CGI Holding Corporation Enters Into Agreement to Merge With Proceed Interactive

Paul Demery

Combination Adds Offices in Chicago, Dallas and Los Angeles and Will be Immediately Accretive to Earnings

LAKE BLUFF, Ill.--Dec. 28, 2004--CGI Holding Corporation (OTCBB:CGIH - News; the "Company") today announced that the Company has entered into an agreement to merge with privately-held Meandaur, Inc. d/b/a Proceed Interactive ("Proceed"). With offices in Chicago, Dallas and Los Angeles, Proceed (www.proceedinteractive.com) is a full service interactive agency with a core competency in search marketing. Founded in 1996, Proceed specializes in online marketing strategies for companies in the dating, travel & hospitality and manufacturing verticals, and is expected to have 2004 revenues of approximately $3.6 million. In 2004 Proceed managed $3 million in paid search advertising and $2 million in additional Internet marketing spends (media buying, contextual advertising & affiliate marketing). Proceed has 35 full-time employees, and maintains more than 50 accounts, including General Motors, Omni Hotels, Wyndham Hotels & Resorts, Wells Fargo and Great Expectations. Co-CEOs Jonathan and Stephen Schepke will continue to lead Proceed following the closing under multi-year employment agreements. Founder Bruce Findley will serve as a consultant to the Co-CEOs.

The Company intends to acquire all of the stock of Proceed in exchange for 666,666 shares of restricted common stock of the Company. An additional 666,667 shares of restricted common stock of the Company will be placed into escrow, with a sliding scale percentage of the escrowed shares to be delivered to the stockholders of Proceed contingent upon the average annual pre-tax earnings of Proceed during the next four years meeting target earn out levels ranging from $1.1 million to $2.1 million. The Company also plans to issue to stockholders and employees of Proceed warrants to purchase an aggregate of approximately 350,000 shares of common stock of the Company. The merger is expected to be immediately accretive to the earnings of CGI Holding Corporation.

The closing of the proposed transaction is subject to the satisfaction of a number of conditions, including the completion of due diligence, the completion of an audit of Proceed, Board of Director approvals, and other customary conditions.

Gerard M. Jacobs, the Company`s CEO, stated, "This is a merger of strength: we become a truly national company; we extend our expertise in key marketing verticals; and we gain energetic and creative partners with the Proceed founder, executive management and the rest of the Proceed team. Merging with Proceed will increase our core business of search engine marketing by 15% and will significantly expand our base of client relationships, allowing us to further extend our leadership position in the Internet marketing industry."

Steven "Pat" Martin, the CEO of the Company`s WebSourced subsidiary, stated, "We are merging with Proceed Interactive to enhance the client service capabilities of both companies. Proceed`s results driven approach and thought leadership in the marketing of the dating, hospitality, travel and entertainment industries are especially compelling."

Jon Schepke, Co-CEO of Proceed Interactive, stated, "Proceed Interactive combined with WebSourced will unquestionably be the worldwide leader in search engine optimization and comprehensive Internet marketing. In addition, we are excited about WebSourced`s pending merger with the MarketSmart Companies; combining MarketSmart`s traditional advertising and marketing with Proceed`s online marketing services will allow us to offer a truly integrated approach to our clients."

Steve Schepke, Co-CEO of Proceed Interactive, stated, "After carefully considering our go-forward options including possibly going public ourselves, we concluded that our surest and fastest path to success for our clients, our stockholders, and our employees, is joining forces with CGI Holding Corporation and WebSourced. We expect this merger to enhance the quality and variety of services we can offer to our clients, and to provide a breadth of opportunities for our shareholders and employees."

Bruce Findley, the founder of Proceed Interactive, stated, "CGI Holding Corporation`s dynamic existing businesses, its rock solid balance sheet, and its acquisition pipeline of rapidly growing, profitable online marketing companies, could not be overlooked. We believe that the growth of CGI Holding Corporation is just beginning, and that the next few years will see explosive growth in revenues, profits, and stock price and we want to be a part of that growth."

Doug Stukel and Lee Wiskowski, Managing Partners of Chicago-based Momentum Capital, LLC, initiated and assisted in this transaction.

CGI Holding Corporation, based in Lake Bluff, Illinois (see www.cgiholding.com) currently has one subsidiary, WebSourced, Inc., Morrisville, North Carolina, a leader in search engine optimization, pay-per-click campaign management, and online dating (see www.websourced.com, www.keywordranking.com and www.cherish.com).

Statements made in this press release that express the Company`s or management`s intentions, plans, beliefs, expectations or predictions of future events, are forward-looking statements. The words "believe", "expect", "intend", "estimate", "anticipate", "will" and similar expressions are intended to further identify such forward-looking statements, although not all forward-looking statements contain these identifying words. Those statements are based on many assumptions and are subject to many known and unknown risks, uncertainties and other factors that could cause the Company`s actual activities, results or performance to differ materially from those anticipated or projected in such forward-looking statements. Other factors that could cause the Company`s actual activities, results or performance to differ materially include risks and uncertainties relating to: historical losses; volatile stock price; acquisition-related risks; managing growth; availability of skilled labor and key personnel; weak general economic and business conditions; lack of long-term contracts; lack of brand awareness; client expectations; dependence upon the Internet and telecommunications infrastructure; competition; long-term viability of search engine optimization business; governmental regulation or taxation; legal uncertainties affecting the Internet; numerous online dating-related risks; affiliate agreements and relationships; third-party providers; hurricanes; terrorism; regulation of adult content and personal information; security breaches; computer viruses; credit card fraud; inability to protect intellectual property; likely inability to collect all monies owed to us; existing and potential litigation; insider control; no dividends; Nevada laws that could discourage transactions involving the Company`s stock; future capital needs; potential dilution; indemnification of directors and officers; and other factors and risks discussed in the Company`s filings with the Securities and Exchange Commission. The Company cannot guarantee future financial results, levels of activity, performance or achievements and investors should not place undue reliance on the Company`s forward-looking statements. The forward-looking statements contained herein represent the judgment of the Company as of the date of this press release, and the Company expressly disclaims any intent, obligation or undertaking to update or revise such forward-looking statements to reflect any change in the Company`s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

CGI Holding Corporation
Gerard M. Jacobs, 847-615-2890
CEOcast, Inc.
Ed Lewis, 212-732-4300 x225


Corporation, Electronic Arts, Excite, IAC/InterActiveCorp, Mergers and acquisitions