SHARE EXCHANGE AGREEMENT
by and between
I-TRACK, INC., A NEVADA CORPORATION
and
STRATEGIC COMMUNICATIONS PARTNERS, INC., A WYOMING CORPORATION
Dated as of March 17, 2003
TABLE OF CONTENTS
PAGE
THE SHARE EXCHANGE................................................................................................4
1.1 THE SHARE EXCHANGE..............................................................................4
1.2 NUMBER OF SHARES OF ITI COMMON STOCK............................................................4
1.3 CONVERSION OF SCP COMMON STOCK..................................................................4
1.4 CONVERSION OF SCP WARRANTS......................................................................5
1.5 EFFECTIVE TIME..................................................................................5
1.6 FRACTIONAL SHARES...............................................................................5
1.7 RESERVATION OF SHARES...........................................................................5
1.8 DISSENTING SHARES...............................................................................5
1.9 EXCHANGE OF CERTIFICATES........................................................................6
1.10 NO FURTHER OWNERSHIP RIGHTS IN SCP COMMON STOCK.................................................6
1.11 LOST, STOLEN OR DESTROYED CERTIFICATES..........................................................6
1.12 EXEMPTION FROM REGISTRATION.....................................................................6
1.13 REPORTING OF SHARE EXCHANGE.....................................................................6
1.14 BOARD OF DIRECTORS AND OFFICERS OF ITI..........................................................6
1.15 TAKING OF NECESSARY ACTION; FURTHER ACTION......................................................6
THE CLOSING.......................................................................................................7
2.1 TIME AND PLACE OF CLOSING.......................................................................7
2.2 OBLIGATIONS OF SCP AND THE SCP SHAREHOLDERS AT OR PRIOR TO THE CLOSING..........................7
2.3 OBLIGATIONS OF ITI AT OR PRIOR TO THE CLOSING...................................................7
REPRESENTATIONS AND WARRANTIES OF SCP.............................................................................8
3.1 ORGANIZATION AND QUALIFICATION..................................................................8
3.2 CAPITALIZATION..................................................................................8
3.3 SUBSIDIARIES AND AFFILIATES.....................................................................8
3.4 OPTIONS OR OTHER RIGHTS.........................................................................8
3.5 OWNERSHIP OF SHARES.............................................................................9
3.6 VALIDITY AND EXECUTION OF AGREEMENT.............................................................9
3.7 NO CONFLICT.....................................................................................9
3.8 CONSENTS AND APPROVALS..........................................................................9
3.9 VIOLATION OF LAWS, PERMITS, ETC.................................................................9
3.10 BOOKS AND RECORDS..............................................................................10
3.11 SCP FINANCIAL STATEMENTS.......................................................................10
3.12 UNDISCLOSED LIABILITIES........................................................................10
3.13 ASSETS; TITLE TO PROPERTY; ENCUMBRANCES........................................................10
3.14 TAXES..........................................................................................11
3.15 LITIGATION.....................................................................................11
3.16 CONTRACTS AND OTHER AGREEMENTS.................................................................12
3.17 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE.......................................................12
3.18 COMPENSATION ARRANGEMENTS; OFFICERS AND DIRECTORS..............................................12
3.19 ERISA..........................................................................................12
3.20 OPERATIONS.....................................................................................12
3.21 INTELLECTUAL PROPERTY..........................................................................14
3.22 EMPLOYEE RELATIONS.............................................................................14
3.23 INSURANCE......................................................................................14
3.24 LICENSES AND PERMITS...........................................................................14
3.25 NO MATERIAL ADVERSE CHANGE.....................................................................14
3.26 COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT..............................................15
3.27 BROKERS........................................................................................15
3.28 DISCLOSURE.....................................................................................15
3.29 SCP SHAREHOLDERS...............................................................................15
REPRESENTATIONS AND WARRANTIES OF ITI............................................................................16
4.1 ORGANIZATION AND QUALIFICATION.................................................................16
4.2 CAPITALIZATION.................................................................................16
4.3 SUBSIDIARIES AND AFFILIATES....................................................................16
4.4 OPTIONS OR OTHER RIGHTS........................................................................16
4.5 VALIDITY AND EXECUTION OF AGREEMENT............................................................16
4.6 NO CONFLICT....................................................................................17
4.7 CONSENTS AND APPROVALS.........................................................................17
4.8 VIOLATION OF LAWS, PERMITS, ETC................................................................17
4.9 BOOKS AND RECORDS..............................................................................17
4.10 ITI FINANCIAL STATEMENTS.......................................................................17
4.11 UNDISCLOSED LIABILITIES........................................................................18
4.12 ASSETS; TITLE TO PROPERTY; ENCUMBRANCES........................................................18
4.13 TAXES..........................................................................................18
4.14 LITIGATION.....................................................................................19
4.15 CONTRACTS AND OTHER AGREEMENTS.................................................................19
4.16 COMPENSATION ARRANGEMENTS; OFFICERS, DIRECTORS AND EMPLOYEES...................................19
4.17 ERISA..........................................................................................19
4.18 OPERATIONS.....................................................................................19
4.19 INTELLECTUAL PROPERTY..........................................................................22
4.20 INSURANCE......................................................................................22
4.21 LICENSES AND PERMITS...........................................................................22
4.22 NO MATERIAL ADVERSE CHANGE.....................................................................23
4.23 BROKERS........................................................................................23
4.24 APPROVAL OF SHARE EXCHANGE.....................................................................23
4.25 SEC REPORTING STATUS...........................................................................23
4.26 INVESTMENT COMPANY.............................................................................23
4.27 TRADING STATUS.................................................................................23
4.28 DISCLOSURE.....................................................................................24
4.29 COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT..............................................24
4.30 LOAN...........................................................................................24
ACTIONS PRIOR TO CLOSING.........................................................................................24
5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS......................................................24
5.2 CONDUCT AND PRESERVATION OF BUSINESS OF ITI....................................................25
5.3 CONDUCT AND PRESERVATION OF BUSINESS OF SCP....................................................25
5.4 ADVICE OF CHANGES..............................................................................25
5.5 NO NEGOTIATION.................................................................................26
5.6 OTC BULLETIN BOARD.............................................................................26
5.7 SEC REPORTS....................................................................................26
5.8 SHAREHOLDER APPROVALS..........................................................................26
5.9 OTHER AGREEMENTS...............................................................................26
CONDITIONS PRECEDENT TO CLOSING..................................................................................27
6.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ITI TO COMPLETE THE CLOSING.........................27
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SCP TO COMPLETE THE CLOSING.........................28
POST-CLOSING COVENANTS...........................................................................................30
7.1 FURTHER INFORMATION............................................................................30
7.2 RECORD RETENTION...............................................................................30
7.3 POST-CLOSING ASSISTANCE........................................................................30
7.4 SEC REPORTING..................................................................................30
7.5 S-8 REGISTRATION STATEMENT.....................................................................31
SURVIVAL; INDEMNIFICATION........................................................................................31
8.1 SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES.........................................31
TERMINATION OF AGREEMENT.........................................................................................31
9.1 TERMINATION....................................................................................31
9.2 SURVIVAL AFTER TERMINATION.....................................................................32
MISCELLANEOUS....................................................................................................32
10.1 EXPENSES.......................................................................................32
10.2 FURTHER ASSURANCES.............................................................................32
10.3 NOTICES........................................................................................32
10.4 ARBITRATION....................................................................................33
10.5 PUBLICITY......................................................................................34
10.6 ENTIRE AGREEMENT...............................................................................34
10.7 WAIVERS AND AMENDMENTS.........................................................................34
10.8 GOVERNING LAW..................................................................................34
10.9 BINDING EFFECT, NO ASSIGNMENT..................................................................34
10.10 COUNTERPARTS................................................................................34
10.11 EXHIBITS AND SCHEDULES......................................................................34
10.12 EFFECT OF DISCLOSURE ON SCHEDULES...........................................................34
10.13 HEADINGS....................................................................................35
10.14 SEVERABILITY OF PROVISIONS..................................................................35
SCHEDULE A - SCP SHAREHOLDERS
THIS SHARE EXCHANGE AGREEMENT is entered into as of March __, 2003, by and
between I-TRACK, INC., a Nevada corporation ("ITI"), and STRATEGIC
COMMUNICATIONS PARTNERS, INC., a Wyoming corporation ("SCP").
RECITALS
A. The Boards of Directors of each of ITI and SCP have determined that it
is in the best interests of ITI and SCP (as applicable) and their
respective shareholders that ITI acquire SCP through a statutory share
exchange under the laws of Nevada and Wyoming (the "SHARE EXCHANGE")
and, in furtherance thereof, have approved the Share Exchange, this
Agreement and the transactions contemplated hereby.
B. Pursuant to the Share Exchange, among other things, and subject to the
terms and conditions of this Agreement, all of the shares of capital
stock of SCP which are issued and outstanding immediately prior to the
Effective Time (as defined below) shall be converted into the right to
receive shares of common stock, $0.001 par value per share, of ITI
("ITI COMMON STOCK") on the terms and subject to the conditions set
forth herein.
C. ITI and SCP desire to make certain representations, warranties,
covenants and agreements in connection with the Share Exchange.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements hereinafter set forth, in accordance with the provisions of
applicable law, the parties hereby agree as follows:
ARTICLE I
THE SHARE EXCHANGE
1.1 THE SHARE EXCHANGE. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and the applicable
provisions of the corporate statutes of the State of Nevada and all
amendments and additions thereto (the "NEVADA LAW") and the corporate
statutes of the State of Wyoming and all amendments and additions
thereto (the "WYOMING LAW"), by virtue of the Share Exchange and
without any action on the part of ITI or the holder of any shares of
SCP Common Stock, the following shall occur:
1.2 NUMBER OF SHARES OF ITI COMMON STOCK. The stockholders of SCP named on
SCHEDULE A attached to this Agreement (the "SCP SHAREHOLDERS") shall
receive an aggregate of 19,000,000 shares of ITI Common Stock on a pro
rata basis based on their percentage shareholdings in SCP at the
Effective Date, and SCP shall become a wholly-owned subsidiary of ITI.
1.3 CONVERSION OF SCP COMMON STOCK. Each share of SCP Common Stock issued
and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares, as such term is defined in SECTION 1.8) will be
automatically cancelled and extinguished and
Share Exchange Agreement - Page 4
each share of SCP Common Stock that is issued and outstanding
immediately prior to the Effective Time shall be converted
automatically into the right to receive that amount which is 19,000,000
divided by the total number of shares of SCP Common Stock issued and
outstanding immediately prior to the Effective Time (the "EXCHANGE
RATIO").
1.4 CONVERSION OF SCP WARRANTS. Each warrant to purchase a share of SCP
Common Stock ("SCP WARRANT") issued and outstanding immediately prior
to the Effective Time will be automatically cancelled and extinguished
and each SCP Warrant that is issued and outstanding immediately prior
to the Effective Time shall be converted automatically into an
equivalent right to purchase a share of ITI Common Stock using the
Exchange Ratio (the "NEW ITI WARRANTS"). The shares underlying the New
ITI Warrants shall be in addition to the 19,000,000 share of ITI Common
Stock to be issued to the SCP Shareholders.
1.5 EFFECTIVE TIME. The Share Exchange will become effective upon the
proper filing of Articles of Share Exchange with the Secretary of State
of the States of Nevada and Wyoming, or such other jurisdictions as
required (the "EFFECTIVE TIME").
1.6 FRACTIONAL SHARES. No fraction of a share of ITI Common Stock will be
issued upon such exchange of shares of SCP Common Stock. Instead
amounts of shares will be rounded to the nearest whole number.
1.7 RESERVATION OF SHARES. ITI will reserve sufficient shares of ITI Common
Stock for issuance pursuant to SECTION 1.3.
1.8 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of SCP Common Stock held by a holder who
has demanded and perfected appraisal rights for such shares in
accordance with Wyoming Law and who, as of the Effective Time,
has not effectively withdrawn or lost such appraisal or
dissenters' rights ("DISSENTING SHARES") shall not be
converted into or represent a right to receive ITI Common
Stock pursuant to SECTIONS 1.2 and 1.3, but the holder thereof
shall only be entitled to such rights as are granted by
Wyoming Law.
(b) Notwithstanding the provisions of SECTION 1.8(A), if any
holder of shares of SCP Common Stock who demands appraisal of
such shares under Wyoming Law shall effectively withdraw or
lose (through failure to perfect or otherwise) the right to
appraisal, then, as of the later of (i) the Effective Time or
(ii) the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right
to receive ITI Common Stock as provided in SECTIONS 1.2 and
1.3, without interest thereon, in accordance with SECTIONS 1.2
and 1.3.
(c) SCP shall give ITI (i) prompt notice of its receipt of any
written demands for appraisal of any shares of ITI Common
Stock, withdrawals of such demands, and any other instruments
relating to the Share Exchange received by SCP and (ii) the
Share Exchange Agreement - Page 5
opportunity to participate in all negotiations and proceedings
with respect to demands for appraisal under Wyoming Law.
1.9 EXCHANGE OF CERTIFICATES. At Closing, or as soon as practicable
thereafter, ITI or its transfer agent shall issue a letter of
transmittal to each SCP Shareholder listed on SCHEDULE A hereto. After
having received a completed letter of transmittal and certificates
representing such SCP Shareholder's SCP Common Stock, the transfer
agent shall deliver certificates representing the whole number of
shares of ITI Common Stock into which such SCP Shareholder's shares of
SCP Common Stock shall have been exchanged as set forth herein.
1.10 NO FURTHER OWNERSHIP RIGHTS IN SCP COMMON STOCK. All shares of ITI
Common Stock issued upon the surrender for exchange of shares of SCP
Common Stock in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
shares of SCP Common Stock, and there shall be no further registration
of transfers on the records of SCP of shares of SCP Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates are presented to the ITI for any reason,
they shall be canceled and exchanged as provided in this Article 1.
1.11 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any certificates
evidencing shares of SCP Common Stock shall have been lost, stolen or
destroyed, the transfer agent for ITI shall issue certificates
representing such shares of ITI Common Stock in exchange for such lost,
stolen or destroyed certificates, upon the making of an affidavit of
that fact by the holder thereof.
1.12 EXEMPTION FROM REGISTRATION. The shares of ITI Common Stock to be
issued pursuant to SECTIONS 1.2 and 1.3 in connection with the Share
Exchange will be issued in a transaction exempt from registration under
the Securities Act of 1933, as amended (including the rules and
regulations promulgated thereunder, the "SECURITIES ACT").
1.13 REPORTING OF SHARE EXCHANGE. For federal, state, and local income tax
return reporting purposes, all parties agree to treat the Share
Exchange as a nontaxable exchange under Section 368 of the Internal
Revenue Code.
1.14 BOARD OF DIRECTORS AND OFFICERS OF ITI. Simultaneously at Closing, the
number of directors of ITI shall be three (3). All of existing
directors of ITI shall resign, except for Xxxxx Xxxxxx. Xx. Xxxxxx
shall appoint Xxxxxxx X. Xxxxx and Xxxx Xxxxx to fill the vacancies on
the board of directors. All of the existing officers of ITI shall
resign and the new board of directors shall elect the following to
serve as officers of ITI: Xxxxxxx X Xxxxx - Chairman and President; and
Xxxx Xxxxx - Secretary and Treasurer.
1.15 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any such further action is necessary or desirable to
carry out the purposes of this Agreement, the officers and directors of
ITI are fully authorized to take, and will use their reasonable efforts
to take, all such lawful and necessary action.
Share Exchange Agreement - Page 6
ARTICLE II
THE CLOSING
2.1 TIME AND PLACE OF CLOSING. The closing of the Share Exchange (the
"CLOSING") shall, unless otherwise agreed to in writing by the parties,
take place at the law offices of Xxxx Xxxx Xxxx Xxxxxxxxxx & Xxxxxxxxx,
P.C., 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, at a time
to be determined by the parties, on or prior to March 31, 2003.
2.2 OBLIGATIONS OF SCP AND THE SCP SHAREHOLDERS AT OR PRIOR TO THE CLOSING.
At or prior to Closing, and subject to the satisfaction by ITI of its
obligations hereunder, SCP and the SCP Shareholders shall deliver to
ITI the following:
(a) A copy of the Articles of Incorporation of SCP certified as of
a date within ten days of the Closing by the Secretary of
State of the State of Wyoming and certified by the corporate
secretary of SCP as to the absence of any amendments between
the date of certification by the Secretary of State and the
Closing;
(b) A certificate from the Secretary of State of the State of
Wyoming as to the existence and good standing of SCP as of a
date within ten days of the Closing;
(c) A certificate of the corporate secretary of SCP attaching
thereto true and correct copies of the bylaws of SCP;
(d) The certificate of SCP referred to in SECTION 6.1 hereof;
(e) Such other documents as are required pursuant to this
Agreement or as may reasonably be requested from SCP by ITI or
its counsel; and
(f) The certificates evidencing the shares of SCP Common Stock
owned by the SCP Shareholders, duly endorsed for transfer to
ITI.
2.3 OBLIGATIONS OF ITI AT OR PRIOR TO THE CLOSING. At or prior to Closing,
and subject to the satisfaction by SCP of its obligations hereunder,
ITI shall deliver to SCP and the SCP Shareholders the following:
(a) A copy of the Articles of Incorporation of ITI certified as of
a date within ten days of the Closing by the Secretary of
State of the State of Nevada and certified by the corporate
secretary of ITI as to the absence of any amendments between
the date of certification by the Secretary of State and the
Closing;
(b) A certificate from the Secretary of State of the State of
Nevada as to the existence and good standing of ITI as of a
date within ten days of the Closing;
(c) A certificate of the corporate secretary of ITI attaching
thereto true and correct copies of the bylaws of ITI and the
corporate resolutions duly adopted by the board of
Share Exchange Agreement - Page 7
directors of ITI authorizing the consummation of the
transactions contemplated hereby;
(d) The certificate of ITI referred to in SECTION 6.2 hereof;
(e) Such other documents as are required pursuant to this
Agreement or as may reasonably be requested from ITI by SCP or
its counsel; and
(f) Certificates evidencing the ITI Common Stock to be issued to
the SCP Shareholders pursuant to ARTICLE I hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SCP
Except as expressly set forth and specifically identified by the section number
of this Agreement in the schedule delivered by SCP to ITI contemporaneously with
the execution of this Agreement (the "SCP DISCLOSURE SCHEDULE"), SCP represents,
warrants, and covenants to ITI as follows:
3.1 ORGANIZATION AND QUALIFICATION. SCP is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Wyoming and has all requisite corporate power and authority to (a) own,
lease and operate its properties and assets as they are now owned,
leased and operated and (b) carry on its business as currently
conducted and as proposed to be conducted. SCP is duly qualified or
licensed to do business in each jurisdiction in which the failure to be
so qualified or licensed could have a material adverse effect in the
business, operations, properties, assets, liabilities, prospects, or
condition (financial or otherwise) of SCP (hereinafter a "MATERIAL
EFFECT").
3.2 CAPITALIZATION. As of March 17, 2003, the issued and outstanding
capital stock of SCP consists of 7,600,000 shares of common stock.
Immediately prior to Closing, the number of issued and outstanding
shares of SCP common stock shall not exceed 19,000,000. All of the
issued and outstanding shares of capital stock of SCP are and will be
validly issued, fully paid, and nonassessable, and none of such shares
has been or will be issued in violation of the preemptive rights of any
person.
3.3 SUBSIDIARIES AND AFFILIATES. Except as set forth in SECTION 3.3 of the
SCP Disclosure Schedule, SCP does not own or hold, directly or
indirectly, any equity, debt, or other interest in any entity or
business or any option to acquire any such interest.
3.4 OPTIONS OR OTHER RIGHTS. Except as set forth in SECTION 3.4 of the SCP
Disclosure Schedule, no options, warrants, calls, commitments or other
rights to acquire, sell or issue shares of capital stock or other
equity interests of SCP, whether upon conversion of other securities or
otherwise, are issued or outstanding, and there is no agreement or
understanding with respect to the voting of such capital stock or other
equity interests.
Share Exchange Agreement - Page 8
3.5 OWNERSHIP OF SHARES. The shares of SCP Common Stock are owned of record
and to the best knowledge of SCP beneficially by the SCP Shareholders
as set forth on Schedule A. To the knowledge of SCP, the SCP
Shareholders possess full authority and legal right to sell, transfer,
and assign the entire legal and beneficial ownership of the shares of
SCP common stock, free from all liens, claims, and encumbrances of any
kind.
3.6 VALIDITY AND EXECUTION OF AGREEMENT. SCP has the full legal right,
capacity and power required to enter into, execute and deliver this
Agreement and to carry out the transactions contemplated, subject to
approval of the shareholders of SCP and the terms set forth in this
Agreement. This Agreement has been duly executed and delivered by SCP
and constitutes the valid and binding obligation of SCP, enforceable in
accordance with its terms, subject to the qualification that
enforcement of the rights and remedies created hereby is subject to (a)
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and
(b) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
3.7 NO CONFLICT. Except as set forth in SECTION 3.7 of the SCP Disclosure
Schedule and to the knowledge of SCP, none of the execution, delivery,
or performance of this Agreement does or will: (a) result in any
violation or be in conflict with or constitute a default under any term
or provision of the Articles of Incorporation or bylaws of SCP or any
term or provision of any judgment, decree, order, statute, injunction,
rule, or regulation applicable to SCP that would cause a Material
Effect, or of any material note, bond, mortgage, indenture, lease,
license, franchise, agreement, or other instrument or obligation to
which SCP or is bound that would cause a Material Effect; (b) result in
the creation of any material option, pledge, security interest, lien,
charge, encumbrance, or restriction, whether imposed by agreement,
understanding, law or otherwise, except those arising under applicable
federal or state securities laws (hereinafter an "ENCUMBRANCE") upon
any of the properties or assets of SCP pursuant to any such term or
provision that would cause a Material Effect; or (c) constitute a
default under, terminate, accelerate, amend or modify, or give any
party the right to terminate, accelerate, amend, modify, abandon, or
refuse to perform or comply with, any material contract, agreement,
arrangement, commitment, or plan to which SCP is a party, or by which
SCP or any of its properties or assets may be subject or bound that
would cause a Material Effect.
3.8 CONSENTS AND APPROVALS. No federal, state, or other regulatory
approvals are required to be obtained, nor any regulatory requirements
complied with, by SCP in connection with the Share Exchange, except for
the filing of a Form D with the Securities and Exchange Commission and
such other filings as are necessary with state securities authorities
to claim an exemption for the Share Exchange.
3.9 VIOLATION OF LAWS, PERMITS, ETC.
(a) SCP is not in violation of any term or provision of its
Articles of Incorporation or bylaws, or of any material term
or provision of any judgment, decree, order, statute, law,
injunction, rule, ordinance, or governmental regulation that
is applicable to it and where the failure to comply with which
would have a Material Effect.
Share Exchange Agreement - Page 9
(b) SCP has maintained in full force and effect all certificates,
licenses, and permits material to the conduct of its business,
and has not received any notification that any revocation or
limitation thereof is threatened or pending.
3.10 BOOKS AND RECORDS. The books and records of SCP (including, without
limitation, the books of account, minute books, and stock record books)
are complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute
books of SCP are complete and current in all material respects and, as
applicable, accurately reflect all actions taken by the shareholders
and the board of directors of SCP since the date of inception of SCP,
and all signatures contained therein are the true signatures of the
persons whose signatures they purport to be.
3.11 SCP FINANCIAL STATEMENTS. The unaudited balance sheet of SCP as of
December 31, 2002, and the related unaudited statement of income and
statement of cash flows for the period from inception to December 31,
2002 (the "SCP FINANCIAL STATEMENTS"), true and complete copies of
which have been delivered to ITI, present fairly, in all material
respects, the financial position of SCP as at such dates and the
results of operations of SCP for the periods then ended, in accordance
with generally accepted accounting principles ("GAAP") consistently
applied for the periods covered thereby.
3.12 UNDISCLOSED LIABILITIES. To the knowledge of SCP, SCP does not have any
material direct or indirect indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise (all of the foregoing being
collectively referred to as "LIABILITIES" and individually as a
"LIABILITY"), of a kind required by GAAP to be set forth on a financial
statement that is not fully and adequately reflected or reserved
against on the SCP Financial Statements. SCP does not have any
Liabilities, whether or not of a kind required by GAAP to be set forth
on a financial statement, other than (a) Liabilities incurred in the
ordinary course of business since the date of the latest balance sheet
included in the SCP Financial Statements that are consistent with past
practice and are included in the latest SCP Financial Statements, (b)
Liabilities that are fully reflected on or reserved against on the
latest balance sheet included in the SCP Financial Statements, or (c)
as specifically disclosed in the SCP Financial Statements.
3.13 ASSETS; TITLE TO PROPERTY; ENCUMBRANCES. SCP has good and indefeasible
title to and other legal right to use all properties and assets, real,
personal and mixed, tangible and intangible, reflected as owned on the
latest balance sheet included in the SCP Financial Statements or
acquired after the date of such balance sheet, except for properties
and assets disposed of in accordance with customary practice in the
business or disposed of for full and fair value since the date of such
balance sheet in the ordinary course of business consistent with past
practice and except for matters that would not have a Material Effect.
The assets listed on the balance sheet included in the SCP Financial
Statements constitute all of the assets, tangible and intangible, of
any nature whatsoever, necessary to operate SCP's business in the
manner presently operated by SCP and include all operating assets of
SCP. Such assets are owned free and clear of any Encumbrances, other
then liens for Taxes for the current year
Share Exchange Agreement - Page 10
which are not yet due and payable and those listed in SECTION 3.13 of
the SCP Disclosure Schedule.
3.14 TAXES. All returns, reports, information returns, or other documents
(including any related or supporting information) filed or required to
be filed with any federal, state, local, or foreign governmental entity
or others authority in connection with the determination, assessment or
collection of any Tax (whether or not such Tax is imposed on SCP) or
the administration of any laws, regulations or administrative
requirements relating to any Tax (hereinafter "TAX RETURNS"), reports
and declarations of estimated tax or estimated tax deposit forms
required to be filed by SCP have been duly and timely filed; SCP has
paid all taxes, charges, fees, levies or other assessments imposed by
any federal, state, local or foreign taxing authority, whether disputed
or not, including, without limitation, income, capital, estimated,
excise, property, sales, transfer, withholding, employment, payroll,
and franchise taxes and such terms shall include any interest,
penalties or additions attributable to or imposed on or with respect to
such assessments and any expenses incurred in connection with the
settlement of any tax liability (hereinafter "TAXES") which have become
due whether pursuant to such returns or any assessment received by it
or otherwise, and has paid all installments of estimated Taxes due; and
all Taxes which SCP is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to the proper
court, tribunal, arbitrator or any government or political subdivision
thereof, whether federal, state, county, local or foreign, or any
agency, authority, official or instrumentality of any such government
or political subdivision (hereinafter "GOVERNMENTAL OR REGULATORY
BODY"). There are no tax liens upon any of the assets or properties of
SCP except for any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any member or similar
agreement, encumbrance or any other restriction or limitation
whatsoever, other than (i) materialmen's, mechanics', repairmen's or
other like liens arising in the ordinary course of business for amounts
either not yet due or being contested in good faith and by appropriate
proceedings so long as such proceedings shall not involve any material
danger of sale, forfeiture or loss of any part of the assets and shall
have been disclosed to ITI hereunder, or (ii) any lien arising as a
result of any act or omission of ITI (hereinafter "LIENS") for Taxes
not yet due. SCP is not a party to any express tax settlement
agreement, arrangement, policy or guideline, formal or informal (a
"SETTLEMENT AGREEMENT"), and SCP does not have any obligation to make
payments under any Settlement Agreement.
3.15 LITIGATION.
(a) There is no action, proceeding, investigation, or inquiry
pending or, to the best of SCP's knowledge, threatened (i)
against or affecting any of SCP's assets or business that, if
determined adversely to SCP, would result in a Material Effect
or (ii) that questions this Agreement or any action
contemplated by this Agreement or in connection with the Share
Exchange.
(b) SCP has no knowledge of any state of facts or of the
occurrence or nonoccurrence of any event or group of related
events, that should reasonably cause SCP to determine
Share Exchange Agreement - Page 11
that there exists any basis for any material claim against SCP
for any of the matters described in paragraph (a) above.
3.16 CONTRACTS AND OTHER AGREEMENTS. SCP has made available to ITI complete
and correct copies of all material written agreements, contracts, and
commitments, together with all amendments thereto, and accurate (in all
material respects) descriptions of all material oral agreements. Such
agreements, contracts, and commitments are in full force and effect,
and, to the best of SCP's knowledge, all other parties to such
agreements, contracts, and commitments have performed all obligations
required to be performed by them to date thereunder in all material
respects and are not in default thereunder in any material respect.
3.17 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. All accounts receivable
reflected on the latest balance sheet of SCP included in the SCP
Financial Statements, and all accounts receivable arising subsequent to
December 31, 2002, (a) have arisen from BONA FIDE sales transactions in
the ordinary course of business on ordinary trade terms and (b) have
been collected or are collectible in the ordinary course of business in
the aggregate recorded amounts thereof in accordance with their terms
without valid set-off or counterclaim. SCP has made payments on
accounts payable and other current obligations arising subsequent to
December 31, 2002, in accordance with past practice of the business of
SCP.
3.18 COMPENSATION ARRANGEMENTS; OFFICERS AND DIRECTORS. SECTION 3.18 to the
SCP Disclosure Schedule sets forth: (a) the names of all present
officers and directors of SCP and current annual salary, including any
promised, expected or customary bonus or such other amount, and (b) the
names and titles of all directors and officers of SCP. SCP has not made
a commitment or agreement (verbally or in writing) to increase the
compensation or to modify the conditions or terms of employment of any
person listed in SECTION 3.18 to the SCP Disclosure Schedule. To the
knowledge of SCP, none of such persons has made a threat to SCP to
terminate such person's relationship with SCP.
3.19 ERISA. Except as set forth in SECTION 3.19 to the SCP Disclosure
Schedule, there are no employee benefit plans as defined in ERISA
("PLANS") maintained for the benefit of, or covering, any employee,
former employee, independent contractor or former independent
contractor of SCP, or their dependents or their beneficiaries, or
otherwise, now or heretofore contributed to by SCP, and no such Plan is
or has ever been subject to ERISA.
3.20 OPERATIONS. Except as expressly authorized by this Agreement, and
except as set forth in SECTION 3.20 to the SCP Disclosure Schedule,
since the date of the latest SCP Financial Statements, SCP has not:
(a) amended its Articles of Incorporation or By-Laws or merged
with or into or consolidated with any other entity, or changed
or agreed to rearrange in any manner the character of the
business of SCP;
(b) issued, sold or purchased options or rights to subscribe to,
or entered into any contracts or commitments to issue, sell or
purchase, any shares of its capital stock or
Share Exchange Agreement - Page 12
other equity interests except in the ordinary course of
business and consistent with past practices;
(c) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money other
than in the ordinary course of business in connection with
trade payables, or guaranteed any indebtedness for borrowed
money or any capitalized lease obligation;
(d) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to the shareholders, or
made any direct or indirect redemption, retirement, purchase
or other acquisition of any shares of its capital stock or
other equity interests;
(e) knowingly waived any right of material value to the business
of SCP;
(f) made any change in its accounting methods or practices or made
any changes in depreciation or amortization policies or rates
adopted by it or made any material write-down of inventory or
material write-off as uncorrectable of accounts receivable;
(g) made any wage or salary increase or other compensation payable
or to become payable or bonus, or increase in any other direct
or indirect compensation, for or to any of its officers,
directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or agreement
to make or pay the same, other than increases made in the
ordinary course consistent with past practice;
(h) entered into any transactions with any of its affiliates,
shareholders, officers, directors, employees, consultants,
agents or other representatives (other than employment
arrangements made in the ordinary course of business
consistent with past practice), or any affiliate of any
shareholder, officer, director, consultant, employee, agent or
other representative;
(i) made any payment or commitment to pay any severance or
termination pay to any person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay
such persons or their officers, directors, employees in the
ordinary course of business;
(j) except in the ordinary course of business, incurred or assumed
any debt, obligation or liability (whether absolute or
contingent and whether or not currently due and payable);
(k) except in the ordinary course of business, made any
acquisition of all or any part of the assets, properties,
capital stock or business of any other person;
(l) except in the ordinary course of business, paid, directly or
indirectly, any of its Liabilities before the same became due
in accordance with their terms or otherwise
Share Exchange Agreement - Page 13
than in the ordinary course of business, except to obtain the
benefit of discounts available for early payment;
(m) except in the ordinary course of business, created, incurred
or assumed any indebtedness for borrowed money, or guaranteed
any indebtedness for borrowed money or any capitalized lease
obligation;
(n) except in the ordinary course of business, made any capital
expenditures or commitments for capital expenditures; or
(o) except in the ordinary course of business, terminated, failed
to renew, amended or entered into any contract or other
agreement of a type required to be disclosed pursuant to
SECTION 3.16.
3.21 INTELLECTUAL PROPERTY. SCP does not have any licenses, trademarks,
trade names, domain names, or patents (hereinafter "INTELLECTUAL
PROPERTY").
3.22 EMPLOYEE RELATIONS. SCP is not a party any agreement with any labor
organization, collective bargaining or similar agreement with respect
to its employees. There are no material complaints, grievances or
arbitrations, employment-related litigation, administrative proceedings
or controversies either pending or, to the knowledge of SCP,
threatened, involving any employee, applicant for employment, or former
employee of SCP against SCP. During the past five years, SCP has not
suffered or sustained any labor dispute resulting in any work stoppage
and no such work stoppage is, to the knowledge of SCP, threatened. To
the knowledge of SCP, there are no attempts presently being made to
organize any employees employed by SCP.
3.23 INSURANCE. SCP has not maintained any policies of insurance for its
operations.
3.24 LICENSES AND PERMITS. Except as set forth in SECTION 3.24 of the SCP
Disclosure Schedule, SCP has obtained all material government permits,
licenses, domain name and other registrations, and other consents and
authorizations (federal, state, local and foreign) of any Governmental
or Regulatory Body (collectively, "PERMITS") are required to be
obtained by SCP in connection with its properties or the business of
SCP. SCP has not received any notice of any claim of revocation of any
such Permit and has no knowledge of any event, which would be likely to
give rise to such a claim. Further, SCP has not received any notice or
other communication from any Governmental or Regulatory Body regarding
any actual, alleged, possible or potential violation of, or failure to
comply with, any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance,
principle of common law, code, regulation, statute or treaty ("LEGAL
REQUIREMENT").
3.25 NO MATERIAL ADVERSE CHANGE. Since the date of the SCP Financial
Statements, there has not been any material adverse change in the
business, operations, prospects, assets, results of operations or
condition (financial or other) of SCP, and no event has occurred or
circumstances exist that may result in such a material adverse change.
Share Exchange Agreement - Page 14
3.26 COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT. SCP and its
representatives have not, to obtain or retain business, directly or
indirectly offered, paid, or promised to pay, or authorized the payment
of, any money or other thing of value (including any fee, gift sample,
travel expense or entertainment with a value in excess of $100.00 in
the aggregate to any one individual in any year) or any commission
payment in excess of 1% of any amount payable, to: (a) any person who
is an official, officer, agent, employee or representative of any
Governmental or Regulatory Body or of any existing or prospective
customer (whether government owned or nongovernment owned); (b) any
political party or official thereof; (c) any candidate for political or
political party office; or (d) any other individual or entity; while
knowing or having reason to believe that all or any portion of such
money or thing of value would be offered, given, or promised, directly
or indirectly, to any such official, officer, agent, employee,
representative, political party, political party official, candidate,
individual, or any entity affiliated with such customer, political
party or official or political office. SCP has made all payments to
third parties by check mailed to such third parties' principal place of
business or by wire transfer to a bank located in the same jurisdiction
as such party's principal place of business. Each transaction is
properly and accurately recorded on the books and records of SCP, and
each document upon which entries in SCP's books and records are based
is complete and accurate in all respects. SCP maintains a system of
internal accounting controls adequate to insure that SCP maintains no
off-the-books accounts and that SCP's assets are used only in
accordance with SCP's management directives.
3.27 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by SCP directly
with ITI without the intervention of any other person on behalf of SCP
in such manner as to give rise to any valid claim by any person against
SCP or ITI for a finder's fee, brokerage commission or similar payment.
3.28 DISCLOSURE. To the knowledge of SCP, neither this Agreement, nor any
Schedule to this Agreement, contains an untrue statement of a material
fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
3.29 SCP SHAREHOLDERS. To the knowledge of SCP, all of the SCP Shareholders
approving the Share Exchange understand that the shares of ITI Common
Stock are restricted securities under the Securities Act and
acknowledge that such SCP Shareholder (i) is acquiring the ITI Common
Stock for his own account without a view to distribution within the
meaning of the Securities Act; (ii) has received from ITI its filings
with the Securities and Exchange Commission and all other information
that he has deemed necessary to make an informed investment decision
with respect to an investment in ITI in general and the ITI Common
Stock in particular; (iii) is financially able to bear the economic
risks of an investment in ITI; and (iv) has such knowledge and
experience in financial and business matters in general and with
respect to investments of a nature similar to the ITI Common Stock so
as to be capable, by reason of such knowledge and experience, of
evaluating the merits and risks of, and making an informed business
decision with regard to, the acquisition of the ITI Common Stock. All
of the SCP Shareholders approving the Share Exchange understand and
agree that the certificates evidencing the ITI Common Stock shall bear
the usual restrictive legend pertaining to Rule 144 under the
Securities Act and that the ITI Common Stock will not be
Share Exchange Agreement - Page 15
transferable except under an effective registration statement under the
Securities Act or in accordance with available exemptions from
registration under the Securities Act. There are no more than 35
non-accredited investors among the SCP Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ITI
Except as expressly set forth and specifically identified by the section number
of this Agreement in the schedule delivered by ITI to SCP contemporaneously with
the execution of this Agreement (the "ITI DISCLOSURE SCHEDULE"), ITI represents,
warrants, and covenants to SCP as follows:
4.1 ORGANIZATION AND QUALIFICATION. ITI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to (a) own,
lease and operate its properties and assets as they are now owned,
leased and operated and (b) carry on its business as currently
conducted and as proposed to be conducted. ITI is duly qualified or
licensed to do business in each jurisdiction in which the failure to be
so qualified or licensed could have a Material Effect.
4.2 CAPITALIZATION. The authorized equity securities of ITI consist of
50,000,000 shares of common stock, $0.001 par value per share, of which
1,184,847 shares are issued and outstanding, and 1,000,000 shares of
preferred stock, $0.01 par value per shares, none of which is issued or
outstanding. All of the issued and outstanding shares of capital stock
of ITI are validly issued, fully paid, and nonassessable, and none of
such shares has been issued in violation of the preemptive rights of
any person. The ITI Common Stock shall be validly issued, fully paid,
and nonassessable at the time of Closing.
4.3 SUBSIDIARIES AND AFFILIATES. Except as set forth in SECTION 4.3 of the
ITI Disclosure Schedule, ITI does not own or hold, directly or
indirectly, any equity, debt, or other interest in any entity or
business or any option to acquire any such interest.
4.4 OPTIONS OR OTHER RIGHTS. Except as set forth in SECTION 4.4 of the ITI
Disclosure Schedule, no options, warrants, calls, commitments or other
rights to acquire, sell or issue shares of capital stock or other
equity interests of ITI whether upon conversion of other securities or
otherwise, are issued or outstanding except as set forth in the ITI
Disclosure Schedule, and there is no agreement or understanding with
respect to the voting of such capital stock or other equity interests.
4.5 VALIDITY AND EXECUTION OF AGREEMENT. ITI has the full legal right,
capacity, and power required to enter into, execute, and deliver this
Agreement and to carry out the transactions contemplated, subject to
approval of the shareholders of ITI and the terms set forth in this
Agreement. This Agreement has been duly and validly executed on behalf
of ITI and is a valid and binding obligation of ITI, enforceable in
accordance with its terms, subject to the qualification that
enforcement of the rights and remedies created hereby is subject to (a)
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application
Share Exchange Agreement - Page 16
affecting the rights and remedies of creditors and (b) general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
4.6 NO CONFLICT. Except as set forth in SECTION 4.6 of the ITI Disclosure
Schedule and to the knowledge of ITI, none of the execution, delivery,
or performance of this Agreement does or will: (a) result in any
violation or be in conflict with or constitute a default under any term
or provision of the Articles of Incorporation or bylaws of ITI or any
term or provision of any judgment, decree, order, statute, injunction,
rule, or regulation applicable to ITI that would cause a Material
Effect, or of any material note, bond, mortgage, indenture, lease,
license, franchise, agreement, or other instrument or obligation to
which ITI is bound that would cause a Material Effect; (b) result in
the creation of any Encumbrance upon any of the properties or assets of
ITI pursuant to any such term or provision that would cause a Material
Effect; or (c) constitute a default under, terminate, accelerate, amend
or modify, or give any party the right to terminate, accelerate, amend,
modify, abandon, or refuse to perform or comply with, any material
contract, agreement, arrangement, commitment, or plan to which ITI is a
party, or by which ITI or any of its properties or assets may be
subject or bound that would cause a Material Effect.
4.7 CONSENTS AND APPROVALS. No federal, state, or other regulatory
approvals are required to be obtained, nor any regulatory requirements
complied with, by ITI in connection with the Share Exchange.
4.8 VIOLATION OF LAWS, PERMITS, ETC.
(a) ITI is not in violation of any term or provision of its
Articles of Incorporation or bylaws, or of any material term
or provision of any judgment, decree, order, statute, law,
injunction, rule, ordinance, or governmental regulation that
is applicable to it and where the failure to comply with which
would have a Material Effect.
(b) ITI has maintained in full force and effect all certificates,
licenses, and permits material to the conduct of its business,
and has not received any notification that any revocation or
limitation thereof is threatened or pending.
4.9 BOOKS AND RECORDS. The books and records of ITI (including, without
limitation, the books of account, minute books, and stock record books)
are complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute
books of ITI are complete and current in all material respects and, as
applicable, accurately reflect all actions taken by the shareholders
and the board of directors of ITI since the date of inception of ITI,
and all signatures contained therein are the true signatures of the
persons whose signatures they purport to be.
4.10 ITI FINANCIAL STATEMENTS. The unaudited balance sheet of ITI as of
September 30, 2002, and the related unaudited statement of operations
and statement of cash flows for the nine months then ended, together
with the audited balance sheets of ITI as of December 31, 2001 and
2000, and the related audited statements of operations, statements of
cash flow and statements of shareholders equity for the years then
ended (the "ITI FINANCIAL
Share Exchange Agreement - Page 17
STATEMENTS"), true and complete copies of which have been delivered to
SCP, present fairly, in all material respects, the financial position
of ITI as at such dates and the results of operations of ITI for the
periods then ended, in accordance with GAAP consistently applied for
the periods covered thereby. ITI has advised SCP that the SEC has
reviewed the adequacy of the audit report covering the financial
statements for the fiscal year ended December 31, 2001 and that ITI is
required to amend its financial statements for the 2001 fiscal year and
all interim 2002 financial statements (the "2001 AUDIT REPORT ISSUE").
The 2001 Audit Report Issue shall be resolved prior to Closing. All
amendments filed with the SEC shall present fairly in all material
respects the financial position of ITI as at such dates and the results
of operations of ITI for the periods then ended, in accordance with
GAAP consistently applied for the periods covered thereby.
4.11 UNDISCLOSED LIABILITIES. To the knowledge of ITI, ITI does not have any
Liabilities of a kind required by GAAP to be set forth on a financial
statement that is not fully and adequately reflected or reserved
against on the ITI Financial Statements. ITI does not have any
Liabilities, whether or not of a kind required by GAAP to be set forth
on a financial statement, other than (a) Liabilities incurred in the
ordinary course of business since the date of the latest balance sheet
included in the ITI Financial Statements that are consistent with past
practice and are included in the latest ITI Financial Statements, (b)
Liabilities that are fully reflected on or reserved against on the
latest balance sheet included in the ITI Financial Statements, or (c)
as specifically disclosed in the ITI Financial Statements. Immediately
prior to Closing, the only Liabilities outstanding shall be those
related to the Share Exchange and shall not exceed $25,000.
4.12 ASSETS; TITLE TO PROPERTY; ENCUMBRANCES. ITI has good and indefeasible
title to and other legal right to use all properties and assets, real,
personal and mixed, tangible and intangible, reflected as owned on the
latest balance sheet included in the ITI Financial Statements or
acquired after the date of such balance sheet, except for properties
and assets disposed of in accordance with customary practice in the
business or disposed of for full and fair value since the date of such
balance sheet in the ordinary course of business consistent with past
practice and except for matters that would not have a Material Effect.
The assets listed on the balance sheet included in the ITI Financial
Statements constitute all of the assets, tangible and intangible, of
any nature whatsoever, necessary to operate ITI's business in the
manner presently operated by ITI and include all operating assets of
ITI. Such assets are owned free and clear of any Encumbrances, other
then liens for Taxes for the current year which are not yet due and
payable and those listed in SECTION 4.12 of the ITI Disclosure
Schedule.
4.13 TAXES. All Tax Returns, reports and declarations of estimated tax or
estimated tax deposit forms required to be filed by ITI have been duly
and timely filed; ITI has paid all Taxes which have become due whether
pursuant to such returns or any assessment received by it or otherwise,
and has paid all installments of estimated Taxes due; and all Taxes
which ITI is required by law to withhold or to collect have been duly
withheld and collected, and have been paid over to the proper
Governmental or Regulatory Body. There are no tax liens upon any of the
assets or properties of ITI except for Liens for Taxes not yet due. ITI
is not a
Share Exchange Agreement - Page 18
party to any Settlement Agreement, and ITI does not have any obligation
to make payments under any Settlement Agreement.
4.14 LITIGATION.
(a) There is no action, proceeding, investigation, or inquiry
pending or, to the best of ITI's knowledge, threatened (i)
against or affecting any of ITI's assets or business or (ii)
that questions this Agreement or any action contemplated by
this Agreement or in connection with the Share Exchange.
(b) ITI has no knowledge of any state of facts or of the
occurrence or nonoccurrence of any event or group of related
events, that should reasonably cause ITI to determine that
there exists any basis for any material claim against ITI for
any of the matters described in paragraph (a) above.
4.15 CONTRACTS AND OTHER AGREEMENTS. SECTION 4.15 to the ITI Disclosure
Schedule contains a complete and correct list as of the date hereof of
all agreements, contracts, and commitments (and all amendments
thereto), written or oral, to which ITI is a party or by which any of
its properties is bound. ITI has made available to SCP complete and
correct copies of all written agreements, contracts, and commitments,
together with all amendments thereto, and accurate (in all material
respects) descriptions of all material oral agreements. Such
agreements, contracts, and commitments are in full force and effect,
and, to the best of ITI's knowledge, all other parties to such
agreements, contracts, and commitments have performed all obligations
required to be performed by them to date thereunder in all material
respects and are not in default thereunder in any material respect. ITI
has represented to SCP that it intends to discontinue its present
business operations immediately prior to the Effective Time by
transferring such operations to AVL Information Systems Ltd. AVL
Information Systems Ltd. shall assume all liabilities associated with
the operations.
4.16 COMPENSATION ARRANGEMENTS; OFFICERS, DIRECTORS AND EMPLOYEES. ITI does
not pay any compensation to any of its officers and directors and has
no employees. ITI has not made a commitment or agreement (verbally or
in writing) to pay any compensation to such persons and ITI is not a
party to any compensation arrangements, except for an agreement to
issue 1,315,153 shares of its common stock to Xxxxx Xxxxxx and Xxxxx
Xxxxxx and to register such shares in a registration statement on Form
S-8 (the "XXXXXX COMPENSATION"). The registration statement shall be
filed after the Closing and shall include the Xxxxxx Compensation
shares, as well as other compensation-based securities.
4.17 ERISA. There are no Plans maintained for the benefit of, or covering,
any employee, former employee, independent contractor or former
independent contractor of ITI or their dependents or their
beneficiaries, or otherwise, now or heretofore contributed to by ITI
and no such Plan is or has ever been subject to ERISA.
4.18 OPERATIONS. Except as expressly authorized by this Agreement, or except
as set forth in SECTION 4.18 to the ITI Disclosure Schedule, since the
date of the latest ITI Financial Statements, ITI has not:
Share Exchange Agreement - Page 19
(a) amended its Articles of Incorporation or By-Laws or merged
with or into or consolidated with any other entity, or changed
or agreed to rearrange in any manner the character of the
business of ITI;
(b) issued, granted, delivered, or sold, or authorized or proposed
to issue, grant, deliver, or sell, or purchased or proposed
the purchase of, any shares of ITI capital stock or securities
convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any
character obligating ITI to issue or purchase any such shares
or other convertible securities, or accelerate the vesting of
any stock options, except for the Xxxxxx Compensation;
(c) entered into, amended or terminated any (i) employment
agreement or collective bargaining agreement, (ii) adopted,
entered into or amended any arrangement which is, or would be,
a Plan or (iii) made any change in any actuarial methods or
assumptions used in funding any Plan or in the assumptions or
factors used in determining benefit equivalencies thereunder;
(d) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money other
than in the ordinary course of business in connection with
trade payables, or guaranteed any indebtedness for borrowed
money or any capitalized lease obligation;
(e) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to the shareholders, or
split, combined or reclassified any of its capital stock or
issued or authorized the issuance of any other securities, or
repurchased, redeemed or otherwise acquired, directly or
indirectly, any shares of the capital stock (or options,
warrants or other rights exercisable therefore), or made any
direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock or other equity
interests;
(f) knowingly waived any right of material value to the business
of ITI;
(g) made any change in its accounting methods or practices or made
any changes in depreciation or amortization policies or rates
adopted by it or made any material write-down of inventory or
material write-off as uncorrectable of accounts receivable;
(h) made any wage or salary increase or other compensation payable
or to become payable or bonus, or increase in any other direct
or indirect compensation, for or to any of its officers,
directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or agreement
to make or pay the same, other than increases made in the
ordinary course consistent with past practice, except for the
Xxxxxx Compensation;
Share Exchange Agreement - Page 20
(i) entered into any transactions with any of its affiliates,
shareholders, officers, directors, employees, consultants,
agents or other representatives (other than employment
arrangements made in the ordinary course of business
consistent with past practice), or any affiliate of any
shareholder, officer, director, consultant, employee, agent or
other representative, except for the Xxxxxx Compensation;
(j) made any payment or commitment to pay any severance or
termination pay to any person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay
such persons or their officers, directors, employees in the
ordinary course of business, except for the Xxxxxx
Compensation;
(k) except in the ordinary course of business and subject to the
provisions of SECTION 5.2 hereof, (i) entered into any lease
(as lessor or lessee), (ii) sold, abandoned or made any other
disposition of any of its assets or properties other than in
the ordinary course of business consistent with past practice,
(iii) granted or suffered any Lien on any of its assets or
properties other than sales of inventory in the ordinary
course of business, or (iv) entered into or amended any
material contract or other agreement to which it is a party,
or by or to which it or its assets or properties are bound or
subject, or pursuant to which it agrees to indemnify any
person or to refrain from competing with any person, in each
case or type required to be disclosed pursuant to SECTION 4.15
hereof;
(l) except in the ordinary course of business, incurred or assumed
any debt, obligation or liability (whether absolute or
contingent and whether or not currently due and payable),
except for the $50,000 loan by SCP;
(m) except for inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of
the assets, properties, capital stock or business of any other
person;
(n) except in the ordinary course of business, paid, directly or
indirectly, any of its Liabilities before the same became due
in accordance with their terms or otherwise than in the
ordinary course of business, except to obtain the benefit of
discounts available for early payment;
(o) except in the ordinary course of business, created, incurred
or assumed any indebtedness for borrowed money, or guaranteed
any indebtedness for borrowed money or any capitalized lease
obligation;
(p) except in the ordinary course of business, made any capital
expenditures or commitments for capital expenditures;
(q) except in the ordinary course of business and subject to the
provisions of SECTION 5.2 hereof, terminated, failed to renew,
amended or entered into any contract or other agreement of a
type required to be disclosed pursuant to SECTION 4.15;
Share Exchange Agreement - Page 21
(r) acquired or agreed to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or
by any other manner, any business or any corporation,
partnership, association or other business organization or
division thereof;
(s) granted any loans to others or purchased debt securities of
others or amended the terms of any outstanding loan agreement;
(t) except for the 2003 Stock Plan, adopted any employee benefit
plan, or entered into any employment contract;
(u) except for the receivable from AVL Information Systems Ltd.
and its subsidiary, revalued any of its assets, including
without limitation writing down the value of inventory or
writing off notes or accounts receivable;
(v) made or changed any material election in respect of Taxes,
adopted or changed any accounting method in respect of Taxes,
entered into any closing agreement, settled any claim or
assessment in respect of Taxes, or consented to any extension
or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes; or
(w) took, or agreed in writing or otherwise to take, any of the
actions described in subsections (a) through (v) above, or any
other action that would prevent ITI from performing or cause
ITI not to perform its covenants hereunder, or any other
action not in the ordinary course of the business or
inconsistent with past practice of ITI.
4.19 INTELLECTUAL PROPERTY. ITI possesses all of the necessary Intellectual
Property necessary to conduct its business in the manner that is
currently being conducted and anticipates conducting in the future. All
of such Intellectual Property is held in the name of ITI. To the
knowledge of ITI, none of the Intellectual Property of ITI infringes
upon the rights of any other person in any material respect or, to the
knowledge of ITI, is so infringed upon by any other person or its
property. ITI has not received any notice of any claim of any other
person relating to any of the Intellectual Property or any process or
confidential information of ITI and does not know of any basis for any
such charge or claim. Except for the Intellectual Property, no other
material intellectual property or intangible property rights are
required for ITI to conduct the business of ITI in the ordinary course
consistent with past practice. Except as separately identified in
SECTION 4.19 of the ITI Disclosure Schedule, no approval or consent of
any person is needed so that the interest of ITI in the Intellectual
Property shall continue to be in full force and effect and enforceable
by ITI following the transactions contemplated by this Agreement.
4.20 INSURANCE. ITI has not maintained any policies of insurance for its
operations
4.21 LICENSES AND PERMITS. Except as set forth in SECTION 4.21 of the ITI
Disclosure Schedule, no Permits are required to be obtained by ITI in
connection with its properties or the business of ITI. ITI has not
received any notice of any claim of revocation of any such Permit and
has
Share Exchange Agreement - Page 22
no knowledge of any event, which would be likely to give rise to such a
claim. Further, ITI has not received any notice or other communication
from any Governmental or Regulatory Body regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any
Legal Requirement.
4.22 NO MATERIAL ADVERSE CHANGE. Since the date of the ITI Financial
Statements, there has not been any material adverse change in the
business, operations, prospects, assets, results of operations or
condition (financial or other) of ITI, and no event has occurred or
circumstances exist that may result in such a material adverse change.
4.23 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by SCP directly
with ITI without the intervention of any other person on behalf of ITI
in such manner as to give rise to any valid claim by any person against
SCP or ITI for a finder's fee, brokerage commission or similar payment.
4.24 APPROVAL OF SHARE EXCHANGE. The board of directors of ITI has approved
the Share Exchange without reservation or qualification.
4.25 SEC REPORTING STATUS. ITI filed a registration statement under the
Securities Act of 1933, which was declared effective on April 11, 2001.
Since that date, except for those reports affected by the 2001 Audit
Report Issue, ITI has filed with the Securities and Exchange Commission
("SEC") all reports required to be filed (the "ITI SEC REPORTS")
pursuant to Section 15(d) of the Securities Exchange Act of 1934 (the
"EXCHANGE ACT") in a timely manner, except for the following reports:
Form 10-QSB for the quarter ended June 30, 2001 (filed September 7,
2001), Form 8-K dated October 5, 2001 regarding a change of accountants
(filed October 17, 2001), Form 10-QSB for the quarter ended September
30, 2001 (filed December 6, 2001), and Form 8-K dated December 19, 2002
regarding a change of accountants (filed January 21, 2003). It has not
filed a certification on Form 15 pursuant to Rule 12h-3 of the Exchange
Act. Except for the disclosures encompassed by the 2001 Audit Report
Issue, the ITI SEC Reports (i) at the time they were filed, complied as
to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.26 INVESTMENT COMPANY. ITI is not an investment company within the meaning
of Section 3 of the Investment Company Act.
4.27 TRADING STATUS. The ITI Common Stock is quoted on the OTC Bulletin
Board under the symbol "ITCK". As of March 5, 2003, an "E" has been
appended to the symbol due to the 2001 Audit Report Issue. Other than
this matter, there is no action or proceeding pending or, to the
knowledge of ITI, threatened against ITI by NASDAQ or the National
Association of Securities Dealers with respect to any intention by such
entities to delist the common stock of ITI from the OTC Bulletin Board.
ITI shall file amended reports with the SEC, as set
Share Exchange Agreement - Page 23
forth in SECTION 4.10 above, as a condition to Closing and prior to
April 4, 2003, to have the "E" removed from its trading symbol.
4.28 DISCLOSURE. To the knowledge of ITI, neither this Agreement, nor any
Schedule to this Agreement, contains an untrue statement of a material
fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
4.29 COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT. ITI and its
representatives have not, to obtain or retain business, directly or
indirectly offered, paid, or promised to pay, or authorized the payment
of, any money or other thing of value (including any fee, gift sample,
travel expense or entertainment with a value in excess of $100.00 in
the aggregate to any one individual in any year) or any commission
payment in excess of 1% of any amount payable, to: (a) any person who
is an official, officer, agent, employee or representative of any
Governmental or Regulatory Body or of any existing or prospective
customer (whether government owned or nongovernment owned); (b) any
political party or official thereof; (c) any candidate for political or
political party office; or (d) any other individual or entity; while
knowing or having reason to believe that all or any portion of such
money or thing of value would be offered, given, or promised, directly
or indirectly, to any such official, officer, agent, employee,
representative, political party, political party official, candidate,
individual, or any entity affiliated with such customer, political
party or official or political office. ITI has made all payments to
third parties by check mailed to such third parties' principal place of
business or by wire transfer to a bank located in the same jurisdiction
as such party's principal place of business. Each transaction is
properly and accurately recorded on the books and records of ITI, and
each document upon which entries in ITI's books and records are based
is complete and accurate in all respects. ITI maintains a system of
internal accounting controls adequate to insure that ITI maintains no
off-the-books accounts and that ITI's assets are used only in
accordance with ITI's management directives.
4.30 LOAN. ITI acknowledges that it has received the sum of fifty thousand
dollars ($50,000) from SCP and has entered into a promissory note with
SCP for the repayment of such monies.
ARTICLE V
ACTIONS PRIOR TO CLOSING
5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. At or prior to the Closing
Date, each of ITI and SCP shall be entitled to make such investigation
of the assets, properties, business and operations of the other and
such examination of the books, records, Tax Returns, financial
condition and operations of the other as each may wish. Any such
investigation and examination shall be conducted at reasonable times
and under reasonable circumstances and ITI and SCP shall cooperate
fully therein. In order that each of ITI and SCP may have full
opportunity to make such a business, accounting and legal review,
examination or investigation as it may wish of the business and affairs
of the other, ITI or SCP, as the case may be, shall furnish to the
other during such period all such information and copies of such
documents concerning its affairs as ITI or SCP may reasonably request
and cause its officers,
Share Exchange Agreement - Page 24
employees, consultants, agents, accountants and attorneys to cooperate
fully and provide all material facts affecting its financial condition
and business operations. Until the Closing and if the Closing shall not
occur, thereafter, ITI, SCP, and its respective affiliates shall keep
confidential and shall not use in any manner inconsistent with the
transactions contemplated by this Agreement and after termination of
this Agreement, ITI, SCP, and its respective affiliates shall not
disclose, nor use for their own benefit, any information or documents
obtained from the other concerning its assets, properties, business and
operations, unless (a) readily ascertainable from public or published
information, or trade sources, (b) received from a third party not
under an obligation to ITI or SCP, as the case may be, to keep such
information confidential or (c) required by any Law or Order. If this
transaction does not close for any reason, ITI, SCP, and its respective
affiliates shall return or destroy all such confidential information
and compilations thereof as is practicable, and shall certify such
destruction or return to ITI or SCP, as the case may be.
5.2 CONDUCT AND PRESERVATION OF BUSINESS OF ITI. From the date hereof
through the Closing Date, ITI shall cause its corporate existence and
status as a reporting issuer with the SEC to be continued in the
ordinary course and to file all required reports in a timely manner, to
pay the debts and Taxes as they come due, and to pay or perform other
obligations when due. ITI covenants that, except with the prior written
consent of SCP, which consent shall not be unreasonably withheld, ITI
will not:
(a) Do any, or agree to do any, of the restricted acts set forth
in SECTION 4.18 hereof, or enter into any agreement of a
nature set forth in SECTION 4.15 hereof; or
(b) Enter into any transaction other than those related to the
transfer of the business to AVL Information Systems Ltd.
5.3 CONDUCT AND PRESERVATION OF BUSINESS OF SCP. From the date hereof
through the Closing Date, SCP shall cause its business to be conducted
in the ordinary course and in the same manner as it has been conducted
since its inception, to pay the debts and Taxes as they come due, and
to pay or perform other obligations when due. SCP covenants that,
except with the prior written consent of ITI, which consent shall not
be unreasonably withheld, SCP will not:
(a) Do any, or agree to do any, of the restricted acts set forth
in SECTION 3.20 hereof, or enter into any agreement of a
nature set forth in SECTION 3.16 hereof; or
(b) Enter into any transaction other than in the ordinary course
of business.
Further, SCP shall use commercially reasonable efforts to (i) preserve
intact its business, assets, properties and organizations, (ii) keep
available the services of its present officers, employees, consultants
and agents; and (iii) maintain its present suppliers and customers and
preserve its goodwill.
5.4 ADVICE OF CHANGES. SCP will promptly advise ITI in writing from time to
time prior to the Closing with respect to any matter hereafter arising
and known to them that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or
Share Exchange Agreement - Page 25
described in the SCP Disclosure Schedule or would have resulted in any
representation of SCP in this Agreement being untrue. ITI will promptly
advise SCP in writing from time to time prior to the Closing with
respect to any matter hereafter arising and known to it that, if
existing or occurring at the date of this Agreement, would have been
required to be set forth or described in the ITI Disclosure Schedule or
would have resulted in any representation of ITI in this Agreement
being untrue in any material respect.
5.5 NO NEGOTIATION. Until such time as this Agreement shall be terminated
pursuant to SECTION 9.1 hereof, neither SCP nor ITI shall directly or
indirectly solicit, initiate, encourage or entertain any inquiries or
proposals from, discuss or negotiate with, provide any nonpublic
information to or consider the merits of any inquiries or proposals
from any person relating to any business combination transaction
involving SCP or ITI, including a merger or consolidation transaction,
or the sale of business or assets. Notwithstanding the foregoing, SCP
shall not be restricted from entering into any form of joint venture
agreement in furtherance of its business objectives or from selling
shares of its common stock.
5.6 OTC BULLETIN BOARD. ITI will use its best efforts to maintain the
listing on the OTC Bulletin Board of the ITI Common Stock. ITI shall
take the necessary action to notify NASD Regulation of the Share
Exchange in a timely manner.
5.7 SEC REPORTS. ITI shall file with the SEC all reports and other
documents that are required by the Exchange Act and the rules and
regulations promulgated thereunder to be filed in connection with this
transactions contemplated by this Agreement. In addition, prior to the
Closing and prior to April 4, 2003, ITI shall file with the SEC an
amended Form 10-KSB for the fiscal year ended December 31, 2001, and
amended Form 10-QSB reports for the quarters ended March 31, 2002, June
30, 2002, and September 30, 2002, and take any and all actions
necessary to resolve the 2001 Audit Report Issue .
5.8 SHAREHOLDER APPROVAL. SCP and ITI shall, as expeditiously as possible,
take all actions necessary to obtain the approval of its shareholders
of the transactions contemplated by this Agreement as required by the
laws of Wyoming and Nevada, respectively.
5.9 OTHER AGREEMENTS. SCP and ITI agree to take, or cause to be taken, all
actions and to do, or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this
Agreement, including, without limitation, the obtaining of all
necessary waivers, consents and approvals and the effecting of all
necessary registrations and filings, including, but not limited to,
submissions of information requested by Governmental or Regulatory
Bodies and any other persons required to be obtained by them for the
consummation of the closing and the continuance in full force and
effect of the permits, contracts and other agreements set forth on the
Schedules to this Agreement.
Share Exchange Agreement - Page 26
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ITI TO COMPLETE THE CLOSING.
The obligations of ITI to enter into and complete the Closing are
subject to the fulfillment of the following conditions, any one or more
of which may be waived by ITI:
(a) (i) All of the terms, covenants, and conditions of this
Agreement to be complied with or performed by SCP at or before
the Closing shall have been duly complied with and performed
in all material respects, (ii) the representations and
warranties of SCP set forth in Article III shall be true in
all material respects on and as of the Closing Date with the
same force and effect as if such representations and
warranties had been made on and as of the Closing, and (iii)
ITI shall have received a certificate to such effect from SCP,
specifically referencing SECTIONS 3.7 AND 3.8. SCP shall
provide a certificate as to the representations contained in
SECTION 3.2.
(b) All consents, waivers, approvals, licenses, authorizations of,
or filings or declarations with third parties or Governmental
or Regulatory Bodies required to be obtained by SCP in order
to permit the transactions contemplated by this Agreement to
be consummated in accordance with agreements and court orders
applicable to SCP and applicable governmental laws, rules,
regulations and agreements shall have been obtained and any
waiting period thereunder shall have expired or been
terminated, and ITI shall have received a certificate from SCP
to such effect.
(c) All actions, proceedings, instruments, and documents in
connection with the consummation of the transactions
contemplated by this Agreement, including the forms of all
documents, legal matters, opinions, and procedures in
connection therewith, shall have been approved in form and
substance by counsel for ITI, which approval shall not be
unreasonably withheld.
(d) SCP shall have furnished such certificates to evidence
compliance with the conditions set forth in this Article, as
may be reasonably requested by ITI or its counsel.
(e) SCP shall not have suffered any Material Effect.
(f) No material information or data provided or made available to
ITI by or on behalf of SCP shall be incorrect in any material
respect.
(g) No investigation and no suit, action, or proceeding before any
court or any governmental or regulatory authority shall be
pending or threatened by any state or federal governmental or
regulatory authority, against SCP or any of its affiliates,
associates, officers, or directors seeking to restrain,
prevent, or change in any material respect the transactions
contemplated hereby or seeking damages in connection with such
transactions that are material to SCP.
Share Exchange Agreement - Page 27
(h) SCP shall have received the necessary approvals from at least
90% of its shareholders to proceed with the transactions
contemplated herein.
(i) SCP shall have completed an audit of its financial statements
and prepared unaudited financial statements, if necessary, so
as to allow ITI to comply with its reporting requirements to
the SEC in connection with the proposed transaction. The audit
shall confirm the existence of SCP's business operations as
described in its Business Plan dated November 7, 2002.
(j) The issuance of the ITI Common Stock shall be exempt from the
registration requirements of the Securities Act pursuant to
the exemption contained in Rule 506 of Regulation D.
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SCP TO COMPLETE THE CLOSING.
The obligations of SCP to enter into and complete the Closing are
subject to the fulfillment on or prior to the Closing Date, of the
following conditions, any one or more of which may be waived by SCP:
(a) (i) All of the terms, covenants, and conditions of this
Agreement to be complied with or performed by ITI at or before
the Closing shall have been duly complied with and performed
in all material respects, (ii) the representations and
warranties of ITI set forth in Article IV shall be true in all
material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had
been made on and as of the Closing, and (iii) SCP shall have
received a certificate to such effect from ITI. ITI shall
provide a certificate from its transfer agent as to the
representations contained in SECTION 4.2.
(b) All consents, waivers, approvals, licenses, authorizations of,
or filings or declarations with third parties or Governmental
or Regulatory Bodies required to be obtained by ITI in order
to permit the transactions contemplated by this Agreement to
be consummated in accordance with agreements and court orders
applicable to ITI and applicable governmental laws, rules,
regulations and agreements shall have been obtained and any
waiting period thereunder shall have expired or been
terminated, and SCP shall have received a certificate from ITI
to such effect.
(c) All actions, proceedings, instruments, and documents in
connection with the consummation of the transactions
contemplated by this Agreement, including the forms of all
documents, legal matters, opinions, and procedures in
connection therewith, shall have been approved in form and
substance by counsel for SCP, which approval shall not be
unreasonably withheld.
(d) ITI shall have furnished such certificates to evidence
compliance with the conditions set forth in this Article, as
may be reasonably requested by SCP or its counsel.
(e) ITI shall not have suffered any Material Effect.
Share Exchange Agreement - Page 28
(f) No material information or data provided or made available to
SCP by or on behalf of ITI shall be incorrect in any material
respect.
(g) No investigation and no suit, action, or proceeding before any
court or any governmental or regulatory authority shall be
pending or threatened against ITI and no investigation and no
suit, action, or proceeding before any court or any
governmental or regulatory authority shall be pending or
threatened against any of its affiliates, associates,
officers, or directors seeking to restrain, prevent, or change
in any material respect the transactions contemplated hereby
or seeking damages in connection with such transactions.
(h) The ITI Common Stock shall be approved for listing on the OTC
Bulletin Board, the "E" shall be removed from ITI's trading
symbol, and ITI shall not have received notification from
NASDAQ that it is not in compliance with the rules and
regulations or that its common stock is going to be delisted
from the OTC Bulletin Board.
(i) ITI shall satisfy, in a timely manner, the filing requirements
set forth in Section 15(d) of the Exchange Act.
(j) SCP Shareholders holding no more than 10% of the issued and
outstanding SCP common stock shall have perfected appraisal
rights for their shares in accordance with the Wyoming Law.
(k) ITI shall have obtained shareholder approval of the Share
Exchange and for an amendment to its articles of incorporation
to effect a name change to "China Wireless Communications
Inc." ITI shall have obtained a new CUSIP number for the
common stock in connection with the name change and requested
a new trading symbol from the OTC Bulletin Board.
(l) The outstanding shares of ITI common stock shall not exceed
2,500,000 shares and ITI shall not have any options, warrants,
convertible notes, or other securities convertible into ITI
capital stock outstanding immediately prior to Closing.
(m) SCP shall have received from ITI written resignations from all
of the officers and from all of the directors except for Xxxxx
Xxxxxx, such resignations to be effective upon the Closing.
ITI shall have taken any and all necessary steps, as
determined by SCP, in its sole discretion, to insure the
election of SCP's nominees to ITI's Board of Directors, and
the appointment of SCP's nominees as officers of ITI, such
elections and appointments to be effective upon the Closing.
(n) ITI shall have discontinued all of its presently existing
business operations, and AVL Information Systems Ltd. shall
have assumed all liabilities relating to such business
operations. ITI shall provide a schedule of the liabilities
assumed by AVL. The only liabilities of ITI existing as of the
Effective Date shall be those incurred in connection with the
transactions contemplated by this Agreement. Such liabilities
are expected to include fees to the transfer agent, a fee for
the new CUSIP number,
Share Exchange Agreement - Page 29
auditing fees of ITI, and fees of ITI's counsel related to the
preparation and filing of the Form 8-K disclosing the
completion of this transaction and the preparation and filing
of the S-8 registration statement, and shall not exceed
$25,000. ITI shall provide a schedule of these liabilities as
they exist immediately prior to Closing.
(o) ITI shall have filed amended reports with the SEC as set forth
in SECTION 5.7 and the "E" shall have been removed from its
trading symbol.
ARTICLE VII
POST-CLOSING COVENANTS
The parties covenant to take the following actions after the Closing Date:
7.1 FURTHER INFORMATION. Following the Closing, each party will afford to
the other party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and other data
of SCP or ITI, as the case may be, relating to the business of SCP or
ITI in their possession with respect to periods prior to the Closing
and the right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party (a) to
facilitate the investigation, litigation and final disposition of any
claims which may have been or may be made against any party or its
affiliates and (b) for any other reasonable business purpose.
7.2 RECORD RETENTION. Each party agrees that for a period of not less than
five years following the Closing Date, such party shall not destroy or
otherwise dispose of any of the Books and Records of SCP or ITI
relating to the business of SCP or ITI in his or its possession with
respect to periods prior to the Closing Date. Each party shall have the
right to destroy all or part of such Books and Records after the fifth
anniversary of the Closing Date or, at an earlier time by giving each
other party hereto 30 days prior written notice of such intended
disposition and by offering to deliver to the other party or parties,
at the other party's or parties' expense, custody of such Books and
Records as such party may intend to destroy.
7.3 POST-CLOSING ASSISTANCE. SCP and ITI will provide each other with such
assistance as may reasonably be requested in connection with the
preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings
relating to liability for Taxes, and each will retain and provide the
requesting party with any records or information that may be reasonably
relevant to such return, audit or examination, proceedings or
determination. The party requesting assistance shall reimburse the
other party for reasonable out-of-pocket expenses incurred in providing
such assistance. Any information obtained pursuant to this SECTION 7.3
or pursuant to any other Section hereof providing for the sharing of
information or the review of any Tax Return or other schedule relating
to Taxes shall be kept confidential by the parties hereto.
7.4 SEC REPORTING. With a view to making available the benefits of certain
rules and regulations of the SEC which may at any time permit the sale
of the ITI Common Stock to
Share Exchange Agreement - Page 30
the public without registration, from and after the Closing, the new
management of ITI will use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act,
at all times; and
(b) file with the SEC in a timely manner all reports and other
documents required of ITI under the Exchange Act.
7.5 S-8 REGISTRATION STATEMENT. The new management of ITI shall file a
registration statement on Form S-8 covering the Xxxxxx Compensation and
the compensation shares of new management.
ARTICLE VIII
SURVIVAL
8.1 SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES. Notwithstanding
any investigation conducted or notice or knowledge obtained by or on
behalf of any party hereto, each agreement in this Agreement shall
survive the Closing without limitation as to time until fully performed
and each representation and warranty in this Agreement or in the
Exhibits, Schedules or certificates delivered pursuant to this
Agreement shall survive the Closing for a period of two years (other
than the representations and warranties contained in SECTION 3.5 which
shall survive the Closing without limitation as to time, and other than
the representations and warranties contained in SECTION 3.14, which
shall survive the Closing until the earlier of (i) three and one-half
years from the Closing Date and (ii) three years following the date on
which ITI files the Tax Return relating to the taxable period from
January 1, 2002 through the Closing Date). Notice must be given to the
party from whom indemnification is sought of any claim for
indemnification under Article VIII prior to the termination of the
relevant survival period.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing as follows:
(a) by mutual written consent of ITI and SCP;
(b) by ITI or SCP by written notice to the other party hereto, if
the Closing shall not have occurred on or prior to the close
of business on April 14, 2003 (unless such event has been
caused by a breach of this Agreement by the party seeking such
termination);
Share Exchange Agreement - Page 31
(c) by ITI or by SCP if a Governmental or Regulatory Body has
permanently enjoined or prohibited consummation of the Share
Exchange and such court or government action is final and
nonappealable;
(d) by ITI if SCP has failed to comply in any material respect
with any of its covenants or agreements under this Agreement
that are required to be complied with prior to the date of
such termination; or
(e) by SCP if ITI has failed to comply in any material respect
with any of its covenants or agreements under this Agreement
that are required to be complied with prior to the date of
such termination.
Should SCP terminate this Agreement for any reason other than a default
by ITI as described in SECTION 9.1(E) hereof, SCP shall be liable for
all damages caused by the failure to close. Similarly, if ITI should
terminate this Agreement for any reason other than a default by SCP as
described in SECTION 9.1(d) hereof, ITI shall be liable for all damages
caused by the failure to close.
9.2 SURVIVAL AFTER TERMINATION. If this Agreement is terminated pursuant to
SECTION 9.1, (a) this Agreement shall become null and void and of no
further force and effect, except for the provisions of SECTION 5.1
relating to the obligation to keep confidential certain information and
(b) there shall be no liability on the part of SCP or ITI or their
respective affiliates.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES. SCP shall be responsible for its own legal and accounting
fees, as well as those of ITI, in connection with the Share Exchange,
to the extent set forth in SECTION 6.2(N).
10.2 FURTHER ASSURANCES. At any time and from time to time after the Closing
Date at the request of ITI, and without further consideration, SCP will
execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as
ITI may reasonably deem necessary or desirable in order to transfer,
convey and assign the Shares to ITI and to assist ITI in exercising all
rights with respect thereto. The parties shall use their best efforts
to fulfill or obtain the fulfillment of the conditions to the Closing,
including, without limitation, the execution and delivery of any
document or other papers, the execution and delivery of which are
conditions precedent to the Closing.
10.3 NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and
shall be given personally, sent by facsimile transmission or sent by
prepaid air courier or certified or express mail, postage prepaid. Any
such notice shall be deemed to have been given (a) when received, if
delivered in person, sent by facsimile transmission with receipt of
proof of a successful transmission, or sent by prepaid air courier with
confirmation of delivery, or (b) three (3) business days following the
mailing thereof, if mailed by certified first class mail, postage
prepaid, return receipt
Share Exchange Agreement - Page 32
requested, in any such case as follows (or to such other address or
addresses as a party may have advised the other in the manner provided
in this SECTION 10.3):
If to SCP:
Strategic Communications Partners, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, President
With a copy to:
Berkman, Henoch, Xxxxxxxx & Xxxxx, P.C.
000 Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to ITI:
I-Track, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxxxxx X
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, President
with a copy to:
Xxxx Xxxx Xxxx Xxxxxxxxxx & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
10.4 ARBITRATION. Any dispute, controversy, or claim arising out of,
relating to, or in connection with, this Agreement or the agreements or
transactions contemplated by this Agreement shall be finally settled by
binding arbitration. The arbitration shall be conducted and the
arbitrator chosen in accordance with the rule of the American
Arbitration Association in effect at the time of the arbitration,
except as they may be modified herein or by mutual agreement of ITI and
SCP. In connection with any such arbitration, each party shall be
afforded the opportunity to conduct discovery in accordance with the
Federal Rules of Civil Procedure.
(a) The seat of the arbitration shall be in Denver, Colorado. Each
of SCP and ITI hereby irrevocably submits to the jurisdiction
of the arbitrator in Denver, Colorado, and waives any defense
in an arbitration based upon any claim that such party is not
subject personally to the jurisdiction of such arbitrator,
that such arbitration is brought in an inconvenient format, or
that such venue is improper.
(b) The arbitral award shall be in writing and shall be final and
binding on each of the parties to this Agreement. The award
may include an award of costs, including
Share Exchange Agreement - Page 33
reasonable attorneys' fees and disbursements. Judgment upon
the award may be entered by any court having jurisdiction
thereof or having jurisdiction over the parties or their
assets. SCP and ITI acknowledge and agree that by agreeing to
these arbitration provisions each of the parties hereto is
waiving any right that such party may have to a jury trial
with respect to the resolution of any dispute under this
Agreement or the agreements or transactions contemplated
hereby.
10.5 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without
advance approval thereof by ITI and SCP except as may be required by
applicable law or the rules and regulations of the applicable
regulatory authorities.
10.6 ENTIRE AGREEMENT. This Agreement (including the Exhibits and Schedules)
and the agreements, certificates and other documents delivered pursuant
to this Agreement contain the entire agreement among the parties with
respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto.
10.7 WAIVERS AND AMENDMENTS. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only
by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof
10.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to
principles of conflicts of law.
10.9 BINDING EFFECT, NO ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable by any party hereto
without the prior written consent of the other parties hereto except by
operation of law and any other purported assignment shall be null and
void.
10.10 COUNTERPARTS. 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 hereof each signed by less than all, but together
signed by all of the parties hereto.
10.11 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall
otherwise require.
10.12 EFFECT OF DISCLOSURE ON SCHEDULES. Any item disclosed on any Schedule
to this Agreement shall only be deemed to be disclosed in connection
with (a) the specific representation and warranty to which such
Schedule is expressly referenced, (b) any specific representation and
warranty which expressly cross-references such Schedule and (c) any
specific representation and warranty to which any other Schedule to
this Agreement is expressly referenced if such other Schedule expressly
cross-references such Schedule.
Share Exchange Agreement - Page 34
10.13 HEADINGS. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
10.14 SEVERABILITY OF PROVISIONS. If any provision or any portion of any
provision of this Agreement or the application of such provision or any
portion thereof to any person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, or the application of such
provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ITI: SCP:
I-TRACK, INC. STRATEGIC COMMUNICATIONS
PARTNERS, INC.
By:/s/Xxxxx Xxxxxx By:/s/Xxxxxxx Xxxxx
------------------------------ ----------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx Xxxxx
Title: President Title: President
Share Exchange Agreement - Page 35
