EXHIBIT 8(C)
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AGREEMENT AND PLAN OF REORGANIZATION
Between and Among
OnCOURSE TECHNOLOGIES, INC.
(a Nevada business corporation)
as the Parent
CIMTRONICS, INC.
(an Arizona business corporation)
as the Subsidiary
and
E. XXXXXXX XXXXXXXX and XXXXXX X. XXXXXXXX
(individual residents of Arizona)
as the Subsidiary Shareholders
Dated: September 30, 1999
AGREEMENT AND PLAN OF REORGANIZATION
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AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement"), dated as
of September 30, 1999, between and among OnCOURSE TECHNOLOGIES, INC., a Nevada
corporation ("Parent"), CIMTRONICS, INC., an Arizona corporation ("Subsidiary"),
and E. XXXXXXX XXXXXXXX and XXXXXX X. XXXXXXXX, individual residents of Arizona
and all of the shareholders of Subsidiary (the "Subsidiary Shareholders").
RECITALS
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A. OnCOURSE TECHNOLOGIES, INC., the acquiring corporation, is a Nevada
business corporation incorporated under and in accordance with the provisions of
the Nevada Private Corporations Law (NRS SectionSection 78.010 et seq.). The
address of its current registered office in Nevada is Resident Agents of Nevada,
Inc., 000 X. Xxxxxx, Xxxxx 0, Xxxxxx Xxxx, Xxxxxx, 00000.
B. CIMTRONICS, INC., the acquired corporation, is an Arizona business
corporation incorporated under and in accordance with the provisions of the
Arizona Business Corporation Act (ARS SectionSection 10-101 et seq.). The
address of its current registered office in Arizona is 0000 Xxxx Xxxxxxx Xxxxx,
Xxxxx X000, Xxxxxxxxxx, Xxxxxxx, 00000.
C. Parent, Subsidiary and Subsidiary Shareholders desire that Parent
acquire Subsidiary by the exchange of some of the stock of Parent for all of the
outstanding shares of stock of Subsidiary (the "Exchange").
D. The Boards of Directors of Parent and Subsidiary have approved the
Exchange and recommended it to their respective shareholders upon the terms and
subject to the conditions set forth herein and in the Plan of Exchange, Exhibit
"A" attached hereto and made a part hereof (the "Plan of Exchange").
E. For federal income tax purposes, it is intended that the Exchange
shall qualify as a tax free reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
F. The parties to this Reorganization Agreement desire to establish the
manner and basis of exchanging the shares of Subsidiary for the shares of
Parent, and each of the parties hereto desires to make certain representations,
warranties and agreements in connection with the Exchange and also to prescribe
various conditions thereto.
AGREEMENT
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE EXCHANGE
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Section 1.01 The Exchange
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(a) At the Effective Time (as defined in Section 1.02) and subject to the
terms and conditions of this Reorganization Agreement and the Plan of Exchange,
Subsidiary Shareholders shall endorse and deliver to Parent Five Hundred (500)
shares of voting common stock of Subsidiary, representing all of its then issued
and outstanding shares (the "Subsidiary Common Stock"). On the same date, Parent
shall issue and deliver to Subsidiary Shareholders, as tenants by the
entireties, Three Hundred Seven Thousand Six Hundred and Ninety-two (307,692)
shares of voting common stock of Parent (the "Parent Common Stock").
(b) On and after the Effective Time, Subsidiary will continue to be
governed by the laws of the State of Arizona, and the separate corporate
existence of Subsidiary and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and liabilities as a
corporation organized under the Arizona Business Corporation Act, will continue
unaffected by the Exchange.
(c) The Exchange will have the effects specified by the Arizona Business
Corporation Act and the Nevada Private Corporations Law.
Section 1.02 Effective Time. As soon as practicable following fulfillment
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of the conditions specified in Sections 4.05 and 5.05 hereof and provided that
this Reorganization Agreement has not been terminated or abandoned pursuant to
Section 7.01 hereof or the Plan of Exchange has not been terminated or abandoned
pursuant to Section 3.01 thereof, Parent and Subsidiary will execute and cause
Articles of Exchange substantially in the form of Exhibit "B" attached hereto
and made a part hereof (the "Articles of Exchange"), to be filed with the
Secretary of State of Nevada as provided in Section 200 of Chapter 92A of the
Nevada Private Corporations Law (NRS Section92A.200) and with the Arizona
Corporation Commission as provided in Section 10-122 of the Arizona Business
Corporation Act (ARS Section10-122). The Articles of Exchange and the Plan of
Exchange shall become effective on September 30, 1999 at 11:59:59 PM Pacific
Standard Time (the "Effective Time") unless otherwise agreed by the parties
hereto in writing prior to such Effective Time.
Section 1.03 Restricted Securities. The Parent Common Stock to be issued
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hereunder, upon issuance and transfer to the Subsidiary Shareholders, will not
have been "registered" and therefore will be "restricted securities", as those
terms are used under the Securities Act of 1933, as amended (the "1933 Act"),
and the rules and regulations thereunder. By execution of this Reorganization
Agreement, each of the Subsidiary Shareholders agrees, represents and warrants
that (a) his or her acquisition of the Parent Common Stock hereunder is for
investment only, for his or her own account (both of record and beneficially)
and not with a view to "distribution" as that term is used under the 1933 Act;
(b) that his or her Parent Common Stock may not be transferred or disposed of
unless the Parent receives an opinion of Subsidiary Shareholders' counsel, at
the request of the President of Parent, satisfactory to Parent and its counsel,
that such transfer or other disposition can be made without registration under
the 1933 Act and all applicable federal and state securities laws; and (c) that
he or she will not sell or otherwise dispose of any of his or her Parent Common
Stock without compliance with this Reorganization Agreement and either
registration under or other compliance with the aforesaid Act, all other
applicable federal and state securities laws, and the rules and regulations
thereunder. Parent Common Stock to be issued hereunder shall bear a legend
substantially as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE TRANSFERRED UNLESS THE CORPORATION RECEIVES
AN OPINION OF COUNSEL, AT THE REQUEST OF THE PRESIDENT, SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH TRANSFER OR OTHER DISPOSITION CAN BE
MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ALL
APPLICABLE FEDERAL AND STATE SECURITIES LAWS. BY ACQUIRING THE SHARES OF
STOCK REPRESENTED BY THIS CERTIFICATE, THE STOCKHOLDER REPRESENTS THAT HE
HAS ACQUIRED SUCH SHARES OF STOCK FOR INVESTMENT AND THAT HE WILL NOT SELL
OR OTHERWISE DISPOSE OF THE SHARES OF STOCK WITHOUT REGISTRATION OR OTHER
COMPLIANCE WITH THE AFORESAID ACT AND THE RULES AND REGULATIONS THEREUNDER.
ARTICLE II
THE SUBSIDIARY
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Section 2.01 Articles of Incorporation. The Articles of Incorporation of
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Subsidiary as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of Subsidiary immediately after the Effective Time
until amended in accordance with the Arizona Business Corporation Act.
Section 2.02 Bylaws. The Bylaws of Subsidiary as in effect immediately
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prior to the Effective Time shall be the Bylaws of the Subsidiary immediately
after the Effective Time until amended in accordance with the provisions of said
Bylaws and the Articles of Incorporation of the Subsidiary.
Section 2.03 Board of Directors. The sole Director of Subsidiary
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immediately prior to the Effective Time shall continue to be the sole Director
of Subsidiary immediately after the Effective Time until his successor or
successors shall be elected and duly qualified, or until his death, resignation
or removal.
ARTICLE III
CONTINGENT CONSIDERATION
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Section 3.01 Contingent Consideration. Within ninety (90) days following
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the end of each of the five (5) calendar years after the Effective Time (the
"Contingent Consideration Period"), if the Subsidiary shall have Net Profits for
the immediately preceding calendar year, then additional shares of Parent Common
Stock aggregating in Fair Market Value, as defined in Section 3.03 below, equal
to such Net Profits shall be issued by Parent and delivered to Subsidiary
Shareholders (the "Contingent Consideration"). Any shares not earned by
application of this provision by the end of the Contingent Consideration Period
shall not be delivered. The rights of Subsidiary Shareholders to receive such
Contingent Consideration shall not be assignable. The maximum number of shares
of Parent Common Stock which may be issued as Contingent Consideration hereunder
shall be Three Hundred Seven Thousand Six Hundred and Ninety-two (307,692)
shares.
Section 3.02 Sale of Business Contingency. If at any time during the
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Contingent Consideration Period, Parent or Subsidiary sell or in any other
manner transfer or convey all or a substantial part of Parent's interest in
Subsidiary, substantially all of the assets of Subsidiary, or substantially all
of the Subsidiary business, at a time when the number of additional shares of
Parent Common Stock issued to Subsidiary Shareholders pursuant to Section 3.01
above aggregates less than Three Hundred Seven Thousand Six Hundred and Ninety-
two (307,692) shares, Parent shall forthwith, and prior to or contemporaneous
with any such transfer or conveyance, issue and deliver to Subsidiary
Shareholders such additional shares of Parent Common Stock as shall be required
to aggregate Three Hundred Seven Thousand Six Hundred and Ninety-two (307,692)
shares of Contingent Consideration to Subsidiary Shareholders.
Section 3.03 "Fair Market Value" Defined. For the purpose of Section 3.01
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above, the "Fair Market Value" of Parent Common Stock for each calendar year
shall be determined as of the last day of such calendar year in accordance with
this Section 3.03. The determination of Fair Market Value for each year of the
Contingent Consideration Period shall be made by independent certified public
accountants regularly employed by Parent for the purpose of preparing the
financial reports of Parent. The Fair Market Value of Parent Common Stock
(whether listed or unlisted) as of any valuation date shall be the mean between
the highest and lowest selling prices quoted on the valuation date. If only the
closing selling prices are available, then the Fair Market Value shall be the
mean between the quoted closing selling price on the valuation date and on the
trading day before the valuation date. If there were no sales on the valuation
date, the Fair Market Value shall be the mean between the highest and lowest
selling prices on the nearest trading date before and the nearest trading date
after the valuation date, adding or subtracting (whichever applies) the prorated
part of the difference to or from the mean price figured for the nearest trading
date before the valuation date. If no actual sales were made within six (6)
months of the valuation date, the same computation shall be made using the mean
between the bona fide bid and asked prices instead of sales prices. If actual
sales prices or bona fide bid and asked prices are available within six (6)
months before the valuation date but not after the valuation date, or vice
versa, the mean between the highest and lowest sales prices or bid and asked
prices shall be used as the Fair Market Value. If the Parent Common Stock was
listed on more than one stock exchange, the above computation shall use either
the records of the exchange where the stock is principally traded or the
composite listing of combined exchanges, if available, in a publication of
general circulation. In the event none of the foregoing is applicable, the Fair
Market Value of Parent Common Stock shall be fifteen (15) times its consolidated
earnings per share as of the valuation date.
Section 3.04 "Net Profits" Defined. For the purpose of this
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Reorganization Agreement, "Net Profits" for each calendar year shall be as
defined and computed in accordance with generally accepted accounting principles
applied on a consistent basis from year to year. The determination of Net
Profits shall include net losses from any one or more years of the Contingent
Consideration Period, but shall not include net losses prior to such Contingent
Consideration Period. The determination of Net Profits for each year of the
Contingent Consideration Period and the computation of Contingent Consideration
shall be made by independent certified public accountants regularly employed by
Parent for the purpose of preparing the financial reports of Parent. The term
"Net Profits" shall include the Net Profits of Subsidiary and the Net Profits of
such other subsidiary or subsidiaries and such division or divisions of Parent
as are then carrying on any part of the business formerly carried on by
Subsidiary (herein referred to as the Subsidiary Business) to the extent such
Net Profits of such subsidiary or subsidiaries and such division or divisions of
Parent derived from the Subsidiary Business. If Parent or any division,
subsidiary, or affiliate of Parent or Subsidiary in any manner directly or
indirectly sells, deals in or manufactures software or performs services which
were not previously sold, dealt in, manufactured or performed by Parent or such
division, subsidiary, or affiliate of Parent but which were previously sold,
dealt in, manufactured or performed by Subsidiary, or which are marketed under
the trade name "Cimtronics", or any product or service trade name utilized by
Subsidiary, but not utilized by Parent or any division, subsidiary, or affiliate
of Parent, prior to the Effective Time, or any variant thereof, Parent or such
division, subsidiary, or affiliate shall be conclusively presumed to be carrying
on a part of Subsidiary Business.
Section 3.05 Reports; Arbitration of Disputes. The Subsidiary
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Shareholders shall be entitled to receive on or before April 15 of each year of
the Contingent Consideration Period and the next calendar year following the end
of the Contingent Consideration Period, or until Parent shall have issued and
delivered to Subsidiary Shareholders the maximum Contingent Consideration,
whichever is the earlier, (a) financial statements of Subsidiary, including at
least a balance sheet and an income statement as of the end of each calendar
year, prepared on the basis of generally accepted accounting principles
consistently applied, which may be consolidated statements of Parent,
Subsidiary, and any other subsidiaries of Parent provided that such financial
statements include a balance sheet and income statement for the Subsidiary; and
(b) an appropriate written report prepared by the independent certified public
accountants of Parent, which report shall show the Fair Market Value of Parent
Common Stock, computed in accordance with Section 3.03 hereof, and Net Profits
for the calendar year then ended computed in accordance with Section 3.01 and
3.02 hereof, as well as a statement of the number of shares of Parent Common
Stock previously issued to Subsidiary Shareholders each year as Contingent
Consideration and the number of shares of Parent Common Stock to be issued to
Subsidiary Shareholders for the immediately preceding calendar year. The
computations made by such independent certified public accountants shall be
final and conclusive unless one or both Subsidiary Shareholders shall, by
written notice to Parent, within thirty (30) days after receipt of any such
statement, have made objection thereto. In the event the objecting Subsidiary
Shareholder(s) and Parent are unable to resolve any disputes as to the proper
amount of Net Profits for any one year, within thirty (30) days after receipt by
Parent of the written objection by the objecting Subsidiary Shareholder(s), the
objecting Subsidiary Shareholder(s) and/or Parent may submit such dispute to
arbitration in Carson City, Nevada (or such other place as Parent and the
objecting Subsidiary Shareholder(s) may mutually agree) under the rules then
obtaining of the American Arbitration Association, and judgment upon any award
in such arbitration may be entered in any court having jurisdiction thereof.
Section 3.06 Changes in Capital Structure. In the event there is any
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change in the Parent Common Stock by reason of a stock dividend issued with
respect to Parent Common Stock, or a recapitalization, reclassification, stock
split, or combination of shares with respect to such Parent Common Stock, or if
the outstanding Parent Common Stock should, by reason of a merger,
consolidation, liquidation or other reorganization, be exchanged for other
shares of Parent or of another corporation which is a party to such transaction,
the shares to be issued and delivered to Subsidiary Shareholders as Contingent
Consideration under Sections 3.01 and 3.02 of this Reorganization Agreement
shall be the shares into or for which the Parent Common Stock to be issued and
delivered under this Reorganization Agreement would have been changed or
exchanged had such shares already been issued and delivered to Subsidiary
Shareholders and become outstanding at the time of such event.
Section 3.07 Termination of Contingent Consideration. In the event of
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termination of either or both of the Employment Agreements (as defined in
Section 6.02 below) for any reason, the Contingent Consideration Period shall
automatically terminate as of the first (1st) day of the calendar year of the
termination of the Employment Agreement(s), and any Contingent Consideration not
earned prior to such date shall terminate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
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Parent represents and warrants to Subsidiary, as of the date hereof and the
Effective Time, which representations and warranties shall survive the Exchange,
as follows:
Section 4.01 Organization. Parent is duly organized and validly exists as
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a business corporation under the laws of the State of Nevada, and it is duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted. The character and location of the
assets now owned or regularly leased by Parent in the conduct of its business
and the nature of the business as now transacted by it do not require
qualification as a foreign corporation in any jurisdiction in which it is not so
registered. As soon as practicable after the execution of this Reorganization
Agreement, but in any event within five (5) days after execution hereof, Parent
will deliver to Subsidiary true and correct copies of its Articles of
Incorporation and Bylaws, which Articles of Incorporation and Bylaws shall not
be amended prior to the Effective Time without the prior written consent of
Subsidiary and Subsidiary Shareholders.
Section 4.02 Capital Stock. The authorized capital stock of Parent
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consists of one hundred million (100,000,000) shares of common stock, par value
one tenth of a cent ($0.001) per share, of which Twenty-two Million Five Hundred
Eighteen Thousand and One (22,518,001) shares are validly issued, fully paid,
non-assessable and outstanding and none of which are issued in violation of the
preemptive rights of any shareholder. In addition, Parent has issued and
outstanding four hundred thousand (400,000) Redeemable Common Stock Purchase
Warrants entitling each Warrant Holder to purchase on or before December 31,
1999 one (1) share of Parent common stock per Purchase Warrant for the sum of
one dollar and fifty cents ($1.50). Secondly, pursuant to Article IV of an
Agreement and Plan of Reorganization dated July 23, 1998, Parent granted four
million (4,000,000) shares of its voting common stock as contingent
consideration to the Majority Target Shareholder and Minority Target Shareholder
defined therein. Lastly, pursuant to Article III of an Agreement and Plan of
Reorganization dated December 30, 1998, Parent granted three hundred thousand
(300,000) shares of its voting common stock as contingent consideration to the
Subsidiary Shareholder defined therein. There are no other securities,
subscriptive rights, warrants, options, contracts, understandings or commitments
providing for issuance of, or granting rights to acquire any capital stock of
Parent or securities convertible into or exchangeable for capital stock of
Parent.
Section 4.03 Financial Statements. Parent has delivered to Subsidiary
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copies of its financial statements for the period(s) indicated therein
("Parent's Financial Statements"). Parent's Financial Statements present fairly
the financial condition of Parent as of the dates indicated thereon.
Section 4.04 Assets and Business. The business of Parent is substantially
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as described in Parent's Financial Statements. To the knowledge and belief of
Parent, Parent has good and marketable title to all properties, assets and
leasehold estates, real, personal and mixed, tangible and intangible (including
by way of example and not limitation all patents, copyrights and other
intellectual property), owned by or used in its business, and which is material
to the operation of that business including those reflected on Parent's
Financial Statements (except as since sold or otherwise disposed of in the
ordinary course of business), subject to no mortgage, pledge, lien, conditional
sales agreement, encumbrance or charge, except for: (a) liens reflected on
Parent's Financial Statements as securing specified liabilities (with respect to
which no default exists); (b) liens for current taxes and assessments not in
default; and (c) liens arising by operation of law of which, except to the
extent disclosed on Parent's Financial Statements, Parent has no knowledge of
any such liens existing.
Section 4.05 Authority. On or before the Effective Time, Parent will have
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taken all necessary legal action to approve the execution and delivery of this
Reorganization Agreement and the performance of its obligations hereunder and
all transactions contemplated hereby will have been duly authorized by all
requisite corporate action on the part of Parent and the Directors and
Shareholders of Parent, and no further authorization, approval or consent is or
shall be necessary.
Section 4.06 Legal Actions. There are no legal actions, suits,
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arbitrations, or other legal, administrative or other governmental proceedings
pending or threatened against Parent, its properties, assets or business, and
Parent is unaware of any fact which might result in such action, suit,
arbitration or other proceeding.
Section 4.07 Operation Pending Closing. On and after execution hereof and
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until the Effective Time, Parent will not enter into any transaction or perform
any act that would constitute a material adverse breach of the representations,
warranties or agreements contained herein and Parent and its officers and
employees, will comply with all applicable material provisions of this
Reorganization Agreement. On and after execution hereof and until the Effective
Time:
(a) Parent will afford to the officers and authorized representatives of
Subsidiary access to the plants, properties, books and records of Parent
and will furnish Subsidiary with such additional financial and operating
data and other information as to the business and properties of the Parent
as Subsidiary may from time to time reasonably request.
(b) Parent will cooperate with Subsidiary, its representatives and counsel
in the preparation and execution of any documents or other material which
may be required in connection with the Exchange.
(c) Parent will: (1) carry on its business in substantially the same manner
as it has heretofore and not introduce any material new method of
management, operation or accounting; (2) maintain its properties and
facilities in as good working order and condition as at present, ordinary
wear and tear excepted; (3) perform all its material obligations under
agreements relating to or affecting its assets, properties and rights; (4)
keep in full force and effect present insurance policies or other
comparable insurance coverage; and (5) use its best efforts to maintain and
preserve its business organization intact, retain its present employees and
maintain its relationships with suppliers, customers and others having
business relations with it.
(d) Without the prior written consent of Subsidiary and Subsidiary
Shareholders, Parent will not: (1) make any change in its Articles of
Incorporation or Bylaws; (2) issue any securities; (3) declare or pay any
dividend or make any distribution in respect of its stock whether now or
hereafter outstanding, or purchase, redeem or otherwise acquire or retire
for value any shares of its stock; (4) enter into any contract or
commitment or incur any liability or make any capital expenditures except
in the normal course of business; (5) increase the compensation payable or
to become payable to any officer, employee or agent, or make any bonus
payment to any such person; (6) create, assume or permit to exist any
mortgage, pledge or other lien or encumbrance upon any assets or properties
whether now owned or hereafter acquired; (7) sell, assign, lease, license
or otherwise transfer or dispose of any property or equipment except in the
normal course of business; or (8) merge, consolidate or otherwise
reorganize or agree to merge or consolidate or otherwise reorganize with or
into any other corporation or entity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUBSIDIARY AND SUBSIDIARY SHAREHOLDER
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Subsidiary and each of the Subsidiary Shareholders jointly and severally
represent and warrant to Parent, as of the date hereof and the Effective Time,
which representations and warranties shall survive the Exchange, as follows:
Section 5.01 Organization. Subsidiary is duly organized and validly
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exists as a business corporation under the laws of the State of Arizona, and it
is duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted. The character and
location of the assets now owned or regularly leased by Subsidiary in the
conduct of its business and the nature of the business as now transacted by it
do not require qualification as a foreign corporation in any jurisdiction in
which it is not so registered. As soon as practicable after the execution of
this Reorganization Agreement, but in any event within five (5) days after
execution hereof, Subsidiary will deliver to Parent true and correct copies of
its Articles of Incorporation and Bylaws, which Articles of Incorporation and
Bylaws shall not be amended prior to the Effective Time without the prior
written consent of Parent. Subsidiary Shareholder E. Xxxxxxx Xxxxxxxx is the
sole director and Subsidiary Shareholders are all of the officers of Subsidiary.
Section 5.02 Capital Stock. The authorized capital stock of Subsidiary
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consists of One Hundred Thousand (100,000) shares of voting common stock, par
value One ($1.00) Dollar per share, of which Five Hundred (500) shares are
validly issued, fully paid, non-assessable and outstanding and none of which are
issued in violation of the preemptive rights of any shareholder. There are no
other securities, subscriptive rights, warrants, options, contracts,
understandings or commitments providing for issuance of, or granting rights to
acquire any capital stock of Subsidiary or securities convertible into or
exchangeable for capital stock of Subsidiary. Subsidiary Shareholders are all of
the shareholders of Subsidiary, owning Five Hundred (500) shares as joint
tenants.
Section 5.03 Financial Statements. Subsidiary has delivered to Parent
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copies of the its financial statements for the period(s) indicated therein
("Subsidiary's Financial Statements"). Subsidiary's Financial Statements present
fairly the financial condition of Subsidiary as of the dates indicated thereon.
Section 5.04 Assets and Business. The business of Subsidiary is
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substantially as described in Subsidiary's Financial Statements. To the
knowledge and belief of Subsidiary and Subsidiary Shareholders, except as
disclosed in writing to Parent prior to execution hereof, Subsidiary has good
and marketable title to all properties, assets and leasehold estates, real,
personal and mixed, tangible and intangible (including by way of example and not
limitation all patents, copyrights and other intellectual property), owned by or
used in its business, and which is material to the operation of that business
including those reflected on Subsidiary's Financial Statements (except as since
sold or otherwise disposed of in the ordinary course of business), subject to no
mortgage, pledge, lien, conditional sales agreement, encumbrance or charge,
except for: (1) liens reflected on Subsidiary's Financial Statements as securing
specified liabilities (with respect to which no default exists); (2) liens for
current taxes and assessments not in default; and (3) liens arising by operation
of law of which, except to the extent disclosed on Subsidiary's Financial
Statements, the Subsidiary and Subsidiary Shareholders have no knowledge of any
such liens existing. By way of example and not limitation, except as disclosed
in writing to Parent prior to execution hereof, Subsidiary is the exclusive
owner of any and all copyrights, patents, trade secrets and know how and other
proprietary rights relating to all software and computer products it produces
and sells.
Section 5.05 Authority. On or before the Effective Time, Subsidiary and
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Subsidiary Shareholders will have taken all necessary legal action to approve
the execution and delivery of this Reorganization Agreement and the performance
of their obligations hereunder and all transactions contemplated hereby will
have been duly authorized by all requisite corporate action on the part of
Subsidiary and the Directors and Shareholders of Subsidiary, and no further
authorization, approval or consent is or shall be necessary. Each of Subsidiary
Shareholders agrees to vote all of his or her Subsidiary Common Stock in favor
of the Plan of Exchange.
Section 5.06 Legal Actions. There are no legal actions, suits,
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arbitrations, or other legal, administrative or other governmental proceedings
pending or threatened against Subsidiary, its properties, assets or business,
and neither Subsidiary nor Subsidiary Shareholders is aware of any fact which
might result in such action, suit, arbitration or other proceeding.
Section 5.07 Operation Pending Closing. On and after execution hereof and
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until the Effective Time, Subsidiary will not, Subsidiary Shareholders will not,
and Subsidiary Shareholders will not cause Subsidiary to, enter into any
transaction or perform any act that would constitute a material adverse breach
of the representations, warranties or agreements contained herein and Subsidiary
Shareholders and Subsidiary and its officers and employees will comply, and
Subsidiary Shareholders will cause Subsidiary to comply, with all applicable
material provisions of this Reorganization Agreement. On and after execution
hereof and until the Effective Time:
(a) Subsidiary and Subsidiary Shareholders will afford to the officers and
authorized representatives of Parent access to the plants, properties,
books and records of Subsidiary and will furnish Parent with such
additional financial and operating data and other information as to the
business and properties of the Subsidiary as Parent may from time to time
reasonably request.
(b) Subsidiary and Subsidiary Shareholders will cooperate with Parent, its
representatives and counsel in the preparation and execution of any
documents or other material which may be required in connection with the
Exchange.
(c) Subsidiary will, and Subsidiary Shareholders will cause Subsidiary, to:
(1) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management,
operation or accounting; (2) maintain its properties and facilities in as
good working order and condition as at present, ordinary wear and tear
excepted; (3) perform all its material obligations under agreements
relating to or affecting its assets, properties and rights; (4) keep in
full force and effect present insurance policies or other comparable
insurance coverage; and (5) use its best efforts to maintain and preserve
its business organization intact, retain its present employees and maintain
its relationships with suppliers, customers and others having business
relations with it.
(d) Without the prior written consent of Parent, Subsidiary will not, and
Subsidiary Shareholders will not permit Subsidiary to: (1) make any change
in its Articles of Incorporation or Bylaws; (2) issue any securities; (3)
declare or pay any dividend or make any distribution in respect of its
stock whether now or hereafter outstanding, or purchase, redeem or
otherwise acquire or retire for value any shares of its stock; (4) enter
into any contract or commitment or incur any liability or make any capital
expenditures except in the normal course of business; (5) increase the
compensation payable or to become payable to any officer, employee or
agent, or make any bonus payment to any such person; (6) create, assume or
permit to exist any mortgage, pledge or other lien or encumbrance upon any
assets or properties whether now owned or hereafter acquired; (7) sell,
assign, lease, license or otherwise transfer or dispose of any property or
equipment except in the normal course of business; or (8) merge,
consolidate or otherwise reorganize or agree to merge or consolidate or
otherwise reorganize with or into any other corporation or entity.
ARTICLE VI
FURTHER AGREEMENTS
------------------
Section 6.01 Continuity of Interest Agreement. On the date hereof,
------------ --------------------------------
Subsidiary Shareholders, Subsidiary and Parent shall execute a continuity of
interest agreement (the "Continuity of Interest Agreement") substantially in the
form of Exhibit "C" attached hereto and made a part hereof.
Section 6.02 Employment Agreements. On the date hereof, each of the
------------ ---------------------
Subsidiary Shareholders, as Employee, and Subsidiary, as Employer shall execute
employment agreements (the "Employment Agreements") substantially in the form of
Exhibits "D" and "E" attached hereto and made a part hereof.
ARTICLE VII
TERMINATION AND AMENDMENT
-------------------------
Section 7.01 Termination. This Reorganization Agreement shall terminate
------------ -----------
in the event of and upon termination of the Plan of Exchange. Notwithstanding
shareholder approval of this Reorganization Agreement, this Reorganization
Agreement may be terminated at any time prior to the Effective Time by any party
by written notice to the other parties prior to the Effective Time. In the event
of termination of this Reorganization Agreement and the Plan of Exchange, the
Continuity of Interest Agreement and the Employment Agreements shall
automatically terminate. Each party agrees that, in the event this
Reorganization Agreement is terminated, it will not disclose to any individual,
corporation, partnership, joint venture, sole proprietorship, association,
syndicate, trust or other person or entity any confidential or proprietary
information (including but not limited to any software, customer lists, pricing
policies, profit margins, training and instruction manuals, reports,
recommendations, work-product, and other information) heretofore or hereafter
acquired by it concerning or relating to the operations, business or affairs of
the other parties. The purpose of this Section is to protect a party from the
disclosure of or use by another party of proprietary or other confidential
business information of a party obtained through this Reorganization Agreement,
but not to prevent any party from using, in connection with its future business
ventures, information which it previously knew or which is generally known in
the industry. The parties have examined in detail the restrictive covenants and
agreements contained in this Section and agree that the restraints imposed upon
the parties herein are not unduly harsh or oppressive, are a material inducement
to each of the parties to execute this Reorganization Agreement, and are
reasonable in order to protect the parties and their legitimate business
interests. Any breach or evasion of any term or provision of this Section shall
be deemed to have caused immediate and irreparable injury to the affected party
and will authorize recourse by such affected party to injunctive relief and/or
specific performance, as well as to any and all other legal or equitable
remedies to which such affected party may be entitled.
Section 7.02 Amendment. This Reorganization Agreement may be amended by
------------ ---------
the parties hereto, at any time before or after approval hereof by the
Subsidiary Shareholders, but only by an instrument in writing signed on behalf
of each of the parties hereto.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
Section 8.01 Waiver. At any time prior to the Effective Time, the parties
------------ ------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 8.02 Notices. All notices required or permitted to be given
------------ -------
hereunder shall be in writing and shall be deemed given when delivered in person
or sent by confirmed facsimile, or when received if given by Federal Express or
other nationally recognized overnight courier service, or five (5) business days
after being deposited in the United States mail, postage prepaid, registered or
certified mail, addressed to the applicable party as follows:
OnCOURSE TECHNOLOGIES, INC.
Attention: Xxxxxxx X. Xxxxx, President
0000 Xxxxx 000xx Xxxxxx
Xxx Xxxxxx, XX 00000
CIMTRONICS, INC.
Attention: E. Xxxxxxx Xxxxxxxx, President
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx X000
Xxxxxxxxxx, XX 00000
E. XXXXXXX XXXXXXXX and XXXXXX X. XXXXXXXX
0000 Xxxx Xxxxxxxxx Xxxx
#000
Xxxxxxxxxx, XX 00000
Section 8.03 Entire Agreement. This Reorganization Agreement, the Plan of
------------ ----------------
Exchange, the Articles of Exchange, the Continuity of Interest Agreement and the
Employment Agreements constitute the entire agreement between the parties as to
the Exchange and shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, successors and permitted
assigns. The parties and their respective affiliates make no representations or
warranties to each other, except as contained in this Reorganization Agreement,
and any and all prior representations and statements made by any party or its
representatives, whether verbally or in writing, are deemed to have been merged
into this Reorganization Agreement and the Plan of Exchange, it being intended
that no such prior representations or statements shall survive the execution and
delivery of this Reorganization Agreement and the Plan of Exchange.
Section 8.04 Non-Waiver. The failure in any one or more instances of a
------------ ----------
party to insist upon performance of any of the terms, covenants or conditions of
this Reorganization Agreement, to exercise any right or privilege conferred in
this Reorganization Agreement, or the waiver by said party of any breach of any
of the terms, covenants or conditions of this Reorganization Agreement, shall
not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred. No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving party.
Section 8.05 Counterparts. This Reorganization Agreement may be executed
------------ ------------
in counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
Section 8.06 Severability. The invalidity of any provision of this
------------ ------------
Reorganization Agreement or portion of a provision shall not affect the validity
of any other provision of this Reorganization Agreement or the remaining portion
of the applicable provision.
Section 8.07 Governing Law. This Reorganization Agreement and the Plan of
------------ -------------
Exchange shall be construed in accordance with the laws of the State of Nevada
applicable to contracts entered into and to be performed entirely therein,
excluding any conflict-of-laws rule or principle that might refer the governance
or the construction of hereof or thereof to the law of another jurisdiction,
and, as applicable, in accordance with the laws of the United States of America.
Section 8.08 Binding Effect; Benefit. This Reorganization Agreement shall
------------ -----------------------
inure to the benefit of and be binding upon the parties hereto and their
successors and permitted assigns. Nothing in this Reorganization Agreement,
express or implied, is intended to confer on any person other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Reorganization
Agreement, including, without limitation, third party beneficiary rights.
Section 8.09 Assignability. This Reorganization Agreement shall not be
------------ -------------
assignable by any party without the prior written consent of the other parties;
provided, however, that Parent shall have the right at the Effective Date or
subsequently thereto, to cause the stock of Subsidiary to be transferred to a
wholly-owned subsidiary of Parent.
Section 8.10 Headings. The description headings in this Reorganization
------------ --------
Agreement are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Reorganization
Agreement. Words used in this Reorganization Agreement, regardless of the gender
or number specifically used, shall be deemed to include any other gender,
masculine, feminine or neuter, and any other number, singular or plural, as the
context may require.
Section 8.11 Further Assurances. Subsidiary and Subsidiary Shareholders
------------ ------------------
shall at any time, or from time to time, as and when requested by Parent, or its
successors and assigns, execute and deliver, or cause to be executed and
delivered, all such conveyances, assignments, transfers, deeds or other
instruments, and shall take or cause to be taken such further action as Parent,
or its successors and assigns, may deem necessary or desirable in order to
evidence the Exchange contemplated herein and otherwise to carry out the intent
and purposes of this Reorganization Agreement.
Section 8.12 Contract Interpretation. This Reorganization Agreement shall
------------ -----------------------
not be more strictly construed against any party regardless of who was
responsible for the preparation hereof. For purposes of contract interpretation
and for the purpose of resolving any ambiguity herein and therein, the parties
agree that this Reorganization Agreement and the other Exchange documents were
prepared jointly by their respective attorneys.
Section 8.13 No Brokers. Parent represents, warrants and covenants with
------------ ----------
Subsidiary and Subsidiary Shareholders, and Subsidiary and Subsidiary
Shareholders jointly and severally represent, warrant and covenant with Parent,
that no brokerage fees or commissions or finders' fees have been incurred by any
of them or are payable, to the best of their respective knowledge, in connection
with the transactions contemplated by this Reorganization Agreement. Each of
Parent, Subsidiary and Subsidiary Shareholders shall bear their own legal,
accounting and other costs and expenses incurred in connection with this
Reorganization Agreement.
Section 8.14 Submission of Agreement. The submission of this
------------ -----------------------
Reorganization Agreement for examination does not constitute a reservation of or
option to the Exchange described herein, and this Reorganization Agreement shall
become effective only upon the execution hereof by all of Parent, Subsidiary and
Subsidiary Shareholders.
IN WITNESS WHEREOF, the Parent has caused this Reorganization Agreement to
be executed by its duly authorized officers on September 30, 1999 with the
intent to be legally bound.
PARENT:
------
ATTEST: OnCOURSE TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxx, III By: /s/ Xxxxxxx X. Xxxxx
(Corporate Seal) Its: President
IN WITNESS WHEREOF, the Subsidiary has caused this Reorganization Agreement
to be executed by its duly authorized officers on September 28, 1999 with the
intent to be legally bound.
SUBSIDIARY:
----------
ATTEST: CIMTRONICS, INC.
/s/ Xxxxxx Xxxxxxxx By: /s/ E. Xxxxxxx Xxxxxxxx
(Corporate Seal) Its: President
IN WITNESS WHEREOF, the Subsidiary Shareholders have executed this
Reorganization Agreement on September 28, 1999 with the intent to be legally
bound.
SUBSIDIARY SHAREHOLDERS:
-----------------------
WITNESS: E. XXXXXXX XXXXXXXX
/s/ Xxxx Xxxxx /s/ E. Xxxxxxx Xxxxxxxx
WITNESS: XXXXXX X. XXXXXXXX
/s/ Xxxx Xxxxx /s/ Xxxxxx X. Xxxxxxxx
