. Additionally, of common stock in NeoMedia Technologies, Inc. convert all outstanding debt, other than The exchange ratio will be one share of NeoMedia trade payables and those mutually agreed upon Technologies common stock for each share of BSDS by both parties, and all shares of preferred stock.* Additionally, NEOM requires a proxy of stocks into shares of common stock of BSDS BSDS shares, on the part of management and major prior to the merger with NeoMedia shareholders, in favor of the proposed merger. Technologies. These shares would be exchanged for common shares of NEOM within ten days * - not to exceed 40 million total shares at subsequent to shareholder approval by the closing shareholders of NEOM and BSDS.
2. Management and Administration: NeoMedia will consolidate all senior management BSDS will run its day to day operations and and overall administrative functions. The retain its headquarters in Calgary, Alberta, accounting, legal, treasury, and Human Resources Canada. Additionally, BSDS will consolidate functions will be combined and headquartered at its entire accounting function at Ft. Myers its Ft. Myers, Florida home office. Additionally, under the direction of the current CFO of the current Board of Directors of NeoMedia NEOM. BSDS agrees to provide financial data Technologies will remain the surviving Board of and projections as requested by NEOM and to Directors for the combined entity. Subsequent to execute, on the part of senior management, a signing the LOI, NEOM agrees to lend BSDS funds, non-compete concurrent with the signing of to an amount and timetable at the sole discretion the LOI. of the CEO and CFO of NEOM. The funds will be utilized by BSDS to run its day to day operations. BSDS will operate, post merger, as a Such funds will be secured in an amount and form subsidiary or division of NEOM. agreeable to the CEO and CFO of NEOM. In the event that the merger fails to occur within eight months BSDS agrees to not hire additional personal, from the signing of this LOI, then NEOM will have execute agreements with agents outside of the right to convert its note into shares of BSDS BSDS or enter into any contractual or verbal common stock at a 30% discount to the closing bid obligation without the written permission of price of the stock on the date of cancellation of NEOM subsequent to the execution of the LOI. the LOI. Additionally, these shares will have Such permission will not be unreasonably piggy back registration rights. withheld. NEOM will operate BSDS, post merger, as a BSDS management will be accountable to a subsidiary or division of the parent mutually agreeable specified position within company. NEOM. NEOM agrees not to insert personnel into the infrastructure of BSDS or to unilaterally make BSDS will provide NEOM with the form of the management changes within BSDS as long as BSDS is option and warrant along with the number of within a mutually agreed upon financial goal for shares of common stock, options and warrants revenue and / or earnings. currently outstanding. Additionally, warrant and option holders will have their warrants BSDS management will report to a mutually or options converted into common shares of agreeable and specified position within NEOM. This NEOM. reporting will occur for a minimum specified period of time. BSDS would complete with its transfer agent cancellation of all disputed shares of common stock to include, but not be limited to, the singular transaction of approximately 9 million shares in dispute and currently being addressed.
3. Due Diligence: NeoMedia will conduct its due diligence BSDS will conduct its due diligence utilizing both internal and outside utilizing both internal and outside professionals, as it requires. It will bear professionals, as it requires. It will bear the costs of its own due diligence, which the costs of its own due diligence, which will include, but not be limited to, legal will include, but not be limited to, legal and accounting costs. and accounting costs and a Fairness Opinion, if necessary. 4. Management Contracts: NeoMedia has a policy of no management BSDS will terminate any open management contracts. contracts prior to the merger. Additionally, BSDS agrees to not hire, adjust salary levels or issue bonuses subsequent to 5. Issuance of Shares: signing the LOI unless mutually agreed to in writing by both NEOM and BSDS. NeoMedia will issue additional shares of its stock as required in the normal course of business. The final exchange rate for shares of BSDS with NeoMedia Technologies will be within ten business days subsequent to the approval of the merger by both NEOM and BSDS shareholders. Acquisition The final agreement will set forth the terms and conditions for both NeoMedia and BSDS and contain Agreement: representations and warranties, covenants and indemnities consistent with transactions of this type.
Approvals: This merger is subject to an affirmative vote from the board of directors of each company, the satisfactory completion of due diligence by both companies and the approval of the shareholders of both companies. Closing: The LOI will be signed as soon as practicable, but no later than Dec. 8, 2003, subject to extension by written mutual consent or to satisfy any regulatory requirements. Dated: Dec 9, 2003 Dated: Nov 20, 2003 /s/ Charles T. Jensen /s/ Guy Fietz CEO, NeoMedia Technologies CEO, BSDS LETTER OF INTENT EXTENSION December 9, 2003 This letter grants a one day extension to the memorandum of terms for the proposed transaction between NeoMedia Technologies, Inc. and BSD Software Inc. Agreed by /s/ Charles T. Jensen CEO, NeoMedia Technologies, Inc. /s/ Guy Fietz CEO, BSD Software Inc.