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Exhibit 2.01
PLAN OF REORGANIZATION
AND
STOCK EXCHANGE AGREEMENT
THIS PLAN OF REORGANIZATION AND STOCK EXCHANGE AGREEMENT ("this
Agreement") is entered into effective as of the 1st day of January, 1999, by and
among (i) iBIZ TECHNOLOGY CORP., a Florida corporation formerly known as Invnsys
Holding Corporation ("Buyer"); (ii) INVNSYS TECHNOLOGY CORPORATION, an Arizona
corporation formerly known as Southwest Financial Systems, Inc. (the "Company");
and (iii) XXXXXXX XXXXXXXXX and XXXXX XXXXXXXXX, husband and wife and trustees
under the Moorea Trust dated December 18, 1991 (sometimes collectively referred
to herein as the "Schillings"); (iv) XXXXX XXXXXXX, an individual ("Xxxxxxx");
(v) XXXX XXXXXXX, an individual ("Xxxxxxx"); (vi) XXXX XXXXX, an individual
("Xxxxx"); (vii) XXXXX XXXXXXXXX, an individual ("Xxxxxxxxx"); (viii) XXXXXXX
XXXXXXXX, an individual ("Bielfelt"); and (ix) XXXXX XXXXX, an individual
("Xxxxx"). The foregoing individuals are all Shareholders of the Company, and
are sometimes referred to herein individually as a "Stockholder" or a "Seller"
and collectively as "the Stockholders" or "the Sellers". The foregoing persons
are sometimes referred to herein individually as a "party" and collectively as
the "parties".
RECITALS:
A. The Company is engaged in the business of designing,
manufacturing and distributing small-footprint desktop computers, transaction
printers, general purpose and financial application keyboards, numeric keypads,
cathode ray tube and liquid crystal display monitors and related products.
B. The Schillings have been officers and directors of the Company
and are the trustees under the Moorea Trust dated December 18, 1991, which holds
a majority of the stock in the Company.
C. The Shareholders desire to sell, and Buyer desires to buy, all of
the issued and outstanding shares of common stock of the Company in exchange for
newly issued voting stock in Buyer representing not less than sixty-five percent
(65%) of the outstanding stock in Buyer. It is intended that this transaction
will qualify as a tax-free reorganization pursuant to the U.S. Internal Revenue
Code.
THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows:
1. DEFINITIONS. The following terms shall have the following
meaning as used in this Agreement:
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"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Income Taxes" means any federal, state, local, or foreign income
taxes, including any interest, penalty, or addition thereto, whether disputed or
not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Knowledge" means actual knowledge without independent
investigation.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof) or other entity or
association.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest.
"Stockholders" means the Schillings as trustees under the Moorea
Trust dated December 18, 1991 (10,605 shares, i.e., 75.75%), Xxxxx Xxxxxxx
(1,550 shares, i.e., 11.07%), Xxxx Xxxxxxx (1,550 shares, i.e., 11.07%), Xxxx
Xxxxx (40 shares, i.e., 0.29%), Xxxxx Xxxxxxxxx (30 shares, i.e., 0.21%),
Xxxxxxx Xxxxxxxx (25 shares, i.e., 0.18%) and Xxxxx Xxxxx (200 shares, i.e.,
1.43%).
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
2. BASIC TRANSACTION.
(a) Purchase and Sale of Stock. Subject to the terms and conditions
of this Agreement, Buyer agrees to purchase from Sellers, and Sellers agrees to
sell, transfer, convey, and deliver to Buyer, 14,000 shares of the common stock
of the Company (the "Shares") which will at Closing represent 100% of the issued
and outstanding shares of the common stock of the Company. The transfer of the
Shares will be effective as of January 1, 1999.
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(b) Purchase Price. The Buyer agrees to pay and deliver to Sellers
at the Closing 16,000,000 shares of newly issued unregistered Common Stock, .001
par value, of Buyer ("Buyer Securities") (collectively the "Purchase Price"),
with the certificates for the Buyer Securities to be delivered at the Closing.
The Buyer Securities shall be allocated as follows: The Schillings as trustees
under the Moorea Trust dated December 18, 1991 (12,120,000 shares); Xxxxx
Xxxxxxx (1,771,200 shares); Xxxx Xxxxxxx (1,771,200 shares); Xxxx Xxxxx (46,400
shares); Xxxxx Xxxxxxxxx (33,600 shares); Xxxxxxx Xxxxxxxx (28,800 shares);
Xxxxx Xxxxx (228,800 shares)). The Buyer Securities shall be titled in the name
of the foregoing individuals as indicated. The Purchase Price shall be allocated
to the Shares and the Covenant Not to Compete set forth in Section 7(f) in any
reasonable manner agreed on by the Sellers and Buyer.
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of the Company
located at 0000 X. Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx commencing at
2:00 p.m. on the second business day following the satisfaction or waiver of all
conditions to the obligations of the parties as set forth in Section 6 to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective parties will take at the Closing itself) or
such other date as the parties may mutually determine but in no event later than
March 5, 1999 ("Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) Sellers will
deliver to Buyer the various certificates, instruments, and documents referred
to in Section 5(a) below; (ii) Buyer will deliver to Sellers the various
certificates, instruments, and documents referred to in Section 5(b) below;
(iii) Buyer will deliver to Sellers the Buyer Securities specified in Section
2(b) above; and (iv) Sellers will transfer the Shares to Buyer pursuant to
Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE SCHILLINGS.
(a) Each Seller individually represents and warrants to Buyer that
the statements contained in this Section 3(a) are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 3(a)), except as set forth in the
disclosure schedule attached to this Agreement ("Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 3(a).
(i) Authorization of Transaction. Sellers have full power and
authority to execute and deliver this Agreement and to perform his, her,
or its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Sellers, enforceable in accordance with
its terms and conditions. The Sellers need not give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
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(ii) Noncontravention. Except as set forth on Section 3(a)(ii)
of the Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
will (i) to the individual Knowledge of the respective Sellers, violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency or court, to which such Seller is subject or any
provision or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which such Seller is a party or by which it is bound or to
which any of the Shares is subject (or result in the imposition of any
Security Interest upon any of the Shares), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have
a material adverse effect on the ability of the parties to consummate the
transactions contemplated by this Agreement. To the individual Knowledge
of the respective Sellers, there is no need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the parties to consummate
the transactions contemplated by this Agreement, except where the failure
to give notice, to file, or to obtain any authorization, consent, or
approval would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Company or on the ability of the parties to consummate
the transactions contemplated by this Agreement.
(iii) Brokers' Fees. Sellers have no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the
Buyer could become liable or obligated.
(iv) Investment. Each Seller (i) understands that the Buyer
Securities have not been, and may not be, registered under any federal,
state or other securities laws, and are being issued in reliance upon
federal and state exemptions for transactions not involving any public
offering, (ii) is acquiring Buyer Securities solely for its own account
for investment purposes, and not with a view to the distribution thereof,
(iii) is a sophisticated investor with knowledge and experience in
business and financial matters, (iv) has received certain information
concerning Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks
inherent in holding Buyer Securities, (v) is able to bear the economic
risk and lack of liquidity inherent in holding Buyer Securities. The
Schillings represent and warrant they qualify as an "Accredited Investor"
as defined in Rule 502 of Regulation D promulgated under the Securities
Act of 1933, as amended. The Buyer Securities shall contain a restrictive
legend. Before transferring any Buyer Securities, Sellers shall furnish
Buyer with (i) a written opinion reasonably satisfactory to
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Buyer in form and substance from counsel reasonably satisfactory to Buyer
by reason of experience to the effect that the holder may transfer Buyer
Securities as desired without registration and (ii) a written undertaking
executed by the desired transferee reasonably satisfactory to Buyer in
form and substance agreeing to be bound by the restrictions on transfer
contained herein.
(v) Ownership of Shares. Each Seller holds of record and owns
beneficially the number of Shares set forth next to his or its name in
Section 1 of this Agreement, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state
securities laws), taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. None of the
Sellers is a party to any option, warrant, purchase right, or other
contract or commitment that could require such Seller to sell, transfer,
or otherwise dispose of any capital stock of the Company (other than this
Agreement). The Sellers is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital
stock of the Company.
(vi) Disclosure. To the individual Knowledge of each of the
Sellers, the representations and warranties contained in this Section 3(a)
do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and
information contained in this Section 3(a) not misleading.
(b) The Schillings and the Company represent and warrant to Buyer
that the statements contained in this Section 3(b) are correct and complete as
of the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3), except as set forth in
the disclosure schedule attached to this Agreement ("Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 3(b).
(i) Organization of the Company. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation. The Company has provided current
Articles, Bylaws and stock records, along with any amendments, to Buyer.
(ii) Noncontravention. Except as set forth on Section 3(b)(ii)
of the Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
will (i) to the Knowledge of the Schillings, violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency or
court, to which the Company is subject or any provision of the charter or
bylaws of the Company or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or
other arrangement to the Company is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any
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Security Interest upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have
a material adverse effect on the business, financial condition,
operations, results of operations, or future prospects of the Company or
on the ability of the parties to consummate the transactions contemplated
by this Agreement. To the Knowledge of the Schillings, the Company does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice,
to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the business, financial condition,
operations, results of operations, or future prospects of the Company or
on the ability of the parties to consummate the transactions contemplated
by this Agreement.
(iii) Brokers' Fees. The Company has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which
Buyer could become liable or obligated.
(iv) Title to Assets. The Company has good and marketable
title to all of its tangible assets, and owns all of its assets free and
clear of any Security Interest except those set forth on Section 3(b)(iv)
of the Disclosure Schedule.
(v) Subsidiaries. The Company has no Subsidiaries or Affiliate
entities except TellerVision, Inc., which is an Arizona corporation, all
of the stock of which is held by the Schillings as trustees of the Moorea
Trust dated December 18, 1991 which is not included in the transactions
contemplated by this Agreement. The Schillings covenant to change the name
of TellerVision, Inc. if requested by Buyer.
(vi) Financial Statements. Attached hereto as Section 3(b)(vi)
of Disclosure Schedule are the following financial statements for the
Company: unaudited financial statements for the fiscal years ended October
31, 1995, October 31, 1996, and October 31, 1997. The October 31, 1997
Financial Statements are sometimes referred to herein as the "Company's
Most Recent Financial Statements". Except as may otherwise be indicated,
the Company's Most Recent Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as
of such dates and the results of operations of the Company for such
periods. "GAAP" means United States generally accepted accounting
principles as modified from time to time.
(vii) Events Subsequent to the Company's Most Recent Financial
Statements. Since the Sellers' Most Recent Financial Statements, there has
not been any material adverse change in the financial condition of the
Company taken as a
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whole except as may otherwise be set forth on Section 3(b)(vi) of the
Disclosure Schedule.
(viii) Undisclosed Liabilities. To the Knowledge of the
Schillings, the Company has no material liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due, including any liability for taxes), except
for (i) liabilities set forth on the Company's Most Recent Financial
Statements; and (ii) liabilities which have arisen after the Company's
Most Recent Financial Statements in the Ordinary Course of Business; and
those that are specifically disclosed in Section 3(b)(vii) of the
Disclosure Schedule.
(ix) Legal Compliance. To the Knowledge of the Schillings, the
Company has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against any of them alleging any failure so to
comply, except where the failure to comply would not have a material
adverse effect on the business, financial condition, operations, results
of operations, or future prospects of the Company.
(x) Tax Matters.
(1) Other than the tax return for the period ended
October 31, 1998, the Company has filed all Income Tax Returns that
it was required to file. All such Income Tax Returns were correct
and complete in all material respects. Except as otherwise set forth
in Section 3(b)(x) of the Disclosure Schedule, all Income Taxes owed
by the Company (whether or not shown on any Income Tax Return) have
been paid. The Company currently is not the beneficiary of any
extension of time within which to file any Income Tax Return other
than the extension filed on January 15, 1999 for the period ended
October 31, 1998.
(2) There is no material dispute or claim concerning any
Income Tax liability of the Company either claimed or raised by any
authority in writing or as to which the Schillings have Knowledge
based upon personal contact with any agent of such authority.
(3) The Company is not currently the subject of an
audit. The Company has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with
respect to an Income Tax assessment or deficiency.
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(4) The Company has not been a member of an Affiliated
Group (as defined herein) filing a consolidated federal Income Tax
Return and has no liability for the taxes of any other Person under
Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise. "Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a
similar provision of state, local, or foreign law.
(5) The unpaid Income Taxes of the Company did not, as
of the Company's Most Recent Financial Statements, exceed by any
material amount the reserve for Income Tax liability (rather than
any reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the Company's
Most Recent Financial Statements and will not exceed by any material
amount that reserve as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and
practice of the Company in filing Income Tax Returns.
(6) The foregoing notwithstanding, the Company has those
liabilities for unpaid taxes as may be set forth in the Company's
Most Recent Financial Statements and those that may be set forth in
Section 3(b)(x) of the Disclosure Schedule.
(xi) Real Property. Section 3(b)(xi) of the Disclosure
Schedule lists all real property that the Company owns, and all real
property leased or subleased to the Company.
(xii) Intellectual Property. Section 3(b)(xii) of the
Disclosure Schedule identifies each pending or issued trademark, copyright
or other intellectual property application, registration or patent owned
by the Company, and identifies each license, agreement, or other
permission that the Company has granted to any third party with respect to
any of its intellectual property. To the Knowledge of the Schillings, the
Company owns or has the right to use any trademarks, know-how, patents,
copyrights, software and other intellectual properties necessary, or
actually used by the Company, for the operation of its business. To the
Knowledge of the Schillings, the Company has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties.
(xiii) Tangible Assets. The buildings, machinery, equipment,
and other tangible assets that the Company owns and leases are free from
material defects (patent and latent), have been maintained in accordance
with normal industry practice, and are in good operating condition and
repair (subject to normal wear and tear).
(xiv) Inventory. The inventory of the Company is merchantable
and fit for the purpose for which it was procured or manufactured, and
none of which is
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slow-moving, obsolete, damaged, or defective, subject only to the reserve
for inventory writedown set forth on the Most Recent Financial Statement
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company.
(xv) Contracts. Section 3(b)(xv) of the Disclosure Schedule
lists all written contracts and other written or oral agreements to which
the Company is a party the performance of which by the Company will
involve consideration in excess of $1,000 paid by the Company or incurred
or received by the Company in connection with services yet to be
performed. The Company has delivered to the Buyer a correct and complete
copy of each contract or other agreement listed in Section 3(b)(xv) of the
Disclosure Schedule (as amended to date).
(xvi) Notes and Accounts Receivable. All notes and accounts
receivable of the Company are reflected properly on their books and
records, are valid receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts
set forth on the Company's Most Recent Financial Statements as adjusted
for operations and transactions through the Closing Date in accordance
with the past custom and practice of the Company.
(xvii) Powers of Attorney. There are no material outstanding
powers of attorney executed on behalf of the Company.
(xviii) Insurance. Section 3(b)(xviii) of the Disclosure
Schedule lists all material insurance policies of the Company and
summarizes the coverages thereunder.
(xix) Litigation. Section 3(b)(xix) of the Disclosure Schedule
sets forth each instance in which the Company (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the Knowledge of the Schillings, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any
arbitrator.
(xx) Product Warranty. Substantially all of the products
manufactured, sold, leased, and delivered by the Company have conformed in
all material respects with all applicable contractual commitments and all
express and implied warranties, and the Company has no material liability
(whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due) for replacement or
repair thereof or other damages in connection therewith, subject only to
the reserve for product warranty claims set forth on the Company's Most
Recent Financial Statements as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and practice
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of the Company. Substantially all of the products manufactured, sold,
leased, and delivered by the Company are subject to the Company's standard
terms and conditions of sale or lease.
(xxi) Product Liability. To the Knowledge of the Schillings,
the Company has no material liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to
become due) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured,
sold, leased, or delivered by the Company.
(xxii) Employees. To the Knowledge of the Schillings, no
executive, key employee, or significant group of employees currently plans
to terminate employment with the Company. The Company is not a party to or
bound by any collective bargaining agreement, nor has the Company
experienced any strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute within the past three
years. The Schillings do not have any Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor
union with respect to employees of any of the Company.
(xxiii) Employee Benefits. The Company has not maintained any
plans or other arrangements that may qualify as Employee Benefit Plans
other than those that may be disclosed on Section 3(b)(xxiii) of the
Disclosure Schedule, and with respect to any such plans the Company has
complied with all applicable laws. "Employee Benefit Plan" means any (a)
nonqualified deferred compensation or retirement plan or arrangement, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan (including
any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material
fringe benefit or other retirement, bonus, or incentive plan or program.
The foregoing terms have the meanings established under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(xxiv) Guaranties. The Company is not a guarantor or otherwise
is responsible for any liability or obligation (including indebtedness) of
any other Person.
(xxv) Environmental, Health, and Safety Matters.
(a) To the Knowledge of the Schillings, the Company is
in compliance with Environmental, Health, and Safety Requirements
(as defined below), except for such noncompliance which would not
have a material adverse effect on the financial condition of the
Company taken as a whole.
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(b) To the Knowledge of the Schillings, the Company has
not received any written notice, report or other information
regarding any actual or alleged material violation of Environmental,
Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to the Company or its
facilities arising under Environmental, Health, and Safety
Requirements, the subject of which would have a material adverse
effect on the financial condition of the Company.
(c) As used herein, "Environmental, Health, and Safety
Requirements" means all federal, state, local and foreign statutes,
regulations, ordinances and similar provisions having the force or
effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
(xxvi) Certain Business Relationships With the Company. Except
as may be disclosed in Section 3(b)(xxvi) of the Disclosure Statement,
neither the Schillings nor their Affiliates have been involved in any
material business arrangement or relationship with the Company within the
past 12 months, and neither the Schillings nor their Affiliates own any
material asset, tangible or intangible, which is used in the business of
the Company.
(xxvii) Disclosure. To the Knowledge of the Schillings, the
representations and warranties contained in this Section 3(b) do not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3(b) not misleading.
(c) The Company represents and warrants to Buyer that the statements
contained in this Section 3(c) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the disclosure
schedule attached to this Agreement ("Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3(c).
(i) Organization of the Company. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of
the
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jurisdiction of its incorporation. The Company has obtained authority to
do business in those jurisdictions in which the Company is required to
obtain authority to do business. Attached as Exhibit 3(c)(i) are the
resolutions or other instruments authorizing the Company to enter into
this Agreement and perform its obligations hereunder.
(ii) Authorization of Transaction. The Company has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The Company has obtained the approval of its
Shareholders to consummate this Agreement and perform the obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms and
conditions.
(iii) The Shares. The Shares to be delivered to Buyer at
Closing pursuant to Section 2 have been duly authorized and are validly
issued, fully paid, and non-assessable. The Company only has one class of
stock which is not divided into series, and the Shares represent one
hundred percent (100%) of the Company's common stock and one hundred
percent (100%) of the Company's total outstanding securities, whether
voting or non-voting. Except as may be disclosed in Section 3(c)(iii) of
the Disclosure Schedule, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights or contracts or commitments that could require the Company
to issue, sell, or otherwise cause to become outstanding any of its
capital stock, and there are no outstanding authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company.
(d) Disclaimer of other Representations and Warranties. Except as
expressly set forth in this Section 3, Sellers and the Company make no
representation or warranty, express or implied, at law or in equity, in respect
to any of the Company's assets, liabilities or operations, including, without
limitation, merchantability or fitness for any particular purpose of any of the
Company's assets; and any such other representations or warranties are hereby
expressly disclaimed. Buyer hereby acknowledges and agrees that, except to the
extent specifically set forth in this Section 3, the Buyer is purchasing the
Company on an "AS-IS, WHERE-IS" basis. Buyer acknowledges that some of the
Company's hardware and software may not be year 2000 compliant.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Sellers that the statements contained in this Section 4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
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(a) Organization of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Buyer has obtained authority to do business in those
jurisdictions in which Buyer is required to obtain authority to do business.
Attached as Exhibit 4(a) are the resolutions or other instruments duly
authorizing Buyer to enter into this Agreement and perform its obligations
hereunder, which shall include a resolution of Buyer's Board of Directors (and
shareholders if required) authorizing this Agreement and issuance of the Buyer
Securities in exchange for the Shares and a determination by the Board of the
adequacy of the consideration for the Buyer Securities.
(b) Authorization of Transaction. Buyer has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
Buyer does not need to obtain the approval of its Shareholders to authorize this
Agreement and perform the obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of Buyer, enforceable in accordance with
its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
to the Knowledge of Buyer, violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency or court, to which Buyer is subject or any
provision of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of its assets
is subject. To the Knowledge of Buyer, Buyer does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Sellers could become
liable or obligated.
(e) Buyer Securities. The Buyer Securities to be delivered to
Sellers at Closing pursuant to Section 2 have been duly authorized and are
validly issued, fully paid, and non-assessable, Buyer only has one class of
stock which is not divided into series, and Buyer Securities represent not less
than sixty-five percent (65%) of Buyer's common stock and not less than
sixty-five percent (65%) of Buyer's total outstanding securities, whether voting
or non-voting. Sellers acknowledge that Buyer may issue an additional 440,600
shares of common stock on or before Closing, which would decrease the foregoing
percentage to sixty-four percent (64%). Except as may be disclosed in Section
4(e) of the Disclosure Schedule, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or contracts or commitments that could require Buyer to issue, sell, or
otherwise cause to become outstanding any of its capital stock, and there are no
outstanding authorized stock appreciation, phantom stock,
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profit participation, or similar rights with respect to Buyer. Excluding the
Buyer Securities to be issued to Sellers, one hundred percent (100%) of Seller's
outstanding common stock is publicly traded with no stop transfer orders present
or pending under the symbol "iBIZ".
(f) Price Stabilization. Neither Buyer nor, to its Knowledge, any of
its directors or Affiliates has taken, directly or indirectly, any action
designed to cause or result in, or which has constituted, the stabilization or
manipulation of the price of the outstanding common stock or any other
outstanding securities of Buyer.
(g) NASD Compliance. Buyer has complied with the reporting
requirements of the National Association of Securities Dealers ("NASD") to have
its common stock quoted on the Over-the-Counter Bulletin Board ("Bulletin
Board"), and Buyer's common stock is now quoted on the Bulletin Board under the
symbol "iBIZ". Buyer is currently in compliance with the reporting requirements
of the NASD.
(h) Actions Affecting Securities Compliance. Buyer has not taken any
action (including, but not limited to, the offering or sale of securities which
may be integrated with the issuance and sale governed by this Agreement) which
adversely affects the availability of the exemption from registration under the
Securities Act of 1933 provided by Section 4(2) thereof or the applicable rules
and regulations thereunder or any provisions of the securities or blue sky laws
of any applicable jurisdiction. Without limiting the foregoing, Sellers
acknowledge that Buyer has recently issued securities under Regulation D and has
fully complied with said Regulation.
(i) No Injunctions Against Principals. To the best of Buyer's
Knowledge, neither Buyer, nor any of its officers or directors have, during the
past five (5) years, been the subject of any injunction, cease and desist order,
assurance of discontinuance, suspension or restraining order, revocation or
suspension of a license to practice a trade, occupation or profession, denial of
an application to obtain or renew same, any stipulation or consent to desist
from any act or practice, any disciplinary action by any court or administrative
agency, nor has Buyer or any of its officers or directors knowingly violated any
state or federal laws regulating the offering and sale of securities.
(j) Subsidiaries. Buyer has no Subsidiaries or Affiliate entities.
(k) Financial Statements. Attached hereto as Section 4(k) of Buyer's
Disclosure Schedule are the following financial statements for Buyer: audited
financial statements for the fiscal years ended December 31, 1996, December 31,
1997 and for January 1998 through May 28, 1998, and unaudited financial
statements for the fiscal year ended December 31, 1998. The December 31, 1998
Financial Statements are sometimes referred to herein as the "Buyer's Most
Recent Financial Statements". Except as may otherwise be indicated, the Buyer's
Most Recent Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of Buyer as of such dates and the results of
operations
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of Buyer for such periods. "GAAP" means United States generally accepted
accounting principles as modified from time to time.
(l) Events Subsequent to Buyer's Most Recent Financial Statements.
Since the Buyer's Most Recent Financial Statements, there has not been any
material adverse change in the financial condition of Buyer taken as a whole
except as may otherwise be set forth on Section 4(l) of the Buyer's Disclosure
Schedule. Without limiting the generality of the foregoing, since the Buyer's
Most Recent Financial Statements Buyer has not declared or made any dividend or
other distribution, and has not taken any action or entered into any transaction
outside the Ordinary Course of Business.
(m) Undisclosed Liabilities. To the Knowledge of Buyer, Buyer has no
material liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due, including any liability for
taxes), except for (i) liabilities set forth on the Buyer's Most Recent
Financial Statements; and (ii) those that are specifically described in Section
4(m) of the Buyer's Disclosure Schedule.
(n) Legal Compliance. To the knowledge of Buyer, Buyer has complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply, except where the failure to comply would not have a
material adverse effect on the business, financial condition, operations,
results of operations, or future prospects of Buyer.
(o) Litigation. Section 4(o) of the Buyer's Disclosure Schedule sets
forth each instance in which Buyer (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of Buyer, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.
(p) Disclosure. To the Knowledge of Buyer, the representations and
warranties contained in this Section 4 do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 4 not misleading.
5. PRE-CLOSING COVENANTS AND CLOSING OBLIGATIONS.
(a) Closing Obligations of Sellers. On or before the Closing,
Sellers shall do the following:
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(i) Sellers shall deliver to Buyer certificates in the form
attached hereto collectively as Exhibit 5(a-1) to the effect that each of
the representations and warranties specified above in Section 3 are
correct and complete as of the Closing Date;
(ii) Sellers shall tender the Employment Agreements executed
by Xxx Xxxxxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxxx in the form attached
hereto as Exhibit 5(a-2), 5(a-3), and 5(a-4);
(iii) Sellers shall tender executed Assignments of Stock
Separate From Certificate for the Shares.
(b) Closing Obligations of Buyer. On or before the Closing, Buyer
shall do the following:
(i) Buyer shall deliver to Sellers a certificate of Buyer in
the form attached hereto as Exhibit 5(b-1) to the effect that each of the
representations and warranties specified above in Section 4 are correct
and complete as of the Closing Date;
(ii) Buyer shall execute the Employment Agreements for Xxx
Xxxxxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxxx in the form attached hereto as
Exhibit 5(a-2), 5(a-3), and 5(a-4);
(iii) Buyer shall deliver executed stock certificates for the
Buyer Securities pursuant to Section 2(b).
(c) Pre-Closing Confidentiality. Prior to the Closing, Buyer shall
maintain all confidential information of Sellers in confidence, shall not use or
disclose such information except in furtherance of the transactions contemplated
by this Agreement, and shall return such information upon demand by Sellers in
the event of a failure to close. Sellers acknowledge that Buyer has issued
certain press releases and Sellers consent to such releases as they have been
disclosed to Sellers prior to execution hereof. Sellers and Buyer shall
coordinate all future publicity and no party shall issue any press release
publicity statement, or other public notice relating to this Agreement and the
transactions contemplated hereby without the approval of the other party,
subject only to Section 9(b).
6. CONDITIONS TO OBLIGATION TO CLOSE; TERMINATION.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
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(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Sellers and Buyer shall have received all authorizations,
consents, and approvals required to consummate the transactions
contemplated by this Agreement, including approval of Community First
National Bank to the extent required.
(v) the Buyer shall have received from counsel to the Sellers
an opinion letter in form and substance reasonably acceptable to Buyer,
addressed to the Buyer, and dated as of the Closing Date, giving those
opinions reasonably requested by the Buyer, which shall include without
limitation the following opinions: (a) that the Company is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Arizona; and (b) the Company has the requisite power and
authority to carry out the terms and conditions applicable to them under
this Agreement;
(vi) all advances made by Buyer to the Company shall be
evidenced by a promissory note bearing interest at six percent (6%) per
annum, in a form acceptable to Buyer in its commercially reasonable
discretion;
(vii) any changes in the Disclosure Schedules and Exhibits
Attached hereto shall be acceptable to Buyer in its discretion.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
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(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Sellers and Buyer shall have received all authorizations,
consents, and approvals required to consummate the transactions
contemplated by this Agreement;
(v) the Sellers shall have received from counsel to the Buyer
an opinion letter in form and substance reasonably acceptable to Sellers,
addressed to the Sellers, and dated as of the Closing Date, giving those
opinions reasonably requested by the Sellers, which shall include without
limitation the following opinions: (a) that the Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Florida; (b) that the Buyer's authorized capital consists of
100,000,000 common shares, par value $.001 per share, of which not more
than 24,980,918 shares are issued and outstanding as of the Closing Date
after issuance of the Buyer Securities to Sellers, and that Buyer only has
one class of stock which is not divided into series, and the Buyer
Securities represent not less than sixty-four percent (64%) of Buyer's
common stock and not less than sixty-four percent (64%) of Buyer's total
outstanding securities, whether voting or non-voting; (c) the Buyer
Securities to be issued to Sellers under this Agreement have been duly
authorized and are validly issued, fully paid, and nonassessable, and are
entitled to all applicable economic and voting rights; (d) the Buyer has
the requisite corporate power and authority to carry out the terms and
conditions applicable to it under this Agreement; (e) the execution,
delivery, and performance of this Agreement by the Buyer has been duly
authorized by all requisite corporate action on the part of the Buyer; (f)
the execution and delivery of this Agreement and consummation of the
transactions contemplated by this Agreement by the Buyer will not conflict
with or result in a violation of the Buyer's Articles of Incorporation or
bylaws, and such transactions shall not give rise to any right of
redemption or otherwise limit Sellers' rights in the Buyer Securities
under Florida's control share statutes or otherwise.
(vi) the Company shall have received a loan of $250,000 from
Buyer which is in addition to and over and above the advances made by
Buyer to the Company as of the execution of this Agreement;
(vii) the shares exchanged pursuant to this Agreement shall
constitute a tax free exchange for the Sellers.
The Sellers may waive any condition specified in this Section 6(b) if the
execute a writing so stating at or prior to the Closing.
(c) Termination of Agreement. The parties may terminate this
Agreement as provided below:
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(i) the Buyer and the Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Sellers in the event of a failure to close that is not the
fault of Buyer, or if the Closing shall not have occurred on or before
February 28, 1999, by reason of the failure of any condition precedent
under Section 6(a) hereof (unless the failure results from the Buyer
itself breaching any representation, warranty, or covenant contained in
this Agreement); and
(iii) the Sellers may terminate this Agreement by giving
written notice to the Buyer in the event of a failure to close that is not
the fault of the Sellers, or if the Closing shall not have occurred on or
before February 28, 1999, by reason of the failure of any condition
precedent under Section 6(b) hereof (unless the failure results from the
Sellers themselves breaching any representation, warranty, or covenant
contained in this Agreement).
If any party terminates this Agreement pursuant to this Section, all
rights and obligations of the parties hereunder shall terminate without any
liability of any party to any other party (except for any liability of any party
then in breach); provided, however, that the confidentiality provisions
contained in Section 5(c) shall survive termination.
7. POST-CLOSING COVENANTS. The parties agree as follows with respect
to the period following the Closing.
(a) General; Payment of Tax Liabilities. In case at any time after
the Closing any further action is necessary to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor under
Section 8 below). Immediately after the Closing, Buyer shall cause the Company
to pay off all outstanding tax liabilities for overdue taxes, including
outstanding tax liabilities for overdue payroll and sales taxes and any
penalties. Buyer shall permit the Sellers to review and comment on any documents
necessary to carry out the foregoing and shall make such revisions as are
reasonably requested by the Sellers.
(b) Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Sellers, each of the other parties will cooperate
with the contesting or defending party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or
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defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 8 below).
(c) Transition. Sellers will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of Sellers from maintaining the same
business relationships with Buyer after the Closing as it maintained with
Sellers prior to the Closing.
(d) Confidentiality. Sellers will treat and hold as confidential all
information concerning the business and affairs of Sellers that is not already
generally available to the public ("Confidential Information"), refrain from
using any Confidential Information except in connection with this Agreement, and
deliver promptly to Buyer or destroy, at the request and option of Buyer, all
tangible embodiments (and all copies) of Confidential Information in its
possession. In the event that Sellers is requested or required (by oral question
or request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, Sellers will notify Buyer promptly of the request or
requirement so that Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 7(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, Sellers are, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that Sellers may disclose
Confidential Information to the tribunal; provided, however, that each Seller
shall use its reasonable best efforts to obtain, at the reasonable request of
Buyer, an order or other assurance that confidential treatment will be accorded
to such portion of Confidential Information required to be disclosed as Buyer
shall designate.
(e) Transfer of Employees. Sellers will cooperate with Buyer to
transfer employment of the Company's employees to Buyer after Closing to the
extent requested by Buyer. A list of Sellers' employees and a summary of
compensation and benefits is attached hereto as Exhibit 7(e).
(f) Covenant Not to Compete. For a period of five (5) years from and
after the Closing Date, Sellers will not engage directly or indirectly in any
business that the Company was conducting as of the Closing Date in any
geographic area in which the Company was conducting that business as of the
Closing Date or in any geographic area in which Buyer conducts business.
(g) Internal Controls. Buyer shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; (iv) and the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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(h) Transfer Agreement. Buyer has appointed Interwest Transfer
Company, Inc., located at 0000 Xxxx Xxxxxx Xxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxx
Xxxx, Xxxx 00000 as Buyer's transfer agent. Buyer will continue to retain a
transfer agent reasonably satisfactory to Sellers for a period of three (3)
years following the Closing Date.
(i) Independent Board. For a period of five (5) years from the
Closing Date, Buyer agrees to appoint and nominate for election as iBIZ
directors by the shareholders Xxxx Xxxxx and Xxx Xxxxxxxxx. Buyer's audit and
compensation committee shall consist of a majority of outside independent
directors as long as Sellers or the Schillings hold any common stock or other
voting securities of Buyer.
(j) Insurance. Effective as soon as possible but no later than sixty
(60) days after the Closing Date, Buyer shall have acquired and shall continue
to maintain an errors and omissions insurance policy in an amount reasonably
acceptable to the Board of Directors of Buyer to cover the errors and omissions
of the directors and officers of Buyer.
(k) Prohibition of Cheap Stock. Any and all issuances by Buyer of
preferred or common stock or warrants, options or other securities convertible
into common stock to Affiliates at a price or conversion price, as applicable,
of less than the Fair Market Value (as defined below) at the time of issuance
shall require prior approval of Sellers. "Fair Market Value" shall mean:
(i) if Buyer's Stock ("the Shares") are listed or admitted to
trading on any securities exchange, the fair market value shall be the
average sales price on such day on the New York Stock Exchange, or if the
Shares have not been listed or admitted to trading on the New York Stock
Exchange, on such other securities exchange on which such stock is then
listed or admitted to trading, or if no sale takes place on such day on
any such exchange, the average of the closing bid and asked price on such
day as officially quoted on any such exchange;
(ii) if the Shares are not then listed or admitted to trading
on any securities exchange, the fair market value shall be the average
sales price on such day, or if no sales takes place on such day, the
average of the reported closing bid and asked price on such date, in the
over-the-counter market as furnished by the National Association of
Securities Dealers Automated Quotation ("NASDAQ"), or if NASDAQ at the
time is not engaged in the business of reporting such prices, as furnished
by any similar firm then engaged in such business and selected by the
Buyer's Board; or
(iii) if the Shares are not then listed or admitted to trading
in the over-the-counter market, the fair market value shall be the amount
determined by the Buyer's Board in a manner consistent with Treasury
Regulation Section 00-0000-0 promulgated under the Code or in such other
manner prescribed by the U.S. Secretary of the Treasury or the Internal
Revenue Service.
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(l) Repayment of Xxxxxxxxx Note. The promissory note evidencing Xxx
Xxxxxxxxx'x debt to the Company shall be repaid in full in either cash or
securities.
(m) Capital Raise. Buyer hereby agrees to raise funds through the
sale of equity in accordance with the schedule set forth on Exhibit 7(m)
attached hereto.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties contained in this Agreement shall survive the
Closing and continue in full force and effect for a period of two years
thereafter.
(b) Indemnification Provisions for Benefit of Buyer. In the event
Sellers breach any of their respective representations, warranties, or covenants
contained in this Agreement, and Buyer makes a written claim for indemnification
against Sellers within the survival period set forth in Section 8(a), then
Sellers shall indemnify Buyer from and against the entirety of any Adverse
Consequences, as defined below, that Buyer may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences that Buyer
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, or caused by the breach.
(c) Indemnification Provisions for Benefit of Sellers. In the event
Buyer breaches any of its representations, warranties, or covenants contained in
this Agreement, and Sellers or the Schillings make a written claim for
indemnification against Buyer within the survival period set forth in Section
8(a), then Buyer shall indemnify Sellers or the Schillings as applicable from
and against the entirety of any Adverse Consequences that Sellers or the
Schillings may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences that Sellers or the
Schillings may suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, or caused by the breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any party ("Indemnified
Party") with respect to any matter ("Third Party Claim") that may give
rise to a claim for indemnification against any other party ("Indemnifying
Party") under this Section 8, then the Indemnified Party shall promptly
notify the Indemnifying Party thereof in writing.
(ii) Any Indemnifying Party will have the right to assume the
defense of the Third Party Claim with counsel of his or its choice
reasonably satisfactory to the Indemnified Party at any time within 15
days after the Indemnified Party has given notice of the Third party
Claim; provided, however, that the Indemnifying party must conduct the
defense of the Third Party Claim actively and diligently thereafter in
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order to preserve its rights in this regard; and provided further that the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim.
(iii) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third Party Claim in accordance with Section
8(d)(ii) above, (A) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party
(not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages by one or more of
the Indemnifying Parties and does not impose an injunction or other
equitable relief upon the Indemnified Party and (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably).
(iv) In the event none of the Indemnifying Parties assume and
conduct the defense of the Third Party Claim in accordance with Section
8(d)(ii) above, (A) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to,
the Third Party Claim in any manner it reasonably may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith) and (B) the
Indemnifying Party will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating
to, or caused by the Third Party Claim to the fullest extent provided in
this Section 8.
(e) Definition of Adverse Consequences. As used herein "Adverse
Consequences" means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
(f) Exclusive Remedy. The parties acknowledge and agree that the
foregoing indemnification provisions shall be the exclusive remedy under this
Agreement, and the parties hereby waive any statutory, equitable, or common law
rights or remedies.
9. MISCELLANEOUS.
(a) Survival of Representations and Warranties. The representations
and warranties of the parties contained in this Agreement shall survive the
Closing hereunder as and to the extent provided herein in Section 8.
(b) Press Releases and Public Announcements. No party shall issue
any press release or make any public announcement relating to the subject matter
of this
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Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing party will use its best
efforts to advise the other party prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes any prior understandings,
agreements, or representations by or between the parties, written or oral, to
the extent they relate in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other party; provided, however, Buyer may assign any or all of
its rights and interests hereunder to one or more of its Affiliates and
designate one or more of its Affiliates to perform its obligations hereunder or
may assign its rights and obligations hereunder to a successor of substantially
all of the Acquired Assets (in any of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by U.S. registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
follows: If to a Seller, the notice may be addressed using the most recent
address for the Seller reflected in the Buyer's shareholder records. If to the
Buyer:
iBIZ Technology Corp.
c/o Xxxx X. Xxxxx & Associates, LTD.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Page 00
00
Xxxxxxxxx, X.X. Xxxxxx X0X0X0
Attn: Xxxx Xxxxx
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona without giving effect to any
choice or conflict of law provision or rule (whether of the State of Arizona or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Arizona.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Sellers. No waiver by any party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Buyer and Sellers will bear their or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby except to the extent that
Buyer assumes Sellers' obligations hereunder.
(m) Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
Page 25
26
(o) Bulk Transfer Laws. The Buyer acknowledges that Sellers will not
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
(p) Representation. The parties hereto acknowledge that Xxxxxxx &
Xxxxxxx, P.L.C., has represented the Company in connection with this Agreement
and has not represented the individual Shareholders of the Company.
*****
Page 26
27
IN WITNESS WHEREOF, the parties hereto have executed this Plan Of
Reorganization and Stock Exchange Agreement effective as of the date first above
written.
iBIZ TECHNOLOGY CORP., a Florida corporation
By:_________________________________________
Name:_______________________________________
Title:______________________________________
INVNSYS TECHNOLOGY CORPORATION, an
Arizona corporation
By:_________________________________________
Name:_______________________________________
Title:______________________________________
XXXXXXX XXXXXXXXX, individually and as trustee
of the Moorea Trust dated December 18, 1991
____________________________________________
XXXXX XXXXXXXXX, individually and as trustee
of the Moorea Trust dated December 18, 1991
____________________________________________
XXXXX XXXXXXX
____________________________________________
XXXX XXXXXXX
____________________________________________
XXXX XXXXX
____________________________________________
Page 27
28
XXXXX XXXXXXXXX
____________________________________________
XXXXXXX XXXXXXXX
____________________________________________
XXXXX XXXXX
____________________________________________
Page 28
