SHARE EXCHANGE AGREEMENT
BY AND BETWEEN
SUNBURST ACQUISITIONS I, INC.
AND
MONTAGUE LIMITED
*****
DATED AS OF MAY 19, 1998
TABLE OF CONTENTS
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Page
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RECITALS .........................................................................................................1
AGREEMENT.........................................................................................................1
1. DEFINITIONS..............................................................................................1
2. THE SHARE EXCHANGE.......................................................................................4
2.1 THE SHARE EXCHANGE..............................................................................4
2.2 EFFECTIVE DATE..................................................................................4
2.3 EXCHANGE OF INVU COMMON STOCK...................................................................4
2.4 EXCHANGE OF CERTIFICATES........................................................................4
2.5 REPORTING OF SHARE EXCHANGE.....................................................................5
2.6 BOARD OF DIRECTORS OF SUNBURST..................................................................5
3. THE CLOSING..............................................................................................5
3.1 TIME AND PLACE OF CLOSING.......................................................................5
3.2 OBLIGATIONS OF MONTAGUE AT OR PRIOR TO THE CLOSING..............................................5
3.3 OBLIGATIONS OF SUNBURST AT OR PRIOR TO THE CLOSING..............................................6
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MONTAGUE....................................................6
4.1 CORPORATE ORGANIZATION..........................................................................6
4.2 CAPITALIZATION..................................................................................7
4.3 AUTHORITY; NO VIOLATION.........................................................................7
4.4 CONSENTS AND APPROVALS..........................................................................8
4.5 VIOLATION OF LAWS, PERMITS, ETC.................................................................8
4.6 INVU FINANCIAL STATEMENTS.......................................................................8
4.7 NO UNDISCLOSED LIABILITIES, ETC.................................................................8
4.8 ABSENCE OF CERTAIN CHANGES......................................................................9
4.9 TITLE TO PROPERTY; ENCUMBRANCES................................................................10
4.10 LITIGATION.....................................................................................10
4.11 TAXES..........................................................................................10
4.12 CONTRACTS......................................................................................11
4.13 COMPENSATION AND EMPLOYEE PLANS................................................................12
4.14 BROKERS, FINDERS AND ADVISORS..................................................................12
4.15 LABOR FORCE....................................................................................12
4.16 BOOKS AND RECORDS..............................................................................13
4.17 PAYMENTS.......................................................................................13
4.18 DISCLOSURE.....................................................................................13
4.19 JOINT VENTURES.................................................................................13
4.20 SUBSIDIARIES...................................................................................13
4.21 OWNERSHIP OF SHARES............................................................................13
4.22 INVESTMENT LETTER..............................................................................14
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5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUNBURST...................................................15
5.1 CORPORATE ORGANIZATION.........................................................................15
5.2 CAPITALIZATION.................................................................................15
5.3 AUTHORITY......................................................................................15
5.4 CONSENTS AND APPROVALS.........................................................................16
5.5 VIOLATION OF LAWS, PERMITS, ETC................................................................16
5.6 SUNBURST FINANCIAL STATEMENTS..................................................................16
5.7 NO UNDISCLOSED LIABILITIES, ETC................................................................17
5.8 ABSENCE OF CERTAIN CHANGES.....................................................................17
5.9 TITLE TO PROPERTY; ENCUMBRANCES................................................................18
5.10 LITIGATION.....................................................................................18
5.11 TAXES..........................................................................................18
5.12 CONTRACTS......................................................................................20
5.13 COMPENSATION AND EMPLOYEE PLANS................................................................21
5.14 BROKERS, FINDERS AND ADVISORS..................................................................21
5.15 LABOR FORCE....................................................................................21
5.16 BOOKS AND RECORDS..............................................................................21
5.17 PAYMENTS.......................................................................................22
5.18 DISCLOSURE.....................................................................................22
5.19 JOINT VENTURES.................................................................................22
5.20 SUBSIDIARIES...................................................................................22
5.21 APPROVAL OF SHARE EXCHANGE.....................................................................22
5.22 SEC REPORTING STATUS AND COMPLIANCE............................................................22
5.23 INVESTMENT COMPANY.............................................................................22
5.24 SEC FILINGS....................................................................................23
5.25 OTC BULLETIN BOARD.............................................................................23
5.26 SECONDARY TRADING EXEMPTION....................................................................23
5.27 CERTAIN LEGAL PROCEEDINGS......................................................................23
5.28 NET WORTH......................................................................................23
5.29 ACCOUNTANTS....................................................................................23
6. ACTIONS OF INVU AND MONTAGUE PRIOR TO THE CLOSING DATE..................................................23
6.1 AFFIRMATIVE COVENANTS..........................................................................23
6.2 NEGATIVE COVENANTS.............................................................................24
6.3 CONSENTS.......................................................................................24
6.4 ADVICE OF CHANGES..............................................................................24
6.5 COMMERCIALLY REASONABLE EFFORTS................................................................24
6.6 ACCESS TO PROPERTIES AND RECORDS...............................................................24
6.7 SUPPLY DOCUMENTS, REPORTS, ETC.................................................................25
7. ACTIONS OF SUNBURST PRIOR TO OR AT THE CLOSING DATE.....................................................25
7.1 AFFIRMATIVE COVENANTS..........................................................................25
7.2 NEGATIVE COVENANTS.............................................................................26
7.3 CONSENTS.......................................................................................26
7.4 ADVICE OF CHANGES..............................................................................26
7.5 OTC BULLETIN BOARD.............................................................................26
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7.6 COMMISSION REPORTS.............................................................................26
7.7 COMMERCIALLY REASONABLE EFFORTS................................................................26
7.8 ACCESS TO PROPERTIES AND RECORDS...............................................................27
7.9 SUPPLY DOCUMENTS, REPORTS, ETC.................................................................27
7.10 BOARD OF DIRECTORS OF SUNBURST.................................................................27
7.11 ADDITIONAL REPORTS AND INFORMATION.............................................................27
8. CONDITIONS TO SUNBURST'S OBLIGATIONS....................................................................28
9. CONDITIONS TO MONTAGUE OBLIGATIONS......................................................................29
10. ADDITIONAL AGREEMENTS...................................................................................31
10.1 CONFIDENTIALITY................................................................................31
10.2 FURTHER ASSURANCES.............................................................................31
11. TERMINATION, WAIVER AND AMENDMENT.......................................................................32
11.1 TERMINATION....................................................................................32
11.2 MANNER OF EXERCISE.............................................................................32
11.3 EFFECT OF TERMINATION..........................................................................32
11.4 WAIVER.........................................................................................32
11.5 AMENDMENT......................................................................................32
12. MISCELLANEOUS...........................................................................................32
12.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS.....................................................................................32
12.2 EXPENSES.......................................................................................33
12.3 PRESS RELEASES.................................................................................33
12.4 BINDING EFFECT.................................................................................33
12.5 SEVERABILITY...................................................................................33
12.6 NOTICES........................................................................................33
12.6 ENTIRE AGREEMENT...............................................................................34
12.7 AMENDMENTS; WAIVERS............................................................................34
12.8 HEADINGS.......................................................................................35
12.9 COUNTERPARTS...................................................................................35
12.10 SPECIFIC PERFORMANCE...........................................................................35
12.11 GOVERNING LAW..................................................................................35
12.12 TIME OF ESSENCE................................................................................35
12.13 COMMERCIALLY REASONABLE EFFORTS................................................................35
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into as of
May 19, 1998, by and between SUNBURST ACQUISITIONS I, INC., a Colorado
corporation, and MONTAGUE LIMITED, an Isle of Man company.
RECITALS
It is the intention of the parties hereto that INVU become a
wholly-owned subsidiary of Sunburst through the exchange of all outstanding
shares of INVU Common Stock for shares of Sunburst Common Stock on the following
terms:
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements hereinafter set forth, in accordance with the provisions of
applicable law, the parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement and documents delivered
pursuant to this Agreement, the following terms shall have the following
meanings:
AFFILIATE. "Affiliate" means an "affiliate" or "associate" as
those terms are defined in Rule 12b-2 promulgated by the Commission
under the Exchange Act.
CBCA. "CBCA"means the Colorado Business Corporations Act.
CLOSING. "Closing" means the closing referred to in Section 3.1.
CLOSING DATE. The "Closing Date" shall be such date as shall be
set by the parties in writing following satisfaction (or waiver) of
the conditions to the Closing set forth in Sections 8 and 9 hereof.
CODE. "Code" means the Internal Revenue Code of 1986, as amended,
or any successor statute.
COMMISSION. "Commission" means the Securities and Exchange
Commission and/or any other Governmental Entity that administers
either the Securities Act or the Exchange Act.
CONSULTANT. "Consultant" means the individual or entity so
designated in Section 5.14 of the Sunburst Disclosure Schedule.
EFFECTIVE DATE. "Effective Date" is as defined in Section 2.2.
EFFECTIVE TIME. "Effective Time" is as defined in Section 2.2.
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ENCUMBRANCE. An "Encumbrance" is any option, pledge, security
interest, lien, charge, encumbrance, or restriction (whether on
voting, sale, transfer, disposition or otherwise), whether imposed by
agreement, understanding, law or otherwise, except those arising under
applicable federal or state securities laws.
ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute.
EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor statute.
EXPIRATION DATE. "Expiration Date" is defined in Section 3.1.
GAAP. "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, in
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, that
are applicable to the circumstances as of the date of determination.
GOVERNMENTAL ENTITY. A "Governmental Entity" is any federal,
state, municipal, domestic or foreign court, tribunal, administrative
agency, department, commission, board, bureau or other governmental
authority or instrumentality.
GROUP COMPANY. "Group Company" or "Group Companies" shall mean
each of INVU, INVU Holdings and INVU Services, individually and
collectively.
HALCYON. "Halcyon" means Halcyon Enterprises PLC, a company
incorporated under English law.
XXXXXXXX SHAREHOLDERS. "Xxxxxxxx Shareholders" means those
investors who provide the Offering Funds.
INVESTMENT COMPANY ACT. "Investment Company Act" means the
Investment Company Act of 1940, as amended, or any successor statute.
INVU. "INVU" means INVU PLC, a company incorporated under English
law, and unless the context indicates otherwise, "INVU" shall include
INVU Holdings and INVU Services.
INVU COMMON STOCK. "INVU Common Stock" means INVU's issued share
capital, one (1) pound par value per share.
INVU DISCLOSURE SCHEDULE. "INVU Disclosure Schedule" is the
schedule delivered by Montague to Sunburst contemporaneously with the
execution of this Agreement.
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Each heading in the INVU Disclosure Schedule shall refer to the
application section of the Agreement.
INVU FINANCIAL STATEMENTS. "INVU financial statements" are
collectively the unaudited financial statements of INVU as of January
31, 1998.
INVU HOLDINGS. "INVU Holdings" means INVU International Holdings
Limited, a company incorporated under English law, a wholly-owned
subsidiary of INVU.
INVU SERVICES. "INVU Services" means INVU Services Limited, a
company incorporated under English law, a wholly-owned subsidiary of
INVU.
JOINT VENTURE AND JOINT VENTURES. "Joint Venture" or "Joint
Ventures" means any partnership or joint venture with third parties in
which INVU, Sunburst, or any of their respective Subsidiaries is a
partner, venturer or participant.
LAST ACCOUNTS. "Last Accounts" means the INVU Financial
Statements.
MATERIAL EFFECT. "Material Effect" means a material adverse
effect in the business, operations, properties, assets, liabilities,
prospects or condition (financial or otherwise) of Sunburst or INVU,
as the context requires.
MONTAGUE. "Montague" means Montague Limited, an Isle of Man
company.
MONTAGUE SHARES. "Montague Shares" is as defined in Section 4.21.
OFFERING FUNDS. "Offering Funds" is as defined in Section 6.8.
PLAN. "Plan" is as defined in Section 4.13.
SECURITIES ACT. "Securities Act" means the Securities Act of
1933, as amended, or any successor statute.
SHARE EXCHANGE. "Share Exchange" means the share exchange between
Sunburst, Halcyon and Montague as described in Section 2.1.
SUBSIDIARY AND SUBSIDIARIES. "Subsidiary" or "Subsidiaries" means
any corporation with more than 50 percent of its voting power owned
directly or indirectly by INVU, Sunburst or any other relevant person,
as the context requires.
SUNBURST. "Sunburst" means Sunburst Acquisitions I, Inc., a
Colorado corporation.
SUNBURST COMMON STOCK. "Sunburst Common Stock" means Sunburst's
common stock, no par value per share.
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SUNBURST DISCLOSURE SCHEDULE. "Sunburst Disclosure Schedule" is
the disclosure schedule delivered by Sunburst to Montague
contemporaneously with the execution of this Agreement. Each heading
in the Sunburst Disclosure Schedule shall refer to the applicable
section of the Agreement.
SUNBURST FINANCIAL STATEMENTS. "Sunburst financial statements"
are collectively the audited financial statements of Sunburst as of
the years ended April 30, 1997.
SUNBURST PREFERRED STOCK. "Sunburst Preferred Stock" means the
80,000 shares of Sunburst's preferred stock, no par value per share,
which are convertible into 160,000 shares of Sunburst Common Stock.
SUNBURST SHARES. "Sunburst Shares" means the shares of Sunburst
Common Stock to be issued to Halcyon and Montague in connection with
the Share Exchange.
TAXES. "Taxes" is as defined in Section 5.11.
TAX RETURN. "Tax Return" is as defined in Section 5.11.
TRANSFER AGENT. "Transfer Agent" means Corporate Stock Transfer,
Inc., located in Denver, Colorado.
2. THE SHARE EXCHANGE.
2.1 THE SHARE EXCHANGE. Subject to the terms and conditions of
this Agreement, at Closing, Montague shall tender to Sunburst all of
its shares of INVU Common Stock and all of the shares of INVU Common
Stock held by Halcyon pursuant to a power of attorney granted by
Halcyon to Montague in exchange for shares of Sunburst Common Stock,
and INVU shall become a wholly-owned subsidiary of Sunburst.
2.2 EFFECTIVE DATE. The Share Exchange will become effective
upon the proper filing of Articles of Share Exchange with the Secretary
of State of the State of Colorado (the time of such filing referred to
as the "Effective Time" and the date of such filing referred to as the
"Effective Date").
2.3 EXCHANGE OF INVU COMMON STOCK. The INVU Common Stock
shall be exchanged in the Share Exchange as follows:
Each share of INVU Common Stock issued and
outstanding prior to the Effective Date will be exchanged for
252 shares of Sunburst Common Stock, which shares of Sunburst
Common Stock will represent in the aggregate 90% of the issued
and outstanding Sunburst Common Stock assuming the conversion
of the Sunburst Preferred Stock and the issuance of the
Sunburst Common Stock to Consultant pursuant to the agreement
set forth in Section 5.2 of the Sunburst Disclosure Schedule
(but excluding the issuance of Sunburst Common Stock to the
Xxxxxxxx Shareholders pursuant to Section 10.3 hereof). No
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No share of Sunburst Common Stock shall be affected in any
manner by the consummation of the Share Exchange.
2.4 EXCHANGE OF CERTIFICATES. At Closing, or as soon as
practicable thereafter, Sunburst shall deliver to Montague (i) a
certificate representing the whole number of shares of Sunburst Common
Stock into which Montague's shares of INVU Common Stock shall have been
exchanged as set forth herein, and (ii) pursuant to a power of attorney
granted from Halcyon to Montague, a certificate representing the whole
number of shares of Sunburst Common Stock into which Halcyon's shares
of INVU Common Stock shall have been exchanged for as set forth herein.
The certificates of INVU Common Stock held by Halcyon and Montague
shall be simultaneously delivered to Sunburst.
2.5 REPORTING OF SHARE EXCHANGE. For federal, state and local
income tax return reporting purposes, all parties agree to treat the
Share Exchange as a nontaxable exchange under Section 368 of the Code.
2.6 BOARD OF DIRECTORS OF SUNBURST. Simultaneously at Closing,
Xxxxxxx X. Xxxxx and Xxx Xxxxxx, shall resign from their positions as
directors and officers of Sunburst and release Sunburst from any and
all claims against Sunburst that such directors and officers may have,
including, without limitation, claims for unpaid compensation, and
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxx X'Xxxxxxxx and such other directors
as Montague shall direct shall be elected as directors of Sunburst to
fill these director vacancies.
3. THE CLOSING.
3.1 TIME AND PLACE OF CLOSING. Subject to the fulfilment of
the conditions precedent in Sections 8 and 9 hereof, the closing of the
Share Exchange (the "Closing"), shall, unless otherwise agreed to in
writing by the parties, take place at the offices of Jenkens &
Xxxxxxxxx, a Professional Corporation, 0000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx at 10:00 a.m., local time, on or prior to the 90th day
following the date of this Agreement (the "Expiration Date").
3.2 OBLIGATIONS OF MONTAGUE AT OR PRIOR TO THE CLOSING. At
or prior to Closing, and subject to the satisfaction by Sunburst of its
obligations hereunder, Montague shall deliver to Sunburst the
following:
(a) A copy of the Certificate of Incorporation and
Memorandum and Articles of Association of INVU and each of its
Subsidiaries certified by the corporate secretary of INVU and
each such Subsidiary as being complete and up to date as of
the Closing Date; and
(b) Such other documents as are required pursuant to
this Agreement or as may reasonably be requested from Montague
by Sunburst or its counsel.
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3.3 OBLIGATIONS OF SUNBURST AT OR PRIOR TO THE CLOSING. At or
prior to the Closing, and subject to the satisfaction by Montague of
their obligations hereunder, Sunburst shall deliver to Montague the
following:
(a) A copy of the charter of Sunburst certified as of
a date within thirty days of the Closing Date by the secretary
of state of its state of incorporation (the "Secretary of
State") and certified by the corporate secretary of Sunburst
as to the absence of any amendments between the date of
certification by the Secretary of State and the Closing Date.
(b) A certificate from the appropriate governmental
officials of the Secretary of State as to the existence and
good standing of Sunburst as of a date within thirty days of
the Closing Date, and a verification from such officials as to
the same matters dated the business day before the Closing
Date;
(c) A certificate of the corporate secretary of
Sunburst attaching thereto true and correct copies of the
bylaws of Sunburst and the corporate resolutions duly adopted
by the board of directors of Sunburst authorizing the
consummation of the transactions contemplated hereby;
(d) The certificate of Sunburst referred to in
Section 9(a);
(e) The certificate of Sunburst referred to in
Section 9(b); and
(f) Such other documents as are required pursuant to
this Agreement or as may reasonably be requested from Sunburst
by Montague or their counsel.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MONTAGUE.
Except as expressly set forth and specifically identified by the section number
of this Agreement in the INVU Disclosure Schedule, Montague represents, warrants
and covenants to Sunburst as follows (each of the representations, warranties
and covenants made by Montague, which specifically relate to INVU, are made to
the best of Montague's knowledge):
4.1 CORPORATE ORGANIZATION.
(a) INVU is a corporation duly incorporated and
validly existing as a corporation and in good standing under
the laws of its jurisdiction of incorporation. INVU has the
requisite corporate power and authority to carry on its
business as now being conducted and to own, lease and operate
its property and assets, and INVU is duly qualified or
licensed to do business and is in good standing in every
jurisdiction in which the failure to be so qualified and
licensed could have a Material Effect.
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(b) Montague is a corporation duly incorporated and
validly existing as a corporation and in good standing under
the laws of its jurisdiction of incorporation. Montague has
the requisite corporate power and authority to carry on its
business as now being conducted and to own, lease and operate
its property and assets, and Montague is duly qualified or
licensed to do business and is in good standing in every
jurisdiction in which the failure to be so qualified and
licensed could have a Material Effect.
4.2 CAPITALIZATION.
(a) The authorized, issued and outstanding capital
stock of INVU, all outstanding securities convertible into or
exchangeable or exercisable for shares of capital stock of
INVU and all rights, agreements or other commitments of INVU
to issue, transfer or sell its capital stock is as set forth
in Section 4.2 of the INVU Disclosure Schedule. All of the
issued and outstanding shares of capital stock of INVU are
validly issued, fully paid and nonassessable, and none of such
shares have been issued in violation of the preemptive rights
of any person.
(b) INVU does not own or hold any equity, debt or
other interest in any entity or business or any option to
acquire any such interest, except for INVU Holdings and INVU
Services.
4.3 AUTHORITY; NO VIOLATION.
(a) The execution and performance of this Agreement
have been duly and validly authorized by the board of
directors of Montague and no other corporate action by
Montague is necessary to authorize the execution, delivery and
performance of this Agreement. Montague has the corporate
power and authority to execute and perform this Agreement and
to carry out the transactions contemplated hereby. This
Agreement has been duly and validly executed on behalf of
Montague and is a valid and binding obligation of Montague,
enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium,
reorganization, receivership or similar laws affecting the
rights of creditors generally.
(b) The execution, delivery or performance of this
Agreement does not or will not: (i) result in any violation of
or be in conflict with or constitute a default under any term
or provision of the charter or bylaws (Memorandum and Articles
of Association) of INVU or the charter or bylaws (Memorandum
and Articles of Association) of Montague or any term or
provision of any judgment, decree, order, statute, injunction,
rule or regulation applicable to INVU or Montague, or of any
material note, bond, mortgage, indenture, lease, license,
franchise, agreement or other instrument or obligation to
which INVU or Montague is bound; (ii) result in the creation
of any material Encumbrance upon any of the properties or
assets of INVU or Montague pursuant to any such term or
7
provision; or (iii) constitute a default under, terminate,
accelerate, amend or modify, or give any party the right to
terminate, accelerate, amend, modify, abandon or refuse to
perform or comply with, any material contract, agreement,
arrangement, commitment or plan to which INVU or Montague is a
party, or by which INVU or Montague or any of their respective
properties or assets may be subject or bound.
4.4 CONSENTS AND APPROVALS. No federal, state or other
regulatory approvals (including any approvals under the laws or
regulations of the United Kingdom) are required to be obtained, nor any
regulatory requirements complied with, by INVU or Montague in
connection with the Share Exchange.
4.5 VIOLATION OF LAWS, PERMITS, ETC.
(a) INVU is not in violation of any term or provision
of its charter or bylaws (Memorandum and Articles of
Association), or of any material term or provision of any
judgment, decree, order, statute, law, injunction, rule,
ordinance or governmental regulation that is applicable to it
and where the failure to comply with which would have a
Material Effect.
(b) Montague is not in violation of any term or
provision of its charter or bylaws (Memorandum and Articles of
Association), or of any material term or provision of any
judgment, decree, order, statute, law, injunction, rule,
ordinance or governmental regulation that is applicable to it
and where the failure to comply with which would have a
Material Effect.
(c) INVU has maintained in full force and effect all
certificates, licenses and permits material to the conduct of
its business, and has not received any notification that any
revocation or limitation thereof is threatened or pending.
4.6 INVU FINANCIAL STATEMENTS. The INVU Financial Statements
set forth in Section 4.6 of the INVU Disclosure Schedule fairly present
the assets, liabilities and financial position of INVU purported to be
covered thereby as of the dates thereof and the results of their
operations for the respective periods ended on such dates, all in
conformity with GAAP consistently applied.
4.7 NO UNDISCLOSED LIABILITIES, ETC. INVU does not have any
material liabilities or obligations, whether direct, indirect, absolute
or contingent (including, without limitation, liabilities as guarantor
or otherwise with respect to obligations of others), except (a)
liabilities that are fully reflected on or reserved against on the
latest balance sheet included in the INVU Financial Statements, (b)
liabilities incurred in the ordinary course of business since the date
of the latest balance sheet included in the INVU Financial Statements
that are consistent with past practice and are included in the latest
INVU Financial Statements, or (c) as specifically disclosed in the INVU
Financial Statements.
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4.8 ABSENCE OF CERTAIN CHANGES. Since the date of the latest
INVU Financial Statements, except as specifically disclosed in the
latest INVU Financial Statements, INVU has not:
(a) Suffered any change that would be likely to
result in a Material Effect;
(b) Adopted or made any change in any pension,
retirement, profit sharing or other employee benefit plan or
arrangement;
(c) Borrowed or agreed to borrow any money or
incurred, assumed or become subject to, whether directly or by
way of guarantee or otherwise, any other obligation or
liability for borrowed money, whether absolute, contingent,
known, unknown, or otherwise, except in the ordinary course of
business and consistent with past practice;
(d) (i) Issued, purchased or redeemed any of its
capital securities or any option, warrant or right to purchase
any of the same; (ii) authorized, declared or paid stock
dividends; or (iii) authorized, declared or paid any
dividends, distributions of earnings or capital on, or splits
or any other reclassification of, its equity securities;
(e) Mortgaged, pledged or subjected to any
Encumbrance any material portion of its assets, tangible or
intangible;
(f) Acquired or disposed of, or entered into any
agreement to acquire or dispose of, any material assets or
properties, other than in the ordinary course of business;
(g) Increased the salaries, compensation, pension or
other benefits payable to its officers and directors or their
Affiliates;
(h) Forgiven or canceled any debts or claims or
waived any rights against INVU or its Affiliates or forgiven
or canceled any material debts or claims or waived any
material rights against any other person;
(i) Entered into, terminated or received notice of
the termination of any commitment, contract, agreement or
transaction that is material to INVU; or
(j) Agreed, either in writing or otherwise, to take
any action described in this Section 4.8; or
(k) Made any capital expenditure or commitment,
except capital expenditures that individually or in the
aggregate do not exceed $50,000, as INVU may, in its
discretion, deem appropriate.
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4.9 TITLE TO PROPERTY; ENCUMBRANCES. INVU has good and
indefeasible title to and other legal right to use all properties and
assets, real, personal and mixed, tangible and intangible, reflected as
owned on the latest balance sheet included in the INVU Financial
Statements or acquired after the date of such balance sheet, except for
properties and assets disposed of in accordance with customary practice
in the business or disposed of for full and fair value since the date
of such balance sheet in the ordinary course of business consistent
with past practice and except for matters that would not have a
Material Effect.
4.10 LITIGATION.
(a) There is no action, proceeding, investigation or
inquiry pending or, to the best of INVU's knowledge,
threatened (i) against or affecting any of INVU's assets or
business that, if determined adversely to INVU, would result
in a Material Effect or (ii) that questions this Agreement or
any action contemplated by this Agreement or in connection
with the Share Exchange.
(b) INVU has no actual knowledge of any state of
facts or of the occurrence or nonoccurrence of any event or
group of related events, that should reasonably cause INVU to
determine that there exists any basis for any material claim
against INVU for any of the matters described in paragraph (a)
above.
4.11 TAXES.
(a) The Last Accounts make full provision or reserve
for all taxation (including deferred taxation) which is liable
to be or could be assessed on each Group Company, or for which
it may be accountable, in respect of the period covered.
(b) All returns, computations and payments which
should be, or should have been, made by any Group Company for
any taxation purpose have been made within the requisite
periods and are up to date, correct and on a proper basis and
none of them is, or is likely to be, the subject of any
dispute with the Inland Revenue or other taxation authorities.
(c) Each Group Company has duly deducted and
accounted for all amounts which it has been obliged to deduct
in respect of taxation and, in particular, has properly
operated the PAYE system, by deducting tax, as required by
law, from all payments made, or treated as made, to its
employees or former employees, and accounting to the Inland
Revenue for all tax so deducted and for all tax chargeable on
benefits provided for its employee or former employees.
(d) No Group Company is, or will become, liable to
pay, or make reimbursement or indemnity in respect of, any
taxation (or amounts corresponding thereto) in consequence of
10
the failure by any other person (not being a Group Company)
to discharge that taxation within any specified period or
otherwise, where such taxation relates to a profit, income
or gain, transaction, event, omission or circumstance arising,
occurring or deemed to arise or occur (whether wholly or
partly) on or prior to the date of this Agreement.
(e) No Group Company has, since the Last Accounts,
incurred or is, or has become, liable to incur after that date
expenditure which will not be wholly deductible in computing
its taxable profits except for expenditure on the acquisition
of an asset to be held otherwise than as stock-in-trade,
details of which are set out in the INVU Disclosure Schedule.
(f) The execution or completion of this agreement
will not result in any profit or gain deemed to accrue to a
Group Company for taxation purposes.
(g) Each Group Company has duly registered and is a
taxable person for the purposes of value added tax and none of
them has applied for treatment as a member of a group which
includes any company other than the Group Companies.
4.12 CONTRACTS.
(a) Section 4.12 of the INVU Disclosure Schedule
contains a complete and correct list as of the date hereof of
all material agreements, contracts and commitments of the
following types (and all amendments thereto), written or oral,
to which INVU or any of its Subsidiaries is a party or by
which any of its properties is bound:
(i) notes, agreements, mortgages,
indentures, security agreements and other instruments
relating to the borrowing of money or evidence of
credit or the deferred purchase price of property, or
the direct or indirect guarantee by such entities of
any such indebtedness or deferred purchase price;
(ii) leases of real property and material
personal property (other than Leases);
(iii) Joint Venture agreements;
(iv) management, employment and consulting
agreements or other contracts for personal services
that are not terminable by any of such entities on
not more than one month's notice without penalty;
11
(v) any agreements providing for liability
for severance pay, collective bargaining agreements,
labor contracts, or labor or personnel policies;
(vi) material surety, performance and
maintenance bonds;
(vii) any plan, contract or arrangement
providing for bonuses, pensions, deferred
compensation, retirement plan payments, profit
sharing, incentive pay, or for any other employee
benefit plan;
(viii) brokerage or finder's agreements;
(ix) any agreement that (a) restricts the
right of such entities to engage in any place in any
line of business, other than in the ordinary course
of business or (b) would restrict the right of INVU
to engage in any line of business after the Closing
Date, other than in the ordinary course of business;
and
(x) any contract, commitment or agreement
that individually or in the aggregate is material to
INVU, except contemplated by this Agreement or in the
ordinary course of business and consistent with past
practice.
(b) INVU has made available to Sunburst complete and
correct copies of all material written agreements, contracts
and commitments, together with all amendments thereto, and
accurate (in all material respects) descriptions of all
material oral agreements. Such agreements, contracts and
commitments are in full force and effect, and all of such
entities and, to the best of INVU's knowledge, all other
parties to such agreements, contracts and commitments have
performed all obligations required to be performed by them to
date thereunder in all material respects and are not in
default thereunder in any material respect.
4.13 COMPENSATION AND EMPLOYEE PLANS.
(a) For all purposes of this Section, "Plan" means
(i) any employee benefit plan as defined in Section 3(3) of
the ERISA, that is (a) maintained by INVU, or (b) to which
INVU is making or accruing an obligation to make
contributions, or (ii) any other formal or informal obligation
to, arrangement with, or plan or program for the benefit of,
employees of INVU, including, but not limited to, stock
options, stock bonuses, stock purchase agreements, bonuses,
incentive compensation, deferred compensation, supplemental
pensions, vacations, severance pay, insurance or any other
benefit, program or practice. Section 4.13 of the INVU
Disclosure Schedule sets forth the name of each Plan and lists
all documents evidencing any Plan.
12
(b) Each Plan is now, and has been from its
inception, administered in compliance in all material respects
with the provisions of all applicable laws and regulations,
including ERISA, the Code and the Age Discrimination in
Employment Act, as amended, insofar as such statutes are
applicable to such Plan.
4.14 BROKERS, FINDERS AND ADVISORS. Neither INVU nor Montague
has employed any broker, finder, or investment advisor on its behalf,
or incurred any liability for any brokerage or finder's fees or
commissions, in connection with the transaction contemplated hereby.
4.15 LABOR FORCE. INVU is in compliance in all material
respects with all applicable laws (including, without limitation,
federal income tax laws), ordinances, regulations, statutes, rules and
restrictions of any Governmental Entity respecting employment and
employment practices and terms and conditions of employment.
4.16 BOOKS AND RECORDS. The books and records of INVU
(including, without limitation, the books of account, minute books and
stock record books) are complete and correct in all material respects
and have been maintained in accordance with sound business practices.
The minute books of INVU contain accurate and complete records in all
material respects of all meetings held of, and corporate action taken
by, the shareholders and the board of directors of INVU, and no
meetings of or actions by such shareholders or board of directors have
been held or taken for which minutes have not been prepared and are not
contained in such minute books. None of the records and written
documents furnished or made available by INVU or its agents to
Sunburst's representatives or agents, when considered in context and
together with any relevant or related documents also so furnished or
made available, contain any untrue statement of material fact or omit a
material fact necessary to make any statement therein not misleading.
4.17 PAYMENTS. INVU has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of property
however characterized to any finder, agent, government official or
other party, in the United States or any other country, in any manner
related to its business or operations, that Montague knows or has
reason to believe to have been illegal under any federal, state or
local laws of the United States or any other country or territory
having jurisdiction over such entity, and has not participated,
directly or indirectly, in any boycotts or similar practices.
4.18 DISCLOSURE. No representation or warranty made by
Montague in this Agreement (including, without limitation, in the INVU
Disclosure Schedule) contains any untrue statement of material fact or
omits to state any material fact necessary to make the statements
herein or therein not misleading in light of the circumstances under
which made.
4.19 JOINT VENTURES. INVU is not a member of any partnership,
joint venture or other business entity.
13
4.20 SUBSIDIARIES. INVU does not own any subsidiary, except
for INVU Holdings and INVU Services.
4.21 OWNERSHIP OF SHARES. All of the shares of INVU Common
Stock are owned of record by Montague and Halcyon as reflected in
Section 4.2 of the INVU Disclosure Schedule. Montague possesses full
authority and legal right to sell, transfer and assign the entire legal
and beneficial ownership of the shares of INVU Common Stock owned by
Montague (the "Montague Shares"), free from all liens, claims and
encumbrances of any kind; and there are no outstanding rights or
obligations granted by Montague to purchase or acquire any of the
Montague Shares or any interest in any of the Montague Shares. Upon
transfer of the Montague Shares to Sunburst hereunder at the Closing,
Sunburst will receive the entire legal and beneficial interest in the
Montague Shares, free and clear of all liens, claims and encumbrances
and subject to no legal or equitable restrictions of any kind.
4.22 INVESTMENT LETTER. Montague acknowledges that the
Sunburst Shares are restricted securities under the Securities Act and
represents that Montague (i) is acquiring the Sunburst Shares for its
own account without a view to distribution within the meaning of the
Securities Act, (ii) has received from Sunburst its filings with the
Securities and Exchange Commission and all other information that it
has deemed necessary to make an informed investment decision with
respect to an investment in Sunburst in general and the Sunburst Shares
in particular; (iii) is financially able to bear the economic risks of
an investment in Sunburst; and (iv) has such knowledge and experience
in financial and business matters in general and with respect to
investments of a nature similar to the Sunburst Shares so as to be
capable, by reason of such knowledge and experience, of evaluating the
merits and risks of, and making an informed business decision with
regard to, the acquisition of the Sunburst Shares.
4.23 INTELLECTUAL PROPERTY.
(a) The INVU software (the "Software") as identified
in Section 4.23(a) of the Disclosure Schedule, including
patents, trademarks, trade names, copyrights, proprietary
know-how, trade secrets, formulae and other intellectual
property (the "Intellectual Property") necessary for the
conduct of its business as currently conducted is free of any
material restrictions and is without any known conflict with
the rights of others, and INVU has not forfeited or otherwise
relinquished any such Intellectual Property except as set
forth in Section 4.23(a) of the Disclosure Schedule. To the
knowledge of INVU, there has not been any breach in any
material respect of, nor has there occurred any material
default under, any material contract or other agreement
relating to the Intellectual Property.
(b) No claim has been brought by any person alleging
that the Intellectual Property, or the disclosing, copying,
making, using or selling of such Intellectual Property, or
products or services embodying such Intellectual Property,
violates, infringes or otherwise conflicts or interferes with
any patent, trademark, trade name, copyright, proprietary
14
know-how, trade secret or other intellectual property of any
third party.
(c) INVU acquired all of its rights to the
Intellectual Property either through the efforts of its own
employees and agents and independent contractors, or pursuant
to the license agreements listed in Section 4.23(c) of the
Disclosure Schedule, the complete copies of which have been
delivered to Sunburst and Montague (the "Intellectual Property
Rights Agreements").
(d) INVU has not disclosed the source code for the
Software to any third parties other than as set forth in the
Disclosure Schedule.
(e) All of INVU's personnel, including without
limitation, employees, agents, consultants, contractors, and
sub-contractors, who have had access to, contributed to or
participated in the conception, development and/or enhancement
of the Intellectual Property have executed an assignment in
favor of INVU or otherwise have executed agreements containing
appropriate and adequate restrictions on the disclosure,
dissemination and use of the Intellectual Property.
(f) INVU warrants that the Software is Year 2000
compliant as set forth in Section 4.23(f) of the Disclosure
Schedule.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUNBURST.
Except as expressly set forth and specifically identified by the section number
of this Agreement in the Sunburst Disclosure Schedule, Sunburst hereby
represents, warrants and covenants to Montague, as follows:
5.1 CORPORATE ORGANIZATION. Sunburst is a corporation duly
incorporated and validly existing as a corporation and in good standing
under the laws of its jurisdiction of incorporation. Sunburst has the
requisite corporate power and authority to carry on its business as now
being conducted and to own, lease and operate its properties and
assets, and Sunburst is duly qualified or licensed to do business and
is in good standing in every jurisdiction in which the failure to be so
qualified and licensed could have a Material Effect. Section 5.1 of the
Sunburst Disclosure Schedule sets forth the name and state of
incorporation of Sunburst and each state in which it is qualified or
licensed to do business. Xxxxxxx X. Xxxxx and Xxx Xxxxxx are currently
the only directors and officers of Sunburst.
5.2 CAPITALIZATION.
(a) The authorized, issued and outstanding capital
stock of Sunburst, all outstanding securities convertible into
or exchangeable or exercisable for shares of capital stock of
Sunburst and all rights agreements or other commitments of
Sunburst to issue, transfer or sell its capital stock is as
set forth in Section 5.2 of the Sunburst Disclosure Schedule.
All of the issued and outstanding shares of Sunburst are
validly issued, fully paid and nonassessable, and none of such
15
shares have been issued in violation of the preemptive rights
of any person.
(b) The Sunburst Shares shall be validly issued,
fully paid and nonassessable.
(c) Sunburst does not own or hold any equity, debt or
other interest in any entity or business on any option to
acquire any such interest.
5.3 AUTHORITY.
(a) The execution and performance of this Agreement
have been duly and validly authorized by the board of
directors of Sunburst and no other corporate action by
Sunburst is necessary to authorize the execution, delivery and
performance of this Agreement. Sunburst has the corporate
power and authority to execute and perform this Agreement and
to carry out the transactions contemplated hereby. This
Agreement has been duly and validly executed on behalf of
Sunburst and is a valid and binding obligation of Sunburst,
enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium,
reorganization, receivership or similar laws affecting the
rights of creditors generally.
(b) None of the execution, delivery or performance of
this Agreement does or will, after the giving of notice, lapse
of time or otherwise, (i) result in any violation of or be in
conflict with or constitute a default under any term or
provision of the Articles of Incorporation or bylaws of
Sunburst or any term or provision of any instrument, judgment,
decree, order, statute, injunction, rule or regulation
applicable to Sunburst or of any material note, bond,
mortgage, indenture, lease, license, franchise, agreement or
other instrument or obligation to which Sunburst is bound; or
(ii) result in the creation of any material lien upon any of
the properties or assets of Sunburst pursuant to any such term
or provision; or (iii) constitute a default under, terminate,
accelerate, amend or modify, or give any party the right to
terminate, accelerate, amend, modify, abandon or refuse to
perform or comply with any material contract, agreement,
arrangement, commitment or plan to which Sunburst is a party,
or by which Sunburst or any of the rights, properties or
assets of Sunburst may be subject or bound.
5.4 CONSENTS AND APPROVALS. No federal, state or other
regulatory approvals are required to be obtained, nor any regulatory
requirements complied with, by Sunburst in connection with the Share
Exchange.
16
5.5 VIOLATION OF LAWS, PERMITS, ETC.
(a) Sunburst is not in violation of any term or
provision of its Articles of Incorporation or bylaws, or in
any material respect of any term or provision of any judgment,
decree, order, statute, injunction, rule, ordinance or
governmental regulation applicable to it and where the failure
to comply with which would have a Material Effect.
(b) Sunburst has maintained in full force and effect
all certificates, licenses and permits material to the conduct
of its business, and has not received any notification that
any revocation or limitation thereof is threatened or pending.
(c) All shares of issued and outstanding capital
stock of Sunburst have been issued in compliance with all
applicable securities laws.
5.6 SUNBURST FINANCIAL STATEMENTS. The Sunburst Financial
Statements set forth in Section 5.6 of the Sunburst Disclosure Schedule
fairly present the assets, liabilities and financial position of such
entity as of the dates thereof and the results of its operations for
the respective periods ended on such dates, all in conformity with GAAP
consistently applied.
5.7 NO UNDISCLOSED LIABILITIES, ETC. Sunburst has no material
liabilities or obligations, whether direct, indirect, absolute or
contingent (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others), except (a)
liabilities that are fully reflected on or reserved against on the
latest balance sheet included in the Sunburst Financial Statements, (b)
liabilities incurred in the ordinary course of business since the date
of the latest balance sheet included in the Sunburst Financial
Statements that are consistent with past practice and are included in
the latest Sunburst Financial Statements or (c) as specifically
disclosed in the Sunburst Financial Statements.
5.8 ABSENCE OF CERTAIN CHANGES. Since the date of the latest
Sunburst Financial Statements, except as specifically disclosed in the
latest Sunburst Financial Statements, Sunburst has not:
(a) Suffered any change that would be likely to
result in a Material Effect;
(b) Adopted or made any change in any pension,
retirement, profit sharing or other employee benefit plan or
arrangement;
(c) Borrowed or agreed to borrow any money or
incurred, assumed or become subject to, whether directly or by
way of guarantee or otherwise, any other obligation or
liability for borrowed money, whether absolute, contingent,
known, unknown, or otherwise, except in the ordinary course of
business and consistent with past practice;
17
(d) (i) Issued, purchased or redeemed any of its
capital securities or any option, warrant or right to purchase
any of the same; (ii) authorized, declared or paid stock
dividends; or (iii) authorized, declared or paid any
dividends, distributions of earnings or capital on, or splits
or any other reclassification of, its equity securities;
(e) Mortgaged, pledged or subjected to any
Encumbrance any material portion of its assets, tangible or
intangible;
(f) Acquired or disposed of, or entered into any
agreement to acquire or dispose of, any material assets or
properties, other than in the ordinary course of business;
(g) Increased the salaries, compensation, pension or
other benefits payable to its officers and directors or their
Affiliates;
(h) Forgiven or canceled any debts or claims or
waived any rights against Sunburst or its Affiliates or
forgiven or canceled any material debts or claims or waived
any material rights against any other person;
(i) Entered into, terminated or received notice of
the termination of any commitment, contract, agreement or
transaction that is material to Sunburst;
(j) Agreed, either in writing or otherwise, to take
any action described in this Section 5.8; or
(k) Made any capital expenditure or commitment,
except capital expenditures that individually or in the
aggregate do not exceed $50,000, as Sunburst may, in its
discretion, deem appropriate.
5.9 TITLE TO PROPERTY; ENCUMBRANCES. Sunburst, either directly
or indirectly, has good and indefeasible title to and other legal right
to use all properties and assets, real, personal and mixed, tangible
and intangible, reflected as owned on their latest balance sheets
included in the Sunburst Financial Statements or acquired after the
date of such balance sheet, except for properties and assets disposed
of in accordance with customary practice in the business or disposed of
for full and fair value since the date of such balance sheet in the
ordinary course of business consistent with past practice and except
for matters that would not have a Material Effect.
18
5.10 LITIGATION.
(a) There is no action, proceeding, investigation or
inquiry pending or, to the best of Sunburst's knowledge,
threatened (i) against or affecting any of Sunburst's assets
or business that, if determined adversely to Sunburst, would
result in a Material Effect or (ii) that questions this
Agreement or any action contemplated by this Agreement or in
connection with the Share Exchange.
(b) Sunburst has no knowledge of any state of facts
or of the occurrence or nonoccurrence of any event or group of
related events, that should reasonably cause Sunburst to
determine that there exists any basis for any material claim
against Sunburst for any of the matters described in paragraph
(a) above.
5.11 TAXES.
(a) Sunburst has duly filed all required separate,
consolidated, combined or unitary tax returns (including any
estimated tax returns), reports, elections, information
returns, declarations, statements or other filings (including
any amendments thereto) required to be filed with any relevant
taxing authority ("Tax Returns"). All taxes, imposts, duties,
fees, levies, withholdings or other like assessments or
charges, including, without limitation, income, gross
receipts, capital, transfer, excise, occupancy, real and
personal property, sales, use, employment franchise, ad
valorem, social security, payroll, unemployment compensation,
stamp, net worth, surplus, environmental, privilege, windfall
profits, value-added, customs or other taxes of any sort,
imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, including any
interest, penalties and additions to tax attributable thereto
("Taxes") owed by Sunburst have been paid. All such Tax
Returns described are complete and accurate in all material
respects and there is no basis for any material assessment of
any addition to the Tax shown thereon and (i) none of such Tax
Returns has been audited by the Internal Revenue Service or
any state, local or other taxing authority, (ii) Sunburst has
no proposed or outstanding Tax deficiency (except as disclosed
in the Sunburst Financial Statements) or assessment nor have
they been notified of any Tax Return examination applicable to
the business or assets of Sunburst (or of any examination of
any consolidated, combined or unitary, Tax Returns of any
affiliated group of which Sunburst was a member and which
relate in part to Sunburst, (iii) no waiver of any statute of
limitations relating to such Tax Returns (or to Taxes payable
by or chargeable as a lien upon the assets of Sunburst) has
been given or requested, (iv) no extension of the period for
assessment or collection of any such Taxes has been agreed,
and (v) there are no Tax liens on any of the assets or
properties of Sunburst other than liens for current Taxes not
yet due and payable. All Taxes payable by, or chargeable as a
lien upon the assets of Sunburst as of the Closing have been
19
duly paid, and the balance sheet in the latest Sunburst
Financial Statement reflects an adequate reserve for all
Taxes payable or asserted to be payable by or chargeable as
a lien upon the assets of Sunburst for all taxable periods
or portions thereof through the date thereof. Any tax
sharing agreements or arrangements between Sunburst on the
one hand and any other corporation on the other and any
obligations to make payments under any such agreement or
arrangement shall be or has been canceled without any
liability of any party to such agreement or arrangement, or
affiliates thereof as of the Closing.
(b) No consent has been filed under Section 341(f) of
the Code with respect to Sunburst.
(c) Sunburst is not a "United States real property
holding corporation" (as defined in Section 897(c)(2) of the
Code).
(d) Sunburst has not made any material payments, is
not obligated to make any material payments, and is not a
party to any agreement that under certain circumstances could
obligate it to make any material payments that will not be
deductible under Section 280G of the Code.
(e) Sunburst has no material liability for the Taxes
of any person other than Sunburst (1) under Treasury
Regulations Section 1.1502-6 (or any similar provision of
state, local, or foreign law), (2) as a transferee or
successor, (3) by contract or (4) otherwise.
(f) Sunburst has delivered to Montague correct and
complete copies of all federal, state and local Tax Returns,
examination reports, and statements of deficiencies assessed
against or agreed to by Sunburst since its first fiscal year.
5.12 CONTRACTS.
(a) Section 5.12 of Sunburst Disclosure Schedule
contains a complete and correct list as of the date hereof of
all material agreements, contracts and commitments of the
following types (and all amendments thereto), written or oral,
to which Sunburst is a party or by which any of its properties
is bound:
(i) notes, agreements, mortgages,
indentures, security agreements and other instruments
relating to the borrowing of money or evidence of
credit or the deferred purchase price of property, or
the direct or indirect guarantee by such entities of
any such indebtedness or deferred purchase price;
20
(ii) leases of real property and material
personal property (other than Leases);
(iii) Joint Venture agreements;
(iv) management, employment and consulting
agreements or other contracts for personal services
that are not terminable by any of such entities on
not more than one month's notice without penalty;
(v) any agreements providing for liability
for severance pay, collective bargaining agreements,
labor contracts, or labor or personnel policies;
(vi) material surety, performance and
maintenance bonds;
(vii) any plan, contract or arrangement
providing for bonuses, pensions, deferred
compensation, retirement plan payments, profit
sharing, incentive pay, or for any other employee
benefit plan;
(viii) brokerage or finder's agreements;
(ix) any agreement that (a) restricts the
right of such entities to engage in any place in any
line of business, other than in the ordinary course of
business, or (b) would restrict the right of Sunburst
or any subsidiary of Sunburst to engage in any line of
business after the Closing Date, other than in the
ordinary course of business; and
(x) any contract, commitment or agreement
that individually or in the aggregate is material to
Sunburst, except contemplated by this Agreement.
(b) Sunburst has made available to Montague complete
and correct copies of all material written agreements,
contracts and commitments, together with all amendments
thereto, and accurate (in all material respects) descriptions
of all material oral agreements. Such agreements, contracts
and commitments are in full force and effect, and all of such
entities and, to the best of Sunburst's knowledge, all other
parties to such agreements, contracts and commitments have
performed all obligations required to be performed by them to
date thereunder in all material respects and are not in
default thereunder in any material respect.
5.13 COMPENSATION AND EMPLOYEE PLANS.
(a) For all purposes of this Section, "Plan" means
(i) any employee benefit plan as defined in Section 3(3) of
the ERISA, that is (a) maintained by Sunburst, or (b) to which
Sunburst is making or accruing an obligation to make
21
contributions, or (ii) any other formal or informal
obligation to, arrangement with, or plan or program for the
benefit of, employees of Sunburst, including, but not limited
to, stock options, stock bonuses, stock purchase agreements,
bonuses, incentive compensation, deferred compensation,
supplemental pensions, vacations, severance pay, insurance or
any other benefit, program or practice. Section 5.13 of the
Sunburst Disclosure Schedule sets forth the name of each Plan
and lists all documents evidencing any Plan.
(b) Each Plan is now, and has been from its
inception, administered in compliance in all material respects
with the provisions of all applicable laws and regulations,
including ERISA, the Code and the Age Discrimination in
Employment Act, as amended, insofar as such statutes are
applicable to such Plan.
5.14 BROKERS, FINDERS AND ADVISORS. Sunburst has not employed
any broker, finder, or investment advisor on its behalf, or incurred
any liability for any brokerage or finder's fees or commissions, in
connection with the transaction contemplated hereby.
5.15 LABOR FORCE. Sunburst is in compliance in all material
respects with all applicable laws (including, without limitation,
federal income tax laws), ordinances, regulations, statutes, rules and
restrictions of any Governmental Entity respecting employment and
employment practices and terms and conditions of employment.
5.16 BOOKS AND RECORDS. The books and records of Sunburst
(including, without limitation, the books of account, minute books and
stock record books) are complete and correct in all material respects
and have been maintained in accordance with sound business practices.
The minute books of Sunburst contain accurate and complete records in
all material respects of all meetings held of, and corporate action
taken by, the shareholders and the board of directors, and no meetings
of or actions by such shareholders or board of directors have been held
or taken for which minutes have not been prepared and are not contained
in such minute books. None of the records and written documents
furnished or made available by Sunburst or its agents to INVU's
representatives or agents, when considered in context and together with
any relevant or related documents also so furnished or made available,
contain any untrue statement of material fact or omit a material fact
necessary to make any statement therein not misleading.
5.17 PAYMENTS. Sunburst has not, directly or indirectly, paid
or delivered any fee, commission or other sum of money or item of
property, however characterized to any finder, agent, government
official or other party, in the United States or any other country, in
any manner related to its business or operations, that Sunburst knows
or has reason to believe to have been illegal under any federal, state
or local laws of the United States or any other country or territory
having jurisdiction over such entity, and has not participated,
directly or indirectly, in any boycotts or similar practices.
22
5.18 DISCLOSURE. No representation or warranty made by
Sunburst in this Agreement (including, without limitation, in the
Sunburst Disclosure Schedule) contains any untrue statement of material
fact or omits to state any material fact necessary to make the
statements herein or therein not misleading in light of the
circumstances under which made.
5.19 JOINT VENTURES. Sunburst is not a member of any partner-
ship, joint venture or other business entity.
5.20 SUBSIDIARIES. Sunburst does not own any subsidiaries.
5.21 APPROVAL OF SHARE EXCHANGE. The board of directors of
Sunburst has approved the Share Exchange without reservation or
qualification.
5.22 SEC REPORTING STATUS AND COMPLIANCE.
(a) Sunburst filed a registration statement on Form
10-SB/A under the Exchange Act, which became effective on
August 6, 1997. Since that date, Sunburst has filed with the
Commission all reports required to be filed pursuant to the
Exchange Act. It has not filed a certification on Form 15
pursuant to Rule 12h-3 of the Exchange Act.
(b) The Form S-8 filed by Sunburst was in compliance
with the Securities Act and all other applicable federal and
state securities laws.
(c) Any and all gifted shares held by current
shareholders of Sunburst were transferred to such shareholders
in accordance the Securities Act and all other applicable
federal and state securities laws.
5.23 INVESTMENT COMPANY. Sunburst is not an investment company
within the meaning of Section 3 of the Investment Company Act. In
addition, since the inception of Sunburst, all funds of Sunburst have
been held in federally insured bank accounts, and the entire amount of
such funds have been federally insured at all times.
5.24 SEC FILINGS. Sunburst has filed all forms, reports and
documents required to be filed with the Commission. All of such filings
were prepared in accordance with the requirements of all applicable
laws in all material respects, and did not at the time they were filed
contain any untrue statement of a material fact or omit 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.
5.25 OTC BULLETIN BOARD. Sunburst Common Stock is approved for
trading on the OTC Bulletin Board.
5.26 SECONDARY TRADING EXEMPTION. Sunburst Common Stock is
approved for trading in the States listed under Section 5.26 of the
Sunburst Disclosure Schedule.
23
5.27 CERTAIN LEGAL PROCEEDINGS.
(a) None of the directors, officers or other
Affiliates of Sunburst have been included within the last five
(5) years in any legal proceedings of the type listed in Item
401(d) of Regulation S-B, Integrated Disclosure System for
Small Business Issuers.
(b) Neither Sunburst, its predecessors, if any, or
any of its Affiliates has been subject to a disqualifying
provision of Regulation A or Regulation D, pursuant to the
Securities Act.
5.28 NET WORTH. On the Closing Date, Sunburst shall have a
positive net worth (taking into account all accrued liabilities and
liabilities relating to or arising from commitments or obligations
incurred prior to the Closing Date and expected to come due within 30
days of the Closing Date).
5.29 ACCOUNTANTS. Xxxxxxxx & Company, P.C. is Sunburst's
independent public accountants. None of the reports of Xxxxxxxx &
Company, P.C. on the financial statements of Sunburst for either of the
past two fiscal years contained an adverse opinion or a disclaimer of
opinion, or was qualified as to uncertainty, audit scope, or accounting
principles. During Sunburst's two most recent fiscal years and the
subsequent interim period preceding such resignation, there were no
disagreements with Xxxxxxxx & Company, P.C. on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedures. None of the reportable events listed in Item
304(a)(1)(v) of Regulation S-K occurred with respect to Sunburst and
Xxxxxxxx & Company, P.C.
6. ACTIONS OF INVU AND MONTAGUE PRIOR TO THE CLOSING DATE.
6.1 AFFIRMATIVE COVENANTS. Prior to the Closing Date, Montague
covenants that, unless the prior written consent of Sunburst is first
obtained, which consent shall not be unreasonably withheld:
(a) During the period from the date of this Agreement
to the Effective Time, INVU will conduct its operations
according to its ordinary and usual course of business and
consistent with past practice, and Montague will use
commercially reasonable efforts to preserve intact INVU's
business organization, to keep available the services of its
officers and employees and to maintain satisfactory
relationships with licensors, licensees, suppliers,
contractors, distributors, customers and others having
business relationships with INVU.
(b) INVU and Montague will duly comply with all laws
applicable to them and their respective properties,
operations, business and employees that if not complied with
would result in a Material Effect.
24
6.2 NEGATIVE COVENANTS. Prior to the Closing Date, Montague
covenants that, except with the prior written consent of Sunburst,
which consent shall not be unreasonably withheld, INVU will not:
(a) Do any of the restricted acts set forth in
Section 4.8 hereof, or enter into any agreement of a nature
set forth in Section 4.12 hereof;
(b) Enter into any transaction other than in the
ordinary course of business; or
(c) Amend the respective organizational or governing
documents of INVU.
6.3 CONSENTS. Montague will use commercially reasonable
efforts to obtain all consents from third parties, including, without
limitation, Governmental Entities necessary or appropriate to
effectuate the transactions contemplated by this Agreement.
6.4 ADVICE OF CHANGES. Montague will promptly advise Sunburst
in writing from time to time prior to the Closing Date with respect to
any matter hereafter arising and known to them that, if existing or
occurring at the date of this Agreement, would have been required to be
set forth or described in the INVU Disclosure Schedule or would have
resulted in any representation of Montague in this Agreement being
untrue.
6.5 COMMERCIALLY REASONABLE EFFORTS. Montague will use
commercially reasonable efforts to cause to be fulfilled those of the
conditions to Sunburst's obligations to consummate the transactions
contemplated by this Agreement that are dependent upon Montague's
actions and to execute and deliver such instruments and take such other
actions as necessary or appropriate in order to carry out the intent of
this Agreement.
6.6 ACCESS TO PROPERTIES AND RECORDS. From and after the date
of this Agreement through the earlier of the Closing or the termination
of this Agreement, Montague shall (a) provide Sunburst an
identification of and access to all books, records and documents,
including contracts, agreements, consents, settlements, revenue and
expense information and (b) afford to Sunburst and its officers,
attorneys, accountants and other authorized representatives free and
full access during normal business hours to the offices, properties,
books and records of INVU.
6.7 SUPPLY DOCUMENTS, REPORTS, ETC.
(a) Montague shall furnish or make available to
Sunburst all documents, reports and other information and data
(including financial statements) concerning INVU as Sunburst
may reasonably require in connection with any statement,
application, or document required to be filed with applicable
Governmental Entities in connection with the transaction
contemplated by this Agreement or furnished to any other
person, firm, corporation or Governmental Entity in connection
25
with this Agreement, including, but not limited to the
Commission.
(b) Montague represents and warrants that all such
information shall be true, correct, and complete in all
material respects and shall not omit any material fact
required to be stated to make such information not misleading
in light of the circumstances under which made.
6.8 OFFERING FUNDS. Montague and INVU shall use commercially
reasonable efforts to raise at least $4,400,000 in net proceeds (the
"Offering Funds") prior to the Closing pursuant to a private offering
under Regulation D of the Securities Act.
6.9 TRANSFER OF HALCYON SHARES. Montague will use its best
efforts to cause Halcyon to grant to Montague a power of attorney to
transfer all of the shares of INVU Common Stock held by Halcyon to
Sunburst pursuant to the terms and conditions of this Agreement.
7. ACTIONS OF SUNBURST PRIOR TO OR AT THE CLOSING DATE.
7.1 AFFIRMATIVE COVENANTS. Prior to the Closing Date, Sunburst
covenants that, unless the prior written consent of Montague is first
obtained, will:
(a) During the period from the date of this Agreement
to the Effective Time, conduct its operations according to its
ordinary and usual course of business and consistent with past
practice, and will use commercially reasonable efforts to
preserve intact their business organizations, to keep
available the services of its officers and employees and to
maintain satisfactory relationships with licensors, licensees,
suppliers, contractors, distributors, customers and others
having business relationships with Sunburst.
(b) Duly comply with all laws applicable to it and
its properties, operations, business and employees that if not
complied with would result in a Material Effect.
(c) Use commercially reasonable efforts to terminate
any outstanding options or warrants that have been issued by
Sunburst.
(d) Sunburst shall satisfy on the date hereof and
shall continue to satisfy (i) the filing requirements of the
Exchange Act and (ii) the requirements of Rule 15(c) 2-11
promulgated by the Commission under the Exchange Act.
7.2 NEGATIVE COVENANTS. Prior to the Closing Date without the
prior written consent of Montague, Sunburst will not:
26
(a) Do any of the restricted acts set forth in
Section 5.8 hereof, or enter into any agreement of a nature
set forth in Section 5.12 hereof;
(b) Enter into any transaction other than in the
ordinary course of business;
(c) Amend its organizational or governing documents;
or
(d) Extend the expiration date of any options or
warrants.
7.3 CONSENTS. Sunburst will use commercially reasonable
efforts to obtain all consents from third parties, including, without
limitation, Governmental Entities necessary or appropriate to
effectuate the transactions contemplated by this Agreement.
7.4 ADVICE OF CHANGES. Sunburst will promptly advise Montague
in writing from time to time prior to the Closing Date with respect to
any matter hereafter arising and known to it that, if existing or
occurring at the date of this Agreement, would have been required to be
set forth or described in the Sunburst Disclosure Schedule or would
have resulted in any representation of Sunburst in this Agreement being
untrue in any material respect.
7.5 OTC BULLETIN BOARD. Sunburst will use commercially
reasonable efforts to maintain the listing on the OTC Bulletin Board of
the Sunburst Common Stock.
7.6 COMMISSION REPORTS. Sunburst shall file with the
Commission all reports that are required to be filed by the Exchange
Act and the rules and regulations promulgated thereunder, including
reports required in order to consummate the transactions contemplated
by this Agreement.
7.7 COMMERCIALLY REASONABLE EFFORTS. Sunburst will use
commercially reasonable efforts to cause to be fulfilled those of the
conditions to Montague's obligations to consummate the transactions
contemplated by this Agreement that are dependent upon Sunburst's
actions and to execute and deliver such instruments and take such other
actions as necessary or appropriate in order to carry out the intent of
this Agreement.
7.8 ACCESS TO PROPERTIES AND RECORDS. From and after the date
of this Agreement through the earlier of the Closing or the termination
of this Agreement, Sunburst shall (a) provide Montague an
identification of and access to all books, records and documents,
including contracts, agreements, consents, settlements, revenue and
expense information, and (b) afford to Montague's and INVU's officers,
attorneys, accounts and other authorized representatives free and full
access during normal business hours to the offices, properties, books
and records of Sunburst.
7.9 SUPPLY DOCUMENTS, REPORTS, ETC.
27
(a) Sunburst shall furnish or make available to
Montague all documents, reports and other information and data
(including financial statements) concerning Sunburst as
Montague may reasonably require in connection with any
statement, application, or document required to be filed with
applicable Government Entities in connection with the
transaction contemplated by this Agreement or furnished to any
other person, firm, corporation or Governmental Entity in
connection with this Agreement, including, but not limited to
the Commission.
(b) Sunburst represents and warrants that all such
information shall be true, correct, and complete in all
material respects and shall not omit any material fact
required to be stated to make such information not misleading
in light of the circumstances under which made.
7.10 BOARD OF DIRECTORS OF SUNBURST. Sunburst shall duly call
a meeting of the Board of Directors to occur simultaneously at Closing.
At this meeting (1) Xxxxxxx X. Xxxxx and Xxx Xxxxxx, shall resign from
their positions as directors and officers of Sunburst and release
Sunburst from any and all claims that such directors and officers may
have against Sunburst, including, without limitation, claims for unpaid
compensation, and (2) Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxx X'Xxxxxxxx and
such other directors as Montague shall direct shall be elected as
directors of Sunburst to fill these director vacancies.
7.11 ADDITIONAL REPORTS AND INFORMATION.
(a) Upon request of INVU or Montague, Sunburst shall
prepare and file all such reports or documents with any
Governmental Entity, the OTC Bulletin Board or any securities
manual exemption publication (including Standard & Poor's
Corporation) that, in connection with the transactions
contemplated herein, may be deemed by INVU or Montague to be
necessary or advisable in order (i) to comply with any
applicable federal or state securities laws or (ii) to create
or maintain a trading market for the Sunburst Common Stock.
(b) Sunburst will (i) cooperate with INVU, Montague
and their respective counsel in connection with such reports
and documents and furnish to them all information, written or
oral, relating to Sunburst or Sunburst Common Stock as may
reasonably be requested in connection with this Section
7.11(a), and (ii) in connection with Section 6.8 hereof,
cooperate with INVU, Montague and their respective counsel,
investment bankers and brokers and provide all such
information, written or oral, and documents as may be
reasonably requested in connection therewith.
(c) None of the information supplied or to be
supplied by Sunburst pursuant to this Section 7.11 will
contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary
to make the statements made therein not misleading. If at any
time prior to the Closing Date any event or circumstance
28
relating to Sunburst or any of its affiliates, or its or
their respective officer or directors, should be discovered
by Sunburst that should be set forth in an amendment or
supplement to a report, document or information described
above, Sunburst shall promptly inform INVU and Montague.
(d) All of the reports, documents or information that
Sunburst is required to file with any Governmental Entity
pursuant to this Section 7.11 in connection with the
transactions contemplated hereby will comply as to form in all
material respects with the provisions of applicable law,
including applicable provisions of the Exchange Act and the
rules and regulations thereunder, and each such report or
document required to be filed with any third party or
Governmental Entity will comply with the provisions of the
applicable rules or laws as to the information required to be
contained therein.
8. CONDITIONS TO SUNBURST'S OBLIGATIONS. Each and every obligation of
Sunburst under this Agreement to be performed on or before the Closing Date is,
at the option of Sunburst, subject to the satisfaction on or before the Closing
Date of each of the following conditions:
(a) (i) All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Montague at or before the
Closing Date shall have been duly complied with and performed in all
material respects, (ii) the representations and warranties of Montague
set forth in Article 4 shall be true in all material respects on and as
of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing
Date, and (iii) Sunburst shall have received a certificate to such
effect from Montague.
(b) All consents, waivers, approvals, licenses, authorizations
of, or filings or declarations with third parties or Governmental
Entities required to be obtained by INVU or Montague in order to permit
the transactions contemplated by this Agreement to be consummated in
accordance with agreements and court orders applicable to INVU or
Montague and applicable governmental laws, rules, regulations and
agreements shall have been obtained and any waiting period thereunder
shall have expired or been terminated, and Sunburst shall have received
a certificate from Montague to such effect.
(c) All actions, proceedings, instruments and documents in
connection with the consummation of the transactions contemplated by
this Agreement, including the forms of all documents, legal matters,
opinions and procedures in connection therewith, shall have been
approved in form and substance by counsel for Sunburst, which approval
shall not be unreasonably withheld.
(d) Montague shall have furnished such certificates to
evidence compliance with the conditions set forth in this Article, as
may be reasonably requested by Sunburst or its counsel.
29
(e) INVU shall not have suffered any Material Effect.
(f) No material information or data provided or made available
to Sunburst by or on behalf of INVU shall be incorrect in any material
respect.
(g) No investigation and no suit, action or proceeding before
any court or any governmental or regulatory authority shall be pending
or threatened by any state or federal governmental or regulatory
authority, against INVU or any of its affiliates, associates, officers
or directors seeking to restrain, prevent or change in any material
respect the transactions contemplated hereby or seeking damages in
connection with such transactions that are material to INVU.
(h) Sunburst shall have received the written opinion, dated as
of the Closing Date, of counsel to Montague, which counsel shall be
reasonably acceptable to Sunburst.
(i) The Offering Funds shall have been deposited in a special
segregated bank account designated for the benefit of Sunburst
providing for such Offering Funds to be invested in Sunburst
immediately following the effectiveness of the Share Exchange.
(j) Sunburst shall have received the unaudited financial
statements of INVU for the period ending January 31, 1998, and shall be
in form and substance reasonably satisfactory to Sunburst.
9. CONDITIONS TO MONTAGUE OBLIGATIONS. Except as set forth below, each
and every obligation of Montague under this Agreement to be performed on the
Closing Date is, at the option of Montague, subject to the satisfaction on or
before the Closing Date, of each of the following conditions:
(a) (i) All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Sunburst at or before the
Closing Date shall have been duly complied with and performed in all
material respects, (ii) the representations and warranties of Sunburst
set forth in Article 5 shall be true in all material respects on and as
of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing
Date and (iii) Montague shall have received a certificate from the
President of Sunburst at Closing to such effect.
(b) All consents, waivers, approvals, licenses, authorizations
of, or filings or declarations with third parties or Governmental
Entities required to be obtained by Sunburst in order to permit the
transactions contemplated by this Agreement to be consummated in
accordance with agreements and court orders applicable to Sunburst and
applicable governmental laws, rules, regulations and agreements shall
have been obtained and any waiting period thereunder shall have expired
or been terminated, and Montague shall have received a certificate from
the President of Sunburst to such effect.
(c) Montague shall have received the written opinion, dated as
of the Closing Date, of counsel to Sunburst, which counsel shall be
reasonably acceptable to Montague.
30
(d) All actions, proceedings, instruments and documents in
connection with the consummation of the transactions contemplated by
this Agreement, including the forms of all documents, legal matters,
opinions and procedures in connection therewith, shall have been
approved in form and substance by counsel for Montague, which approval
shall not be unreasonably withheld.
(e) Sunburst shall have furnished such certificates of its
officers and others to evidence compliance with the conditions set
forth in this Article, as may be reasonably requested by Montague or
their counsel.
(f) Sunburst shall not have suffered any Material Effect.
(g) No material information or data provided or made available
to Montague by or on behalf of Sunburst shall be incorrect in any
material respect.
(h) No investigation and no suit, action or proceeding before
any court or any governmental or regulatory authority shall be pending
or threatened by any state or federal governmental or regulatory
authority, against Sunburst or any of their affiliates, associates,
officers or directors seeking to restrain, prevent or change in any
material respect the transactions contemplated hereby or seeking
damages in connection with such transactions that are material to
Sunburst.
(i) On the Closing Date, Sunburst shall have a positive net
worth (taking into account all accrued liabilities and liabilities
relating to or arising from commitments or obligations incurred prior
to the Closing Date and expected to come due within 30 days of the
Closing Date).
(j) Sunburst Common Stock shall be approved for listing on the
OTC Bulletin Board.
(k) Sunburst shall satisfy (i) the filing requirements set
forth in the Exchange Act, including, but not limited to, the
information requirements set forth in Section 14(f), and (ii) the
requirements of Rule 15(c)2-11 as promulgated by the Commission under
the Exchange Act.
(l) The Sunburst Preferred Stock shall have been converted
into Sunburst Common Stock.
(m) Xxxxxxxx & Company, P.C. shall have agreed in writing, in
form and substance reasonably satisfactory to Montague, to deliver
audit opinions with respect to any and all financial statements of
Sunburst that had been audited by Xxxxxxxx & Company, P.C. and to
cooperate with Sunburst after Closing with respect to Sunburst's
obligations under applicable federal and state securities laws.
31
(n) Montague shall have received (i) the executed resignations
of Xxxxxxx X. Xxxxx and Xxx Xxxxxx as directors and officers of
Sunburst and (ii) executed releases from each of Xxxxxxx X. Xxxxx and
Xxx Xxxxxx in the form attached hereto as Exhibit 9(n).
(o) The Offering Funds shall have been deposited in a special
segregated bank account designated for the benefit of Sunburst
providing for such Offering Funds to be invested in Sunburst
immediately following the effectiveness of the Share Exchange.
(p) Montague shall have obtained (i) a power of attorney from
Halcyon authorizing Montague to transfer all of the shares of INVU
Common Stock held by Halcyon to Sunburst pursuant to the terms and
conditions of this Agreement, and (ii) a certificate executed by
Halcyon in favor of Sunburst certifying that the representations and
warranties set forth in Section 4.21 and 4.22 of this Agreement are
true and correct with respect to the INVU Common Stock held by Halcyon.
10. ADDITIONAL AGREEMENTS.
10.1 CONFIDENTIALITY. The parties hereto will, and will cause
their officers, directors, employees and authorized representatives to,
hold in confidence all, and not to use or to disclose to others any,
non-public information received by them from another party hereto in
connection with the transactions contemplated by this Agreement;
provided, however, the foregoing shall not restrict necessary
disclosures in compliance with requirements of any law, governmental
order or regulation.
10.2 FURTHER ASSURANCES. After Closing, the parties shall
execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered such instruments and take such other action including
payment of monies as may be necessary or advisable to carry out their
obligations under this Agreement and under any document, certificate or
other instrument delivered pursuant hereto or required by law. If at
any time subsequent to the Closing, any party comes into possession of
money or property belonging to another party, such money or property
shall be promptly turned over to the party entitled thereto.
10.3 ISSUANCE OF SHARES. Simultaneously with the consummation
of the Share Exchange, the Offering Funds shall be delivered to
Sunburst, the Consultant shall receive 2,737,500 shares of Sunburst
Common Stock and the Xxxxxxxx Shareholders shall receive 5,475,000
shares of Sunburst Common Stock; provided, however, the Xxxxxxxx
Shareholders may receive additional shares of Sunburst Common Stock so
long as the aggregate number of shares of Common Stock to be issued to
Halcyon, Montague, the Consultant and the Xxxxxxxx Shareholders does
not exceed 52,560,000 shares of Sunburst Common Stock.
11. TERMINATION, WAIVER AND AMENDMENT.
11.1 TERMINATION. This Agreement may be terminated prior to
the Effective Date by: (i) mutual consent of the board of directors of
Sunburst and Montague for any reason; (ii) Sunburst, if Montague has
32
failed to comply in any material respect with any of its covenants or
agreements under this Agreement that are required to be complied with
prior to the date of such termination; (iii) Montague, if Sunburst has
failed to comply in any material respect with any of their covenants
or agreements under this Agreement that are required to be complied
with prior to the date of such termination; (iv) either Sunburst or
Montague, if the Closing does not take place prior to the Expiration
Date, unless such delay is attributable to actions by a Governmental
Entity; or (v) either Sunburst or Montague, if a Governmental Entity
has permanently enjoined or prohibited consummation of the Share
Exchange and such court or government action is final and
nonappealable.
11.2 MANNER OF EXERCISE. In the event of termination and
abandonment by a party pursuant to Section 11.1, written notice thereof
shall forthwith be given to the other party, and this Agreement shall
terminate and the transactions contemplated hereunder shall be
abandoned without further action by the parties.
11.3 EFFECT OF TERMINATION. In the event of the termination
and abandonment pursuant to Section 11.1, this Agreement shall become
void and have no effect, without any liability on the part of any of
the parties or their directors or officers or shareholders in respect
of this Agreement and the transactions contemplated hereby except that
a party that breaches this Agreement may have liability to the other
parties hereto arising out of such breach. Except as allowed under this
Agreement, if the Share Exchange is not consummated, Consultant shall
bear all costs and expenses incurred in connection therewith and the
transactions contemplated thereby in accordance with Section 12.2
hereof.
11.4 WAIVER. The respective obligations of the parties hereto
to effect the Share Exchange are subject to written waiver thereof.
11.5 AMENDMENT. The parties to this Agreement may, at any time
prior to the Effective Date, amend this Agreement or extend the time
for performance of any of the other parties' obligations under this
Agreement and waive any inaccuracies in the representations and
warranties contained herein and waive compliance with any of the
agreements or conditions contained herein that may be legally waived.
12. MISCELLANEOUS.
12.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations, warranties and covenants in this
Agreement shall terminate at the Effective Time or upon termination of
this Agreement pursuant to Section 11 hereof, except that those set
forth in Section 10.1 and Section 12 hereof shall survive termination
indefinitely.
12.2 EXPENSES. Except as otherwise provided herein, (i) in the
event that the transactions contemplated by this Agreement are not
consummated, Consultant shall pay all expenses and costs incurred in
connection with this Agreement and the transactions contemplated
hereby, and (ii) in the event that the transactions contemplated by
this Agreement are consummated, Sunburst shall, after the Closing, pay
33
all expenses and costs incurred in connection with this Agreement and
the transactions contemplated hereby.
12.3 PRESS RELEASES. No party shall make any public
announcement or press release with respect to this transaction without
written consent of the others (which shall not be unreasonably
withheld), except as required by law.
12.4 BINDING EFFECT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party without the prior written
consent of the others. Nothing contained herein, express or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
12.5 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, in such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
12.6 NOTICES. Any notice, request, instructions or other
document to be given hereunder to any party shall be in writing, sent
by facsimile transmission or delivered personally or by courier or sent
by certified mail, postage prepaid, as follows:
If to Montague:
Montague Limited
00 Xxxxx Xxxxxx
Xxxxxxx
XXXX XX XXX
Attn.: Mr. Xxxxx Xxxxxx
Copy to:
Xxxx X. Xxxxxx, Esq.
Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
34
and a copy to:
Xxx Xxxxx, Esq.
XxXxxxxx, Xxxxxxxxxx & Xxxx
City Tower - Level Four
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
If to Sunburst:
Sunburst Acquisitions I, Inc.
0000 Xxxxx Xxxx Xxx
Xxxxxxxx, Xxxxxxxx 00000
Attn.: Xx. Xxx Xxxxxx, President
Copy to:
Xxxx Xxxxxx, Esq.
Frascona, Xxxxxx & Xxxxxxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Any party may change its address for purposes of this Section by giving written
notice of such change of address to the other parties in the manner herein
provided for giving notice. Any notice or communication hereunder shall be
deemed to have been given when (i) deposited in the United States mail, if by
certified mail, and (ii) received, if delivered personally or by courier or
facsimile transmission.
12.6 ENTIRE AGREEMENT. This Agreement (including the
instruments between the parties referred to herein and any waivers
delivered pursuant hereto) constitutes the entire agreement among the
parties and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect
to the subject matter hereof. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references to
articles, sections, subsections, paragraphs, clauses, exhibits and
schedules shall be deemed references to such part of this Agreement,
unless the context shall otherwise require.
12.7 AMENDMENTS; WAIVERS. No supplement, modification, or
.amendment of this Agreement or waiver of any provision of this
Agreement will be binding unless executed in writing by, or on behalf
of, all parties to this Agreement. No waiver of any of the provisions
of this Agreement will be deemed or will constitute a waiver of any
other provision of this Agreement (regardless of whether similar), nor
will any such waiver constitute a continuing waiver unless otherwise
expressly provided.
12.8 HEADINGS. Descriptive headings contained herein are for
convenience of reference only and shall not affect the meaning or
interpretation hereof.
35
12.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
but all of which together shall constitute but one agreement.
12.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur if any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provision
hereof in any court of the United States of America or any state having
jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF COLORADO APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
12.12 TIME OF ESSENCE. Time is of the essence of the parties'
obligation to consummate the transactions contemplated by this
Agreement on the Closing Date.
12.13 COMMERCIALLY REASONABLE EFFORTS. No provision of this
Agreement calling for a party to use commercially reasonable efforts or
reasonable efforts shall be construed so as to require such party to
incur out-of-pocket expenditures other than expenditures normally
incurred in transactions similar to the Share Exchange or to take any
step that would not be commercially reasonable, in light of all of the
circumstances.
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EXECUTED as of the day and year first above written.
SUNBURST ACQUISITIONS I, INC.
By:
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Name:
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Title:
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MONTAGUE LIMITED
By:
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Name:
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Title:
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37
