Exhibit 2.5
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT dated as of January 2, 2001 ("Agreement"), among
Saratoga International Holdings Corp., a Nevada corporation ("Saratoga"), and
Processing Plus, Inc., a Florida corporation ("Processing Plus"), and Gene and
Xxxxx Xxxxxx ("Retske").
BACKGROUND
The respective Boards of Directors of Saratoga and Processing Plus have each
approved, upon the terms and subject to the conditions set forth in this
Agreement, the share exchange between Saratoga and Processing Plus whereby each
issued and outstanding share of common stock of Processing Plus will be
exchanged for shares of Common Stock and Warrants to be issued by Saratoga as
set forth in Article 1 and by which Processing Plus shall become a wholly-owned
subsidiary of Saratoga.
Retske owns all of the shares of Common Stock of International Insider Reports,
Inc. ("Insider"). As part of this Agreement, Retske has agreed to deliver to
Saratoga, 30% of the Insider shares owned by Retske upon the terms and subject
to the conditions set forth in this Agreement.
In consideration of the respective representations, warranties, covenants and
agreements contained in this Agreement, Saratoga and Processing Plus and
Saratoga and Retske hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 THE SHARE EXCHANGE. Upon the terms and subject to the conditions hereof,
Processing Plus shall become a wholly-owned subsidiary of Saratoga upon the
Effective Time of this Agreement subject to the conditions set forth in
Article VII.
1.02 EFFECTIVE TIME. This Agreement shall become effective at such time
("Effective Time") as the conditions set forth in Article VII are satisfied
or waived, if permissible.
1.03 SHARES. At or prior to the Effective Time, by virtue of this Agreement, the
following events shall occur.
a) Each issued and outstanding share of common stock of Processing Plus
shall be assigned, transferred and conveyed to Saratoga.
E-1
b) Thirty percent (30%) of the issued and outstanding shares of common
stock of Insider owned by Retske shall be assigned, transferred and
conveyed to Saratoga.
c) In exchange thereof, Saratoga shall issue from its treasury 1,000,000
shares of its common stock ("Common Stock") which shall be issued to
each of Processing Plus' shareholders, as set forth in Exhibit 1.03
(c) annexed hereto.
d) In addition to the Common Stock, Saratoga shall issue to the
Processing Plus shareholders Saratoga's common stock purchase warrants
("Warrants") entitling the holders to purchase up to 500,000 shares of
the common stock of Saratoga which Warrants shall provide as follows:
1) The right to exercise the Warrants shall vest at the rate of 33
1/3% of the total number of Warrants issued hereunder each year
beginning one (1) year from the Effective Time of this Agreement.
2) The Warrants shall expire five (5) years from the Effective Time
of this Agreement;
3) The exercise price of the Warrants shall be $0.05 per share of
common stock;
4) The right to exercise the Warrants to be issued hereunder, shall
be contingent upon and subject to Xxxx Xxxxxx'x continued
employment with either Saratoga or its subsidiary.
5) Redemption provisions and other terms and conditions of the
Warrant shall be as set forth in the sample Warrant certificate
and agreement annexed hereto as Exhibit 1.03 (d).
1.04 PRIVATE PLACEMENT.
a) The Common Stock and Warrants and the Common Stock underlying the
Warrants issued to Processing Plus' shareholders have not been and
will not be registered with the Securities and Exchange Commission
("SEC") or the securities commission of any state, pursuant to an
exemption from registration by virtue of Saratoga's intended
compliance with the provisions of Section 4(2) and 4(6) of the
Securities Act of 1933, as amended ("Securities Act"), and the Common
Stock and Warrants will be made available only to "accredited
investors" or Processing Plus' shareholders who have used a "Purchaser
representative", as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act. Such exemption limits the number and types
of investors to which the offering of Common Stock and Warrants may be
made and restricts subsequent transfers of the Common Stock so offered
which also may be restricted by state securities laws. The Common
Stock and Warrants may not be resold or otherwise disposed of by
Processing Plus' shareholders unless, in the opinion of counsel to
Saratoga, registration under federal and applicable state securities
laws is not required or compliance is made with the registration
requirements of such laws.
E-2
ARTICLE II
EXCHANGE OF SHARES
2.01 ISSUANCE OF CERTIFICATE. At the Effective Time, Saratoga shall issue to
each person set forth on Exhibit 1.03 (c) a certificate representing the
Common Stock and Warrants to be issued to each Processing Plus shareholder
and simultaneously each Processing Plus shareholder shall exchange and
surrender the certificate representing all of such Processing Plus
shareholder's shares in Processing Plus and Retske shall exchange and
surrender the certificate or certificates representing thirty percent (30%)
of Retske's shares in Insider.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SARATOGA
Saratoga represents and warrants to Processing Plus as of the date of this
Agreement and as of the Effective Time as follows:
3.01 EXISTENCE: GOOD STANDING. Saratoga is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
3.02 CAPITALIZATION. The authorized capital stock of Saratoga consists of
200,000,000 shares of Common Stock, par value $0.001 ("Shares") and
50,000,000 shares of Preferred Stock, par value $0.001. As of July 31,
2000, Saratoga's most recent fiscal quarter filing with the SEC, there were
251,828 shares of 8% cumulative convertible redeemable shares of Preferred
Stock issued and outstanding and 61,254,703 shares of Common Stock issued
and outstanding including 2,000,000 shares of Common Stock held in escrow
pending completion and outcome of Saratoga's claim against Language Force
Inc. All issued and outstanding shares of Preferred Stock and issued and
outstanding shares of Common Stock are duly authorized, validly issued,
free of preemptive rights, non-assessable, and, except for the 2,000,000
shares of Common Stock held in escrow, are fully paid. Options, warrants
and other rights to acquire from Saratoga or any of its subsidiaries and
obligations of Saratoga or any of its subsidiaries to issue, any capital
stock, or securities convertible into or exchangeable for capital stock or
voting securities of Saratoga as of October 31, 1999 are as set forth in
Saratoga's audited financial statements as of and for the fiscal year ended
October 31, 1999, a copy of which is available to Processing Plus and is
annexed hereto as Exhibit 3.02.
3.03 AUTHORIZATION: VALIDITY AND EFFECT OF AGREEMENTS. Saratoga has the
requisite corporate power and authority to execute and deliver this
Agreement. The consummation by Saratoga of the transactions contemplated
hereby has been duly authorized by all requisite corporate action and the
issuance of the Common Stock and warrants to Processing Plus' shareholders
has been approved by the board of directors of Saratoga at a meeting held
August 2, 2000. This Agreement constitutes the valid and legally binding
obligation of Saratoga, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
E-3
3.04 NO VIOLATION. To the best of Saratoga's knowledge neither the execution and
delivery by Saratoga of this Agreement, nor the consummation by Saratoga of
the transactions contemplated hereby in accordance with the terms hereof,
will: (i) conflict with or result in a breach of any provisions of the
Articles of Incorporation or Bylaws of Saratoga (ii)violate, or conflict
with, or result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both, would constitute a
default) under, or result in the termination or in a right of termination
or cancellation of, or accelerate the performance required by, or result in
the triggering of any payment of compensation under, or result in the
creation of any lien, security interest, charge or encumbrance ("Lien")
upon any of the material properties of Saratoga or its subsidiaries under,
or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust or any material license, franchise
permit, lease, contract, agreement or other instrument, commitment or
obligation to which Saratoga or any of Saratoga's subsidiaries is a party,
or by which Saratoga or any of Saratoga's subsidiaries or any of their
respective properties is bound or affected, except for any of the foregoing
matters which would not have a material adverse effect on the business,
results of operations, financial condition or prospects of Saratoga and its
subsidiaries taken as a whole ("Saratoga Material Adverse Effect"); or
(iii) other than the filings required under the Securities Exchange Act of
1934, ("Exchange Act"), the Securities Act or applicable state securities
and "Blue Sky" laws or filings in connection with the maintenance of its
qualification to do business in other jurisdictions, and the filings
contemplated by Section 5.02 of this Agreement (collectively, "Regulatory
Filings"), require any material consent, approval or authorization of, or
declaration, filings or registration with, any domestic governmental or
regulatory authority, the failure to obtain or make which would have a
Saratoga Material Adverse Effect.
3.05 DOCUMENTS. Saratoga has delivered to Processing Plus the following
documents:
- Audited financial statements for the year ended October 31, 1999;
- Registration Statement on Form 10-SB A-4 filed with the Securities and
Exchange Commission on June 6, 2000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PROCESSING PLUS
Processing Plus represents and warrants to Saratoga as of the date of this
Agreement and as of the Effective Time as follows:
4.01 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW.
Processing Plus is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation.
Processing Plus is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction in which the character of its
properties occupied, owned or held under lease or the nature of its
business makes such qualification or licensing necessary. The copies of
Processing Plus' Articles of Incorporation and Bylaws previously delivered
to Saratoga are true and correct and have not since been amended, modified
or rescinded except as may have occurred pursuant to Section 6.01 (d)
herein.
E-4
4.02 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Processing Plus has the
requisite corporate power and authority to execute and deliver this
Agreement. The consummation by Processing Plus of all transactions
contemplated hereby has been duly authorized by the approval of the Board
of Directors and is required to be approved by the shareholders of
Processing Plus and such approvals were obtained by shareholder consent and
meeting of the Board of Directors on December __, 2000. This Agreement
constitutes the valid and legally binding obligation of Processing Plus,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
and general principles of equity.
4.03 CAPITALIZATION. The authorized capital stock of Processing Plus consists of
____shares of __ par value common stock and no other classes of stock,
common or preferred, or other securities. There are ____ shares of common
stock issued and outstanding as of December __, 2000. All issued and
outstanding shares of common stock are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights. Processing Plus
is not a party to or bound by any written or oral contract or agreement
which grants to any person an option, warrant or right of first refusal or
other right of any character to acquire at any time, or upon the happening
of any stated events, any shares of or interest in Processing Plus, whether
or not presently authorized, issued or outstanding. There are outstanding
(i) no other shares of capital stock or other voting securities of
Processing Plus, (ii) no securities of Processing Plus or any of its
subsidiaries convertible into or exchangeable for shares of capital stock
or voting securities of Processing Plus, (iii) except for Series A Senior
Subordinated Convertible Debentures ("Processing Plus Debentures") no
options or other rights to acquire from Processing Plus or any of its
subsidiaries, and no obligations of Processing Plus or any of its
subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Processing Plus, and (iv) no equity equivalents, interest in the ownership
or earnings of Processing Plus or any of its subsidiaries or other similar
rights. There are no outstanding obligations of Processing Plus or any of
its subsidiaries to repurchase, redeem or otherwise acquire any securities
of Processing Plus.
4.04 NO VIOLATION. Neither the execution and delivery by Processing Plus of this
Agreement nor the consummation by Processing Plus of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict
with or result in a breach of any provisions of the Articles of
Incorporation or Bylaws of Processing Plus or its subsidiaries, (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in
a right of termination or cancellation of, or accelerate the performance
required by, or result in the triggering of any payment or compensation
under, or result in the creation of any Lien upon any of the properties of
Processing Plus or its subsidiaries under, or result in being declared
void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract,
agreement or other instrument, commitment or obligation of which Processing
Plus or its subsidiaries is a party, or by which Processing Plus or its
subsidiaries or any of their respective properties or assets is bound or
E-5
affected, except for any of the foregoing matters which, singularly or in
the aggregate, would not have an adverse effect on the business of
Processing Plus ("Processing Plus Material Adverse Effect"); (iii) other
than the Regulatory filings, require any material consent, approval or
authorization of, or declaration, filing or registration with, any domestic
governmental or regulatory authority, the failure to obtain or make which
would have an Processing Plus Material Adverse Effect, as defined in
Section 7.01(c) below, or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Processing Plus, any of its
subsidiaries or any of their assets, except for violations which in the
aggregate would not have an Processing Plus Material Adverse Effect or
materially adversely affect the ability of Processing Plus to consummate
the Merger.
4.05 DOCUMENTS. Processing Plus has delivered to Saratoga the following
documents:
1. Unaudited financial statements for the periods ____, ____, and ____. 2.
Subscription Agreement, Debenture Agreement and other documentation
relating to the Processing Plus Debentures issued to accredited investors
in a private placement offering of Processing Plus' securities. 3. List of
Assets
4.06 ASSETS AND LIABILITIES. Processing Plus hereby represents and warrants that
it has no contingent or other liabilities other than those listed in
Exhibit 4.06 annexed hereto. The assets owned by Processing Plus, as set
forth in Exhibit 4.06(a) annexed hereto, at the Effective Time shall be
free and clear of any and all liens, claims or other encumbrances.
4.07 MATERIAL CONTRACTS. Processing Plus hereby represents and warrants that all
of the material contracts which are essential to its business ("Material
Contracts") are set forth in Exhibit 4.07. Processing Plus further
represents and warrants that all the Material Contracts as set forth in
Exhibit 4.07 are valid, binding and enforceable according to their terms
against each party to the contracts.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RETSKE
Retske represents and warrants to Saratoga as of the date of this Agreement and
as of the Effective Time as follows:
5.01 OWNERSHIP. Retske owns beneficially and of record the shares of Insider
free and clear of any liens and encumbrances.
5.02 ENFORCEABILITY. Retske has full power, capacity and authority to execute
this Agreement and such other agreements, documents and instruments called
for by this Agreement, to make the representations, warranties and
covenants herein and to perform his obligations hereunder. This Agreement
is duly executed and is a legal and binding obligation of Retske,
enforceable according to its terms, except as to the effect, if any, of
applicable bankruptcy insolvency, moratorium or other similar laws relating
to creditors rights and general principles of equity. Neither the execution
and delivery by Retske of this Agreement or the consummation by Retske of
the transactions contemplated by this Agreement will (i) violate, conflict
with or result in the breach of any provision of, or constitute a default
under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by Retske under any
material agreement, lease, note or other restriction, encumbrance,
obligation or liability to which Retske is a party or by which he is bound;
or (ii) result in the creation or imposition of any lien or encumbrance on
any of Retske's shares of Insider.
E-6
ARTICLE VI
COVENANTS
6.01 CONDUCT OF BUSINESS. From and after the date of this Agreement until the
Effective Time or this Agreement is terminated, unless Processing Plus has
consented in writing thereto, Saratoga, and, with respect to (e) and (f)
below, Saratoga and Processing Plus:
a) Shall, and shall cause its subsidiaries to, conduct its operations
according to its usual, regular and ordinary course in substantially
the same manner as heretofore conducted;
b) Shall use reasonable efforts, and shall cause its subsidiaries to use
reasonable efforts, to preserve intact its business organization and
goodwill, keep available the services of its officers and employees
and maintain satisfactory relationships with those persons having
business relationships with it;
c) Shall confer on a regular basis with one or more representatives of
Saratoga to report operational matters of materiality and any
proposals to engage in material transactions;
d) Shall not amend its Articles of Incorporation or By Laws except to
increase its authorized capital shares to accommodate the issuance of
the Debentures as set forth in Section 7.01 (e).
e) Shall promptly notify the other parties hereto of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects or
the normal course of its businesses or in the operation of its
properties, any material litigation or material governmental
complaints, investigations or hearings (or communications indicating
that the same may be contemplated), or the breach in any material
respect of any representation or warranty contained herein;
f) Shall promptly deliver to the other parties hereto true and correct
copies of any report, statement or schedule filed with or delivered to
the SEC, any other Governmental entity (other than routine corporate
tax and other filings in the ordinary course of business) or any
shareholder of Processing Plus or Saratoga, as the case may be,
subsequent to the date of this Agreement;
E-7
g) Shall not (i) issue, sell or pledge, or agree to issue, sell or
pledge, any shares of its capital stock, effect any stock split or
otherwise change its capitalization as it existed on the date hereof,
(ii) grant, confer or award any option, warrant, conversion right or
other right to acquire any shares of its capital stock or grant any
right to convert or exchange any securities of Processing Plus for
Common Stock, (iii) increase any compensation or enter into or amend
any employment agreement with any of its present or future officers or
directors, other than in the ordinary course of Processing Plus'
business, (iv) adopt any new employee benefit plan, other than in the
ordinary course of Processing Plus' business (including any stock
option, stock benefit or stock purchase plan) or amend any existing
employee benefit plan in any material respect, other than in the
ordinary course of business, except, in each case, for changes which
are less favorable to participants in such plans or as may be required
by applicable law, or (v) amend any Officer Employment Agreement or
increase any compensation payable pursuant to such Officer Employment
Agreements;
h) Shall not (i) except in the normal course of business as consistent
with prior practice, declare, set aside or pay any dividend (whether
in cash, stock or property) or make any other distribution or payment
with respect to any shares of its capital stock or (ii) directly or
indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or make any commitment for any such action;
i) Shall not, and shall not permit its subsidiaries to, agree in writing
to take or otherwise take (i) any of the foregoing actions or (ii) any
action which would make any representation or warranty of Processing
Plus herein untrue or incorrect.
6.02 FILINGS; OTHER ACTION. Subject to the terms and conditions herein provided,
Processing Plus and Saratoga shall: (i) use all reasonable efforts to
cooperate with one another in (a) determining which filings are required to
be made prior to the Effective Time with, and which consents, approvals,
permits or authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory authorities of the United
States, the several states, and other jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (b) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations; and
(ii) use best efforts to take, or cause to be taken, all other action and
do, or cause to be done, all other things necessary, proper or appropriate
to consummate and make effective the transactions contemplated by this
Agreement. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purpose of this Agreement, the
proper officers and directors of Saratoga and Processing Plus shall use
best efforts to take all such necessary action.
6.03 DUE DILIGENCE REVIEW. From the date hereof to the Effective Time, each of
Saratoga and Processing Plus shall allow all designated officers,
attorneys, accountants and other representatives of Saratoga and Processing
Plus, as the case may be, access at all reasonable times to the records and
files, correspondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs of Saratoga, Processing
Plus and their subsidiaries.
E-8
For the purpose of conducting their respective due diligence
investigations, each party will make available to the other for examination
and reproduction all documents and data of every kind and character
relating to this Agreement and the transactions contemplated hereby, in
possession or control of, or subject to reasonable access by either party.
All such due diligence investigation shall be completed and each party
shall notify the other in writing of the satisfaction or removal of this
due diligence review condition on or prior to the Effective Time.
Upon mutual agreement of the parties, additional time may be allowed to
complete such due diligence investigation. Should a party ("Reviewing
Party") become aware of any information during its due diligence
investigation which, in the opinion of the Reviewing Party, could have
material adverse impact on this Agreement and/or the transactions
contemplated hereby, the Reviewing Party shall immediately notify the other
party ("Receiving Party") in writing of such information and the concerns
which such information has caused. The Receiving Party shall have a
reasonable time to respond to those concerns. In the event that the
concerns cannot be resolved to the satisfaction of the Reviewing Party, the
Reviewing Party shall have the right to terminate this Agreement without
further liability hereunder. Each party shall bear the costs and expenses
of its own due diligence investigation hereunder, including the fees and
expenses of professional advisors
6.04 INDEMNIFICATION.
(a) (i) After the Effective Time, Saratoga shall, to the fullest extent
permitted, indemnify, defend and hold harmless the present and
former directors and officers of Saratoga and Processing Plus and
any subsidiaries and their respective heirs, executors,
administrators and legal representatives (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties")
against all losses, expenses, claims, damages or liabilities
arising out of actions or omissions occurring on or prior to the
Effective Time (including, without limitation, acts or omissions
relating to the transactions contemplated by this Agreement
(collectively "Losses")). In connection with the foregoing
obligations from and after the Effective Time, Saratoga shall
bear the cost of expenses incurred in defending against any
claim, action, suit, proceeding or investigation arising out of
any alleged acts or omissions occurring on or prior to the
Effective Time (including, without limitation, acts or omissions
relating to the transactions contemplated by this Agreement), as
incurred to the fullest extent permitted under applicable law.
All rights to indemnification, including provisions relating to
advances, expenses and exculpation of director liability,
existing in favor of the Indemnified Parties as provided in
Saratoga's or Processing Plus' Articles of Incorporation and
Bylaws, as in effect as of the date of this Agreement, with
respect to matters occurring through the Effective Time, will
survive the Effective Time and will continue in full force and
effect.
E-9
(ii) Any Indemnified Party will promptly notify Saratoga of any claim,
action, suit, proceeding or investigation for which such party
may seek indemnification under this Section (a "Third Party
Claim"). In the event of any such Third Party Claim, (x) within
twenty (20) days of receipt of such notice, Saratoga will have
the right to assume the defense thereof, and Saratoga will not be
liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred
thereafter by such Indemnified Parties in connection with the
defense thereof, except that all Indemnified Parties (as a group)
will have the right to retain one separate counsel, acceptable to
such Indemnified Parties, as the expense of the Indemnifying
Party if the named parties to any such proceeding include both
the Indemnified Party and Saratoga and the representation of such
parties by the same counsel would be inappropriate due to a
conflict of interest between them, and each Indemnified Party
will have the right to retain a separate counsel, acceptable to
such Indemnified Party, at the expense of the Indemnifying Party,
if representation of such Indemnified Party and the other
Indemnified Parties as a group would be inappropriate due to a
conflict of interest between them and (y) the Indemnified Parties
will cooperate in the defense of any such matter. If Saratoga
fails to take action within twenty (20) days as set forth in (x)
above, then the Indemnified Party shall have the right to pay,
compromise or defend any Third Party Claim and to assert the
amount of any payment on the Third Party Claim plus the expense
of defense or settlement as a Loss. Saratoga will not be liable
for any settlement affected without its prior written consent,
unless it has failed to take action within the twenty (20) day
period after receipt of notice as set forth above.
Notwithstanding the foregoing, Saratoga will not have any
obligation under this Section 5.04 to indemnify an Indemnified
Party when and if a court of competent jurisdiction ultimately
determines and such determination becomes final, that the
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
b) Saratoga shall pay all reasonable expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Parties
in enforcing the indemnity and other obligations provided for in
this Section 6.04.
c) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have
under the Articles of Incorporation or by laws of Saratoga, under
the Nevada Statute or otherwise. The provisions of this Section
shall survive the consummation of the Effective Time and
expressly are intended to benefit each of the Indemnified Parties
and will be binding on all successors and assigns of Saratoga.
6.05 FURTHER ACTION. Each party hereto shall, subject to the fulfillment at or
before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute
such documents as may be reasonably required to effect the Effective Time.
6.06 EXPENSES. Whether or not the Effective Time is consummated, except as
provided in Section 8.02 hereof or as provided otherwise herein, all costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
E-10
6.07 PUBLICITY. The initial press release relating to this Agreement shall be a
joint press release and thereafter Processing Plus and Saratoga shall,
subject to their respective legal obligations (including requirements of
the OTC Bulletin Board stock exchanges and other similar regulatory
bodies), consult with each other, and use reasonable efforts to agree upon
the text of any press release, before issuing any such press release or
otherwise making public statements with respect to the transactions
contemplated hereby and in making any filings with any federal or state
governmental or regulatory agency or with OTC Bulletin Board, or any
national securities exchange with respect thereto.
6.08 BEST EFFORTS TO EXECUTE AGREEMENT. The parties hereto agree to use their
best efforts to execute this Agreement on or before January 19, 2001.
ARTICLE VII
CONDITIONS TO CONSUMMATION
OF THE SHARE EXCHANGE
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE SHARE EXCHANGE. The
respective obligations of each party to effect the Share Exchange are
subject to the satisfaction or waiver, where permissible, prior to the
Effective Time, of the following conditions:
a) This Agreement shall have been approved by the Board of Directors of
Processing Plus and the affirmative vote of the shareholders of
Processing Plus by the requisite vote in accordance with applicable
law, if required, and by the Board of Directors of Saratoga by
resolution in accordance with applicable law. Each of the consents and
resolutions set forth on Schedule 7.01(a), 7.01 (a) (1) and 7.01 (a)
(2) hereto shall have been obtained.
b) No statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent), shall have
been enacted, entered, promulgated or enforced by any court or
governmental authority which is in effect and has the effect of
prohibiting the consummation of the Effective Time; provided, however,
that each of the parties shall have used its best efforts to prevent
the entry of any injunction or other order and to appeal as promptly
as possible any injunction or other order that may be entered;
c) Processing Plus, on or before the Effective Time shall have completed
the issuance of the Processing Plus Debentures in the face amount of
$1,000,000 to , a Colorado limited liability company, upon the terms
and conditions set forth in the Subscription Agreement and other
documentation relating to the issuance of the Processing Plus
Debentures. Subject to and upon the Effective Time of this Agreement,
Saratoga agrees to assume the liabilities and obligations of
Processing Plus under the Processing Plus Debentures including the
obligation to pay principal and interest on the Debentures. On or
prior to the Effective Time, Processing Plus shall secure, in writing,
from all of the holders of the Processing Plus Debentures, their
consent to Saratoga's assumption of Processing Plus' liability and
obligations under the terms and conditions of the Processing Plus
Debentures.
d) Processing Plus shall deliver the legal opinion of its counsel,
substantially in the form annexed hereto as Exhibit 7.01 (d) and
Saratoga shall deliver the legal opinion of its counsel, substantially
in the form annexed hereto as Exhibit 7.01(d)(1).
E-11
e) At the Effective Time, Processing Plus shall have executed all
agreements, documents and instruments necessary to effectuate the
issuance of the Processing Plus Debentures.
f) An Employment Agreement between Saratoga or its wholly-owned
subsidiary, Saratoga Telcom Acquisitions Corp. and Xxxx Xxxxxx shall
have been executed in the form attached hereto as Exhibit 7.01 (f).
g) As set forth in Exhibit 4.06 to the Agreement, Processing Plus has
debt obligations ("debt") totaling $36,750 as of the Effective Time.
The payment terms of Processing Plus' debt obligations are combined
with the payment terms of Insider's debt obligations totaling
approximately $64,000, under a negotiated consolidated debt payment
arrangement with the creditors. The debt obligations of Processing
Plus and Insider aggregating approximately $100,000 are payable in
monthly installments of $3,000 per month or more, including interest,
until paid. Such monthly payments are applied applied approximately
35% to Processing Plus' debt obligations and approximately 65% to
Insider's debt obligations. Gene and Xxxxx Xxxxxx are personal
guarantors of the payments under the Processing Plus' and Insider's
consolidated debt payment arrangment. Saratoga hereby agrees to pay a
minimum of $3,000 per month during the twelve (12) month term of the
Insider Option Agreement referred to in Exhibit 7.01(i). The portion
of the monthly $3,000 payment paid to the Insider's debt obligation
referred to herein shall be treated as an advance to Insider and a
reduction of Insider's liabilities. Subject to, and upon exercise of
the Insider Option, Saratoga shall agree to continue to pay the $3,000
monthly payment until the Processing Plus and Insider consolidated
debt obligations referred to herein are fully paid. Xxxx Xxxxxx shall
pay any and all indebtedness of Processing Plus in excess of $36,750
in the aggregate as of the Effective Time. In the event Saratoga pays
excess indebtedness, if any, Saratoga shall have the right to deduct
such amounts from salaries due and payable or which become due and
payable to Retske under the Employment Agreement referred to in
Article 7.01(f) of this Agreement. h) Each party shall have completed
its due diligence review and notified the other in writing of the
satisfaction or removal of the due diligence review condition in
accordance with Article 6.03 of this Agreement. i) On or prior to the
Effective Time, Saratoga shall have executed with all parties thereto
an Agreement for Purchase and Sale of Stock between Saratoga, Insider
and Retske ("Insider Option Agreement") pursuant to which Saratoga
shall have the right to acquire, among other things, all of the issued
and outstanding shares of common stock of Insider not acquired
hereunder from Retske. Such Insider Option Agreement shall have been
executed in the form annexed hereto as Exhibit 7.01(i).
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.01 EFFECTIVE TIME AND TERMINATION. Except as otherwise set forth in this
Section 8.01, this Agreement shall close by no later than 11:59 p.m.
Seattle, Washington, January 19, 2001, provided that either party may
extend this Agreement for an additional seven (7) day period by written
notice to the other party prior to the Effective Time. This Agreement shall
terminate if not closed by 11:59 p.m., Seattle, Washington, January 26,
2001. Notwithstanding the foregoing and/or the approval of this Agreement
by the shareholders of Processing Plus and the Board of Directors of
Saratoga, this Agreement may be terminated and the Effective Time
contemplated hereby may be abandoned at any time prior to the Effective
Time:
E-12
a) By mutual written consent, duly authorized by their respective Boards
of Directors, by Saratoga and Processing Plus;
b) By either Saratoga or Processing Plus:
(i) if any court of competent jurisdiction or any other governmental
body shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
permanently prohibiting the Effective Time and such order,
decree, ruling or other action shall have become final and
non-appealable; (ii) if, upon a vote at a duly held meeting or
upon any adjournment thereof, the shareholders of Processing Plus
and the Board of Directors of Saratoga shall have failed to give
any required approvals; or c) By Saratoga if Processing Plus
shall have breached any of its representations and warranties or
covenants contained herein and if such breach or breaches, either
individually or in the aggregate, will have, or are reasonably
likely to have, a material adverse effect on the business,
results of operations, financial condition or prospects of
Processing Plus (an "Processing Plus Material Adverse Effect"),
unless, in the case of a breach of covenant, such failure to
perform has been caused by a breach of this Agreement by
Saratoga. d) By Processing Plus if Saratoga shall have breached
any of its representations and warranties and such breach or
breaches, either individually or in the aggregate, will have, or
are reasonably likely to have, a Saratoga Material Adverse
Effect, or if a Saratoga shall have breached in any material
respect any of its covenants contained herein, unless, in the
case of a breach of any covenant, such failure to perform has
been caused by a breach of this Agreement by Processing Plus;
8.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.01, this
Agreement, except for the obligations of the parties pursuant to
this Section 8.02 and the provisions of Section 6.06, shall
forthwith become void and have no effect, without any liability
on the part of any party or its directors, officers or
shareholders; provided that nothing in this Section 8.02 shall
relieve any party to this Agreement of liability for breach of
this Agreement.
8.03 AMENDMENT. To the extent permitted by applicable law, this Agreement may be
amended by the parties, at any time before or after approval of this
Agreement and the share exchange by the shareholders of Processing Plus
but, after any such shareholder approval, no amendment shall be made that
by law requires further approval of such shareholders without the approval
of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
E-13
8.04 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any
other applicable party or in any document, certificate or writing delivered
pursuant hereto by any other applicable party, or (iii) subject to the
terms hereof, waive compliance with any of the agreements or conditions of
the other parties contained herein. Any agreement on the part of any party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of a
party to this Agreement to assert any of its rights under this Agreement
shall not constitute a waiver of those rights.
8.05 PROCEDURE FOR CLOSING, TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 8.01, an amendment of
this Agreement pursuant to Section 8.03 or an extension or waiver pursuant
to Section 8.04 shall, in order to be effective, require (a) in the case of
Saratoga, action by its Board of Directors or the duly authorized designee
of its Board of Directors and (b) in the case of Processing Plus, action by
its Board of Directors.
ARTICLE IX
MISCELLANEOUS
9.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to be only
conditions to the Effective Time and shall not survive the Effective Time,
provided, however, that the representations and warranties contained in
Section 1.04, and in this Article IX shall survive the Effective Time.
9.02 ASSIGNMENT, BINDING EFFECT; BENEFIT; ENTIRE AGREEMENT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties except
that Saratoga shall have the right, at its sole discretion, to assign and
transfer this Agreement to a subsidiary company wholly owned by Saratoga.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. This Agreement and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect thereto.
No addition to or modification of any provision of this Agreement shall be
binding upon any party hereto unless made in writing and signed by all
parties hereto.
9.03 SEVERABILITY. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or otherwise affecting the validity or enforceability of any
of the terms or provisions of this Agreement in any other jurisdiction. If
any provision, clause, section or part of this Agreement is so broad as to
be unenforceable, the provision, clause, section or part shall be
interpreted to be only so broad as is enforceable, and all other
provisions, clauses, sections or parts of this Agreement which can be
effective without such unenforceable provision, clause, section or part
shall, nevertheless, remain in full force and effect.
E-14
9.04 NOTICES. Any notice required to be given hereunder shall be sufficient if
in writing, and sent by facsimile transmission and by courier service (with
proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
If to Processing Plus, to
Processing Plus, Inc.
Xxxx Xxxxxx, President
0000 X. Xxxxxxx Xxxxx, Xxx. 000
Xxxxxxxxx Xxxxx, XX 00000
Phone (000) 000-0000
Fax (000) 000-0000
If to Gene and Xxxxx Xxxxxx
Xxxxx Xxxxxx
0000 X. Xxxxxxx Xxxxx, Xxx. 000
Xxxxxxxxx Xxxxx, XX 00000
Phone (000) 000-0000
Fax (000) 000-0000
If to Saratoga, to
Saratoga International Holdings Corp.
0000 000xx Xxxxxx XX
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx, President
Fax: 000-000-0000
With a copy to:
Xxxxxx X. Xxxxxxxxx
Attorney At Law
S.W. Fifth Avenue, Suite 1300
Xxxxxxxx, XX 00000-0000
Fax: 000-000-0000
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the
date it is telecommunicated, personally delivered or mailed.
9.05 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington without regard to its
rules of conflict of laws.
9.06 ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled under the with rules of
the American Arbitration Association with venue in King County Washington.
E-15
9.07 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
9.08 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may
consist of a number of copies of this Agreement each of which may be signed
by less than all of the parties hereto, but together all such copies shall
constitute one and the same instrument. Execution and delivery of this
Agreement by exchange of facsimile copies bearing the facsimile signature
of a party hereto shall constitute a valid and binding execution and
delivery of this Agreement by such party. Such facsimile copies shall
constitute enforceable original documents.
9.09 CERTAIN DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings ascribed to them below:
a) "Affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first-mentioned person.
b) "Control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a person, whether through ownership of voting securities,
by contract, or otherwise.
c) "Person" means a natural person, company, corporation, partnership,
joint venture, association, trust, unincorporated organization or
other entity. d) "Subsidiary" of any person means a person in which
such first referenced person owns directly or indirectly an amount of
the voting securities, other voting ownership or voting partnership
interest which is sufficient to elect at least a majority of its Board
of directors or other governing body (or, if there are no such voting
interest, owns directly or indirectly 50% or more of the equity
interest).
9.10 WAIVERS. Except as provided in this Agreement, no action taken pursuant to
this Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties,
covenants or agreements contained in the Agreement. The waiver by any party
hereto to a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
9.11 U.S. FUNDS. All monetary amounts set forth herein are stated in currency of
the Untied States of America unless otherwise specifically stated.
9.12 INCORPORATION OF EXHIBITS. All Exhibits and annexes attached hereto and
referred to herein are hereby incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
E-16
9.13 INTERPRETATION. In this Agreement, unless the context otherwise requires,
words describing the singular number shall include the plural and vice
versa, words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and
vice versa.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its respective officers thereunto duly authorized, all as of
the day and year first above written.
SARATOGA INTERNATIONAL HOLDINGS CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, President and CEO
PROCESSING PLUS, INC.
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx, President
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx, Individually
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, Individually
E-17
EXHIBITS TO SHARE EXCHANGE AGREEMENT
BETWEEN SARATOGA INTERNATIONAL HOLDINGS CORP.
AND PROCESSING PLUS, INC.
Exhibit 1.03 (c) Shares and Warrants to be issued to Processing
Plus' shareholders
Exhibit 1.03 (d) Sample Warrant Certificate and Agreement
Exhibit 1.04 (b) Registration Rights Agreement
Exhibit 3.02 Audited Financial Statements of Saratoga International
Holdings Corp. as of and for the year ended
October 31, 1999
Exhibit 4.06 List of Processing Plus' Liabilities
Exhibit 4.06 (a) List of Processing Plus' Assets
Exhibit 4.07 Processing Plus Material Contracts
Exhibit 7.01 (a) Consent of Processing Plus' Directors
Exhibit 7.01 (a) (1) Consent of Processing Plus' Shareholders
Exhibit 7.01 (a) (2) Resolution of the Board of Directors of Saratoga
International Holdings Corp.
Exhibit 7.01 (d) Legal Opinion of Processing Plus' General Counsel
Exhibit 7.01 (d) (1) Legal Opinion of Saratoga's General Counsel
Exhibit 7.01 (h) Employment Agreement with Xxxx Xxxxxx
Exhibit 7.01 (i) Insider Option Agreement
E-18
