EXHIBIT 10.1
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AGREEMENT AND PLAN OF MERGER, dated as of November 7, 2000 (the
"Agreement"), among INFORETECH WIRELESS TECHNOLOGY, INC., a Nevada corporation,
("Inforetech"), INFORETECH MERGER SUB, INC., a California corporation ("Merger
Sub") and PROSHOT GOLF, INC., a California corporation (the "Company").
Inforetech, Merger Sub and the Company are collectively referred to herein as
the "Parties." Inforetech and Merger Sub are sometimes referred to herein
collectively as the "Inforetech Parties."
RECITALS:
The Parties intend for Inforetech to acquire the Company by means of the
merger of Merger Sub with and into the Company, upon the terms and subject to
the conditions set forth herein.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization under Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the premises and mutual promises herein
made, and in consideration of the representations, warranties, covenants and
agreements herein contained, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. The following terms shall, when used in this
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Agreement, have the following meanings:
"Acquisition" means the acquisition by a Person of any businesses, assets
or property other than in the Ordinary Course, whether by way of the purchase of
assets or stock, by merger, consolidation or otherwise.
"Acquisition Proposal" means any proposal for a merger or other business
combination to which the Company is a party or the direct or indirect
acquisition of any substantial equity interest in, or a substantial portion of
the assets of the Company other than the transactions contemplated by this
Agreement.
"Affiliate" means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling, or holding with power to vote 10% or more of the
outstanding voting securities of such other Person (other than passive or
institutional investors); (ii) any Person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote, by such other Person; (iii) any Person directly or indirectly
controlling, controlled by, or under common control with such other Person; and
(iv) any officer, director or partner of such other Person. "Control" for the
foregoing purposes shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Average Price" means the daily volume weighted average price of
Inforetech's Common Stock as reported by Bloomberg Financial using the AQR
function.
"Business Day" means any day other than Saturday, Sunday or a day on which
banking institutions in Los Angeles, California, are required or authorized to
be closed.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Collateral Documents" mean the Exhibits and any other documents,
instruments and certificates to be executed and delivered by the Parties
hereunder or thereunder.
"Commission" means the Securities and Exchange Commission or any Regulatory
Authority that succeeds to its functions.
"Company Acquisition" means any of the following transactions (other than
the transactions contemplated by this Agreement): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the shareholders of the
Company immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the Company
Business immediately prior to such sale or (iii) the acquisition by any person
or group (including by way of a tender offer or an exchange offer or issuance by
the Company), directly or indirectly, of beneficial ownership or a right to
acquire beneficial ownership of shares representing in excess of 50% of the
voting power of the then outstanding shares of capital stock of the Company.
"Company Assets" mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased, held,
used or useful in the Company Business and in which the Company has any right,
title or interest or in which the Company acquires any right, title or interest
on or before the Closing Date, wherever located, whether known or unknown, and
whether or not now or on the Closing Date on the books and records of the
Company, but excluding any of the foregoing, if any, transferred prior to the
Closing pursuant to this Agreement or any Collateral Documents.
"Company Business" means the sale and leasing of wireless devices using
global positioning satellites for application in the recreational industry
conducted by the Company.
"Company Common Stock" means the common shares of the Company.
"Company Disclosure Statement" means the disclosure statement delivered by
the Company to Inforetech concurrently with the execution of this Agreement, as
supplemented pursuant to Section 6.7.
"Company Shareholders" means, as of any particular date, the holders of
Company Capital Stock on that date.
"Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement that is an Employee Pension Benefit Plan; (b)
qualified defined
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contribution retirement plan or arrangement that is an Employee Pension Benefit
Plan; (c) qualified defined benefit retirement plan or arrangement that is an
Employee Pension Benefit Plan (including any Multiemployer Plan); (d) Employee
Welfare Benefit Plan or material fringe benefit plan or program; or (e) other
employee benefit arrangement or payroll practice.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
"Encumbrance" means any material mortgage, pledge, lien, encumbrance,
charge, security interest, security agreement, conditional sale or other title
retention agreement, limitation, option, assessment, restrictive agreement,
restriction, adverse interest, restriction on transfer or exception to or
material defect in title or other ownership interest (including restrictive
covenants, leases and licenses).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Inforetech Assets" mean all properties, assets, privileges, powers,
rights, interests and claims of every type and description that are owned,
leased, held, used or useful in the Inforetech Business and in which Inforetech
or any of its Subsidiaries has any right, title or interest or in which
Inforetech or any of its Subsidiaries acquires any right, title or interest on
or before the Closing Date, wherever located, whether known or unknown, and
whether or not now or on the Closing Date on the books and records of Inforetech
or any of its Subsidiaries.
"Inforetech Business" means the business conducted by Inforetech and its
Subsidiaries.
"Inforetech Common Stock" means the Class A common shares of Inforetech.
"Inforetech Credit Agreement" means, collectively, all credit agreements,
loan agreements and other agreements, notes and instruments providing for each
credit facility to which Inforetech or any of its Subsidiaries is a party.
"Inforetech Disclosure Statement" means the disclosure statement delivered
by the Inforetech Parties to the Company concurrently with the execution of this
Agreement, as supplemented pursuant to Section 7.6.
"Inforetech Securities Filings" means Inforetech's annual report on Form
10-KSB for the year ended December 31, 1999, its quarterly reports on Form 10-
QSB, and all other reports filed and to be filed with the Commission prior to
the Effective Time.
"Legal Requirement" means any statute, ordinance, law, rule, regulation,
code, injunction, judgment, order, decree, ruling, or other requirement enacted,
adopted or applied by
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any Regulatory Authority, including judicial decisions applying common law or
interpreting any other Legal Requirement.
"Losses" shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments, diminutions in value
and other losses, however suffered or characterized, all interest thereon, all
costs and expenses of investigating any claim, lawsuit or arbitration and any
appeal therefrom, all actual attorneys', accountants' investment bankers' and
expert witness' fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and, subject to Section
11.4, all amounts paid incident to any compromise or settlement of any such
claim, lawsuit or arbitration.
"Liability" means any liability or obligation (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.
"Market Price" per share of Inforetech Common Stock on any day means the
average of the Average Prices of the Inforetech Common Stock for the ten
consecutive trading days immediately preceding such day.
"Material Adverse Effect on the Company" means a material adverse effect on
(i) the assets, Liabilities, properties or business of the Company, (ii) the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or (iii) the ability of the Company to perform its obligations under
this Agreement and the Collateral Documents; provided, however, that none of the
following shall constitute a Material Adverse Effect on the Company: (i) the
filing, initiation and subsequent prosecution, by or on behalf of shareholders
of the Company, of litigation that challenges or otherwise seeks damages with
respect to the Merger, this Agreement and/or transactions contemplated thereby
or hereby, (ii) occurrences due to a disruption of the Company's business as a
result of the announcement of the execution of this Agreement or changes caused
by the taking of action required by this Agreement, (iii) general economic
conditions, or (iv) any changes generally affecting the industries in which the
Company operates.
"Material Adverse Effect on Inforetech" means a material adverse effect on
(i) the assets, Liabilities, properties or business of Inforetech and its
Subsidiaries, taken as a whole, (ii) the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or (iii) the
ability of Inforetech or any of the Inforetech Parties to perform its
obligations under this Agreement and the Collateral Documents; provided,
however, that none of the following shall constitute a Material Adverse Effect
on Inforetech: (i) the filing, initiation and subsequent prosecution, by or on
behalf of shareholders of Inforetech, of litigation that challenges or otherwise
seeks damages with respect to the Merger, this Agreement and/or transactions
contemplated thereby or hereby, (ii) occurrences due to a disruption of
Inforetech's or its Subsidiaries' businesses as a result of the announcement of
the execution of this Agreement or changes caused by the taking of action
required by this Agreement, (iii) general economic conditions, or (iv) any
changes generally affecting the industries in which Inforetech and its
Subsidiaries operate.
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"Merger Consideration" means the shares of Inforetech Common Stock
deliverable by Inforetech in exchange for Company Capital Stock pursuant to
Section 2.7.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course" with reference to a Person means the ordinary course of
business consistent with past practice of that Person and its Subsidiaries
(including with respect to quantity and frequency).
"Permit" means any license, permit, consent, approval, registration,
authorization, qualification or similar right granted by a Regulatory Authority.
"Permitted Liens" means (i) liens for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings; (ii) rights reserved
to any Governmental Authority to regulate the affected property; (iii) statutory
liens of banks and rights of set-off; (iv) as to leased assets, interests of the
lessors and sublessors thereof and liens affecting the interests of the lessors
and sublessors thereof; (v) inchoate materialmen's, mechanics', workmen's,
repairmen's or other like liens arising in the Ordinary Course; (vi) liens
incurred or deposits made in the Ordinary Course in connection with workers'
compensation and other types of social security; (vii) licenses of trademarks or
other intellectual property rights granted by the Company or Inforetech, as the
case may be, in the Ordinary Course and not interfering in any material respect
with the Ordinary Course of the business of the Company or Inforetech, as the
case may be; and (viii) as to real property, any encumbrance, adverse interest,
constructive or other trust, claim, attachment, exception to or defect in title
or other ownership interest (including, but not limited to, reservations, rights
of entry, rights of first refusal, possibilities of reverter, encroachments,
easement, rights-of-way, restrictive covenants, leases, and licenses) of any
kind, which otherwise constitutes an interest in or claim against property,
whether arising pursuant to any Legal Requirement, under any contract or
otherwise, that do not, individually or in the aggregate, materially and
adversely affect or impair the value or use thereof as it is currently being
used in the Ordinary Course.
"Person" means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company, Regulatory
Authority or other entity.
"Public Float" means the shares of Inforetech Common Stock which are not
restricted shares (as defined under Rule 144) or, without duplication, held by
Affiliates of Inforetech.
"Regulatory Authority" means: (i) the United States of America; (ii) any
state, commonwealth, territory or possession of the United States of America and
any political subdivision thereof (including counties, municipalities and the
like); (iii) Canada and any other foreign (as to the United States of America)
sovereign entity and any political subdivision thereof; or (iv) any agency,
authority or instrumentality of any of the foregoing, including any court,
tribunal, department, bureau, commission or board.
"Representative" means any director, officer, employee, agent, consultant,
advisor or other representative of a Person, including legal counsel,
accountants and financial advisors.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Subsidiary" of a specified Person means (a) any Person if securities
having ordinary voting power (at the time in question and without regard to the
happening of any contingency) to elect a majority of the directors, trustees,
managers or other governing body of such Person are held or controlled by the
specified Person or a Subsidiary of the specified Person; (b) any Person in
which the specified Person and its Subsidiaries collectively hold a 50% or
greater equity interest; (c) any partnership or similar organization in which
the specified Person or Subsidiary of the specified Person is a general partner;
or (d) any Person the management of which is directly or indirectly controlled
by the specified Person and its Subsidiaries through the exercise of voting
power, by contract or otherwise.
"Tax" means any U.S. or Canadian federal, state, provincial, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, intangible property,
recording, occupancy, sales, use, transfer, registration, value added minimum,
estimated or other tax of any kind whatsoever, including any interest, additions
to tax, penalties, fees, deficiencies, assessments, additions or other charges
of any nature with respect thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund or
credit or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Treasury Regulations" means regulations promulgated by the U.S. Treasury
Department under the Code.
1.2 Other Definitions. The following terms shall, when used in this
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Agreement, have the meanings assigned to such terms in the Sections indicated.
Term Section
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"Agreement".................................................... Preamble
"Certificate of Merger"........................................ 2.5
"CGCL"......................................................... 2.9
"Closing"...................................................... 2.10
"Closing Date"................................................. 2.10
"Company Capital Stock"........................................ 2.7(a)
"Company Certificates"......................................... 2.6(a)
"Company Financial Statements"................................. 3.9
"Company Intellectual Property Rights"......................... 3.7(a)
"Company Shareholders' Meeting"................................ 6.5(a)
"Company Termination Fee"...................................... 12.2(b)
"Current Market Price"......................................... 2.7(a)
"Dissenting Shares"............................................ 2.9
"Effective Time"............................................... 2.5
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"Environmental Laws"........................................... 3.18
"Inforetech Financial Statements".............................. 4.18(a)
"Inforetech Golf".............................................. 4.2(b)
"Inforetech Parties"........................................... Preamble
"Material Company Contract".................................... 3.4
"Material Inforetech Contract"................................. 4.4
"Merger"....................................................... 2.1
"Options"...................................................... 3.2(b)
"Parties"...................................................... Preamble
"Surviving Corporation"........................................ 2.1
ARTICLE II
BASIC TRANSACTION
2.1 Merger; Surviving Corporation. In accordance with and subject to the
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provisions of this Agreement and the General Corporation Law of the State of
California ("CGCL"), at the Effective Time, the Merger Sub shall be merged with
and into the Company (the "Merger"), and the Company shall be the surviving
corporation in the Merger (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of California. At the Effective Time, the separate existence of the
Merger Sub shall cease. All properties, franchises and rights belonging to the
Company and Merger Sub, by virtue of the Merger and without further act or deed,
shall be vested in the Surviving Corporation, which shall thenceforth be
responsible for all the liabilities and obligations of each of Merger Sub and
the Company.
2.2 Articles of Incorporation. The Company's articles of incorporation,
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as in effect at the Effective Time, shall be amended and restated effective at
the Effective Time to be as set forth in Exhibit A attached hereto, and, as so
amended and restated shall thereafter continue in full force and effect as the
articles of incorporation of the Surviving Corporation until altered or amended
as provided therein or by law.
2.3 By-Laws. The Company's by-laws, as in effect at the Effective Time,
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shall be the by-laws of the Surviving Corporation until altered, amended or
repealed as provided therein or by law.
2.4 Directors and Officers. The directors of the Company prior to the
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Effective Time shall resign effective the Effective Time. Inforetech shall
immediately thereafter take such action as may be necessary to cause those
Persons designated by Inforetech to be elected to serve as directors of the
Surviving Corporation. The members of the board of directors of the Surviving
Corporation, as so reconstituted, shall serve thereafter in accordance with the
articles of incorporation and by-laws of the Surviving Corporation and the CGCL.
The officers of the Company prior to the Effective Time shall continue to serve
as officers of the Surviving Corporation, but Inforetech shall, immediately
thereafter, cause those Persons designated by Inforetech to be appointed as the
officers of the Surviving Corporation. The officers of the Surviving
Corporation shall thereafter serve at the pleasure of the board of directors of
the Surviving Corporation in accordance with the articles of incorporation and
by-laws of the Surviving Corporation and the CGCL.
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2.5 Effective Time. The Merger shall become effective at the time and
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date that the agreement of merger with an officers' certificate of each of the
Merger Sub and the Company (the "Certificate of Merger"), in form and substance
acceptable to the Parties, is accepted for filing by the Secretary of State of
the State of California in accordance with the provisions of Section 1103 of the
CGCL. The Merger Documents shall be executed by the Merger Sub and the Company
and delivered to the Secretary of State of the State of California for filing on
the Closing Date. The date and time when the Merger becomes effective are
referred to herein as the "Effective Time."
2.6 Surrender of Company Certificates.
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(a) Exchange Procedures. Promptly after the Effective Time,
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Inforetech shall mail to each holder of record (as of the Effective Time) of a
certificate or certificates (the "Company Certificates") which immediately prior
to the Effective Time represented outstanding shares of Company Common Stock
whose shares were converted into the right to receive the Merger Consideration,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon delivery of the Company Certificates to Inforetech and which shall be
in such form and have such other provisions as Inforetech may reasonably
specify) and (ii) instructions for use in effecting the surrender of the Company
Certificates in exchange for the Merger Consideration, cash in lieu of any
fractional shares pursuant to Section 2.7(c) and any dividends or other
distributions pursuant to Section 2.6(b). Upon surrender of Company Certificates
for cancellation to Inforetech, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, the
holders of such Company Certificates shall be entitled to receive the Merger
Consideration in exchange therefor (subject to the escrow of the Indemnification
Escrow Shares pursuant to Section 11.1), payment in lieu of fractional shares
which such holders have the right to receive pursuant to Section 2.7(c) and any
dividends or distributions payable pursuant to Section 2.6(b), and the Company
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Company Certificates will be deemed from and after the Effective
Time, for all corporate purposes, subject to Section 2.9, to evidence the
ownership of the number of full shares of Inforetech Common Stock into which
such shares of the Company Common Stock shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 2.7(c) and any dividends or distributions
payable pursuant to Section 2.6(b). Notwithstanding the foregoing, if any
Company Certificate is lost, stolen, destroyed or mutilated, such holder shall
provide evidence reasonably satisfactory to Inforetech as to such loss, theft,
destruction or mutilation and an affidavit in form and substance satisfactory to
Inforetech, and, thereupon, such holder shall be entitled to receive the Merger
Consideration in exchange therefor (subject to the escrow of the Indemnification
Escrow Shares pursuant to Section 11.1), payment in lieu of fractional shares
which such holders have the right to receive pursuant to Section 2.7(c) and any
dividends or distributions payable pursuant to Section 2.6(b), and the Company
Certificates so surrendered shall forthwith be canceled. Additional Merger
Shares, if any, to be issued pursuant to Section 2.7(a)(ii) shall be issued by
Inforetech within fifteen (15) business days following the date on which it has
been determined that a milestone has been achieved.
(b) Distributions With Respect to Unexchanged Shares. No dividends
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other distributions declared or made after the date of this Agreement with
respect to Inforetech
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Common Stock with a record date after the Effective Time, will be paid to the
holders of any unsurrendered Company Certificates with respect to the shares of
Inforetech Common Stock represented thereby until the holders of record of such
Company Certificates shall surrender such Company Certificates or, in the case
of any Company Certificate which is lost, stolen, destroyed or mutilated, an
affidavit in form and substance satisfactory to Inforetech. Subject to
applicable law, following surrender of any such Company Certificates or delivery
of such affidavit, Inforetech shall deliver to the record holders thereof,
without interest, the Merger Consideration along with payment in lieu of
fractional shares pursuant to Section 2.7(c) hereof and the amount of any such
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole shares of Inforetech Common Stock.
(c) Transfers of Ownership. If certificates for shares of Inforetech
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Common Stock are to be issued in a name other than that in which the Company
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Company Certificates so surrendered
will be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid to Inforetech or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates for shares of Inforetech Common Stock in any name other than
that of the registered holder of the Company Certificates surrendered, or
established to the satisfaction of Inforetech or any agent designated by it that
such tax has been paid or is not payable.
(d) Required Withholding. In connection with any payment to any holder
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or former holder of the Company Common Stock, each of Inforetech and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of the Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable laws.
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(e) No Liability. Notwithstanding anything to the contrary in this
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Section 2.6, Inforetech, the Surviving Corporation nor any party hereto shall be
liable to any Person for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. If any Company
Certificate shall not have been surrendered prior to the date immediately prior
to the date on which such property would otherwise escheat to or become the
property of any Governmental or Regulatory Authority, any such property, to the
extent permitted by applicable law, shall become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(f) Termination. Any holders of the Company Certificates who have
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not theretofore complied with this ARTICLE II shall thereafter look only to
Inforetech or the Surviving Corporation for, and Inforetech and the Surviving
Corporation shall remain liable for, payment of their claim for Merger
Consideration, any cash in lieu of fractional shares of Inforetech Common Stock
and any dividends or distributions with respect to Inforetech Common Stock,
without interest thereon.
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2.7 Merger Consideration; Conversion and Cancellation of Securities.
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(a) Conversion of Company Capital Stock. At the Effective Time of the
-----------------------------------
Merger, all of the issued and outstanding shares of the common stock of the
Company (the "Company Capital Stock") outstanding immediately before the
Effective Time, other than shares described in Section 2.7(b) and other than
Dissenting Shares, shall be converted, by virtue of the Merger and without any
further action on the part of the holders thereof, into an aggregate number of
shares of Inforetech Common Stock (the "Merger Shares") determined by dividing
(x) $27,000,000 by (y) the Market Price per share of Inforetech Common Stock as
of the Closing Date, subject to the following:
(i) if the Market Price per share of Inforetech Common
Stock as of the Closing Date is less than $6.00 (adjusted to reflect any
stock split, reverse stock split or stock dividend of or on the Inforetech
Common Stock between the date of this Agreement and the Closing Date), the
amount specified in clause (x) above shall be divided by $6.00 (adjusted to
reflect any stock split, reverse stock split or stock dividend of or on the
Inforetech Common Stock between the date of this Agreement and the Closing
Date) rather than the amount specified in clause (y) above, and if the
Market Price per share of Inforetech Common Stock as of the Closing Date is
greater than $7.50 (adjusted to reflect any stock split, reverse stock
split or stock dividend of or on the Inforetech Common Stock between the
date of this Agreement and the Closing Date), the amount specified in
clause (x) above shall be divided by $7.50 (adjusted to reflect any stock
split, reverse stock split or stock dividend of or on the Inforetech Common
Stock between the date of this Agreement and the Closing Date) rather than
the amount specified in clause (y) above;
(ii) in the event that between August 21, 2000 and December
31, 2000 the Company has achieved the milestones set forth on Schedule
2.7(a) attached hereto, then the number of Merger Shares shall be increased
as set forth on such Schedule;
(iii) the aggregate number of Merger Shares is based on and
assumes the conversion or cancellation prior to the Closing of all
outstanding shares of Preferred Stock, it being understood that the number
of Merger Shares shall not be increased as a result of any such conversion;
(iv) the allocation of the Merger Shares among the Company
Shareholders excluding the holders of Dissenting Shares shall be as set
forth on Exhibit 2.7 to be delivered to Inforetech at least one business
day prior to the Closing;
(v) the number of Merger Shares delivered to the Company
Shareholders pursuant to Section 2.6 shall be subject to the provisions of
Section 11.1 below as to the Indemnification Escrow Shares;
(vi) the number of Merger Shares shall be exclusive of the
Guaranty Escrow Shares which may be issuable pursuant to Article VIII; and
(vii) If between the date of this Agreement and the Closing
Date, Inforetech shall subdivide or combine the outstanding Inforetech
Common Stock or shall
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declare a dividend on Inforetech Common Stock payable in Inforetech Common
Stock (or set a record date with respect thereto), the number of Merger
Shares determined above shall be adjusted to reflect fully the appropriate
effect of any such subdivision, combination or dividend.
(b) Treasury Shares, Etc. Each share of Company Capital Stock held in
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the treasury of the Company and each share of Company Capital Stock, if any,
held by Inforetech or any Subsidiary of Inforetech or of the Company immediately
before the Effective Time shall be cancelled and extinguished, and nothing shall
be issued or paid in respect thereof.
(c) Fractional Shares. No certificates or scrip evidencing fractional
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shares of Inforetech Common Stock shall be issued in exchange for Company
Capital Stock. In lieu of any such fractional shares, each holder of Company
Capital Stock shall be paid an amount in cash (without interest), rounded upward
to the nearest cent, determined by multiplying (i) the Market Price on the
Closing Date of the Inforetech Common Stock by (ii) the fractional share of
Inforetech Common Stock to which such holder would otherwise be entitled (taking
into account all shares held of record by such holder at the Effective Time).
2.8 Stock Transfer Books. At the Effective Time, the stock transfer books
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of the Company shall be closed, and there shall be no further registration of
transfers of shares of Company Capital Stock thereafter on the records of the
Company.
2.9 Dissenting Shares. Shares of Company Capital Stock which are issued
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and outstanding immediately prior to the Effective Time and which are held by
persons who have properly exercised, and not withdrawn or waived, appraisal
rights with respect thereto in accordance with Section 1300 of the CGCL, (the
"Dissenting Shares"), will not be converted into the right to receive the Merger
Consideration, and holders of such shares of Company Capital Stock will be
entitled, in lieu thereof, to receive payment of the appraised value of such
shares of Company Capital Stock in accordance with the provisions of such
Section 1300 unless and until such holders fail to perfect or effectively
withdraw or lose their rights to appraisal and payment under the CGCL. If, after
the Effective Time, any such holder fails to perfect or effectively withdraws or
loses such right, such shares of Company Capital Stock will thereupon be treated
as if they had been converted at the Effective Time into the right to receive
the Merger Consideration, without any interest thereon. The Company will give
Inforetech prompt notice of any demands received by the Company for appraisal of
shares of Company Capital Stock. Prior to the Effective Time, the Company will
not, except with the prior written consent of Inforetech make any payment with
respect to, or settle or offer to settle, any such demands.
2.10 Closing. The closing of the transactions contemplated by this
-------
Agreement and the Collateral Documents ("Closing") shall take place at the
offices of Loeb & Loeb LLP, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, or at such other location as the parties may agree,
at 10:00 a.m., Pacific Time, on a Business Day specified by Inforetech on at
least two business days notice to the Company that may be on, but shall not be
more than five Business Days after, all conditions precedent to the Closing set
forth in ARTICLE IX and ARTICLE X have been satisfied or waived, or on such
other date and at such other time as the Parties may agree, provided that all
such conditions precedent have been satisfied or
11
waived. The date on which the Closing actually occurs is referred to herein as
the "Closing Date."
2.11 Treatment of Certain Outstanding Derivative Securities. At the
------------------------------------------------------
Effective Time, Inforetech will issue new (a) stock options to the optionees
with respect to the stock options of the Company and (b) warrants to the holders
with respect to warrants of the Company, all as described in Section 2.11 of the
Company Disclosure Schedule on the terms set forth on such Schedule and, upon
such issuance, the Company shall cause all such options and warrants to
terminate, without liability to Inforetech or the Surviving Corporation. Subject
to Section 6.10(a), all other rights to acquire any shares of the Company
Capital Stock including all shares of Preferred Stock shall be either converted
into shares of the Company Capital Stock or exercised prior to the Closing Date.
Any such derivative securities not so converted or exercised shall be terminated
without liability to Inforetech or the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Inforetech that the statements
contained in this ARTICLE III are correct and complete as of the date of this
Agreement and, except as provided in Section 9.1, 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 ARTICLE III, except in the
case of representations and warranties stated to be made as of the date of this
Agreement or as of another date and except for changes contemplated or permitted
by this Agreement).
3.1 Organization and Qualification. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
California. The Company has no Subsidiaries. The Company has all requisite
power and authority to own, lease and use its assets as they are currently
owned, leased and used and to conduct its business as it is currently conducted.
The Company is duly qualified or licensed to do business in and is in good
standing in each jurisdiction in which the character of the properties owned,
leased or used by it or the nature of the activities conducted by it make such
qualification necessary, all of which are identified in Section 3.1 of the
Company Disclosure Statement, except any such jurisdiction where the failure to
be so qualified or licensed would not have a Material Adverse Effect on the
Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company to perform its obligations under this Agreement or any of the
Collateral Documents.
3.2 Capitalization.
--------------
(a) The authorized, issued and outstanding capital stock and other
ownership interests of the Company are fully and accurately described in Section
3.2(a) of the Company Disclosure Statement, which Statement shall be updated as
of the Closing.
(b) Section 3.2(b)(i) of the Company Disclosure Statement lists all
outstanding or authorized options, warrants, purchase rights, preemptive rights
or other contracts or commitments that could require the Company to issue, sell,
or otherwise cause to become
12
outstanding any of its capital stock or other ownership interests (collectively
"Options"). Except as described in Section 3.2(b)(ii) of the Company Disclosure
Statement, there are no authorized or outstanding stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Company, and
no rights described in Section 3.2(b)(ii) of the Company Disclosure Statement
will be outstanding at the time of the Closing.
(c) All of the issued and outstanding shares of Company Capital Stock
have been duly authorized and are validly issued and outstanding, fully paid and
nonassessable and have been issued in compliance with applicable securities laws
and other applicable Legal Requirements or transfer restrictions under
applicable securities laws except as described in Section 3.2(c) of the Company
Disclosure Statement.
3.3 Authority and Validity. The Company has all requisite corporate power
----------------------
to execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement (subject to the approval of the
Company Shareholders as contemplated by Section 6.5 and to receipt of any
consents, approvals, authorizations or other matters referred to in Section
6.4). The execution and delivery by the Company of, the performance by the
Company of its obligations under, and the consummation by the Company of the
transactions contemplated by, this Agreement have been duly authorized by all
requisite action of the Company (subject to the approval of the Company
Shareholders as contemplated by Section 6.5). This Agreement has been duly
executed and delivered by the Company and (assuming due execution and delivery
by the Inforetech Parties and approval by the Company Shareholders) is the
legal, valid, and binding obligation of the Company, enforceable against it in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles. Upon the execution and delivery of the Collateral
Documents by each Person (other than the Inforetech Parties) that is required by
this Agreement to execute, or that does execute, this Agreement or any of the
Collateral Documents, and assuming due execution and delivery thereof by the
Inforetech Parties, the Collateral Documents will be the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles.
3.4 No Breach or Violation. Subject to obtaining the consents, approvals,
----------------------
authorizations, and orders of and making the registrations or filings with or
giving notices to Governmental Authorities and Persons identified in the
exceptions to Section 3.5, the execution, delivery and performance by the
Company of this Agreement and the Collateral Documents to which it is a party,
and the consummation of the transactions contemplated hereby and thereby in
accordance with the terms and conditions hereof and thereof, do not and will not
conflict with, constitute a violation or breach of, constitute a default or give
rise to any right of termination or acceleration of any right or obligation of
the Company under, or result in the creation or imposition of any Encumbrance
upon the Company, the Company Assets, the Company Business or the Company
Capital Stock by reason of the terms of (i) the articles of incorporation, by-
laws or other charter or organizational document of the Company or any
Subsidiary of the Company, (ii) any material contract, agreement, lease,
indenture or other instrument to which the
13
Company is a party or by or to which the Company, or the Assets may be bound or
subject and a violation of which would result in a Material Adverse Effect on
the Company (a "Material Company Contract"), (iii) any order, judgment,
injunction, award or decree of any arbitrator or Regulatory Authority or any
statute, law, rule or regulation applicable to the Company or (iv) any Permit of
the Company, which in the case of (ii), (iii) or (iv) above would have a
Material Adverse Effect on the Company or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of the Company to perform its obligations under this
Agreement or any of the Collateral Documents.
3.5 Consents and Approvals. Except for requirements described in Section
----------------------
3.5 of the Company Disclosure Statement, no consent, approval, authorization or
order of, registration or filing with, or notice to, any Regulatory Authority or
any other Person is necessary to be obtained, made or given by the Company in
connection with the execution, delivery and performance by the Company of this
Agreement or any Collateral Document or for the consummation by the Company of
the transactions contemplated hereby or thereby, except to the extent the
failure to obtain any such consent, approval, authorization or order or to make
any such registration or filing would not have a Material Adverse Effect on the
Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company to perform its obligations under this Agreement or any of the
Collateral Documents.
3.6 Title to Assets. With respect to all assets and properties of the
---------------
Company
(a) The Company does not own any real property. Section 3.6 of the
Company Disclosure Statement includes an accurate and complete description of
(i) all real property leased by the Company (identifying the lessee and the
lessor and describing the term and the payment terms) and (ii) each place of
business of the Company. The Company has good title to the material Company
Assets, free and clear of any and all Encumbrances, except (A) the matters
described in Section 3.6 of the Company Disclosure Statement (all of which will
have been discharged at or before the Closing unless otherwise indicated in
Section 3.6 of the Company Disclosure Statement), (B) Permitted Liens, and (C)
Encumbrances on property that would not have a Material Adverse Effect on the
Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company to perform its obligations under this Agreement or any of the
Collateral Documents, and (D) such Company Assets as may be subject to a lease.
(b) Except as provided by this Agreement, and except as described in
Section 3.2 or 3.6 of the Company Disclosure Statement, no Person has any right
to acquire, directly or indirectly, any interest in any of the material Company
Assets, and there is no agreement to which the Company or any of its Affiliates
is a party or is otherwise bound relating to the foregoing.
3.7 Intellectual Property.
---------------------
(a) Section 3.7 of the Company Disclosure Statement sets forth a true
and complete list of all registered patents, trademarks, service marks, trade
names, copyrights and applications therefor relating to assets and properties of
the Company owned by or registered in
14
the name of the Company, or in which the Company has any right, license or
interest (the "Company Intellectual Property Rights"). Except as set forth in
Section 3.7 of the Company Disclosure Statement, the Company is not a party to
any material license agreement, either as licensor or licensee, with respect to
any Company Intellectual Property Rights. To the knowledge of the Company, the
Company has good title to or the right to use all material Company Intellectual
Property Rights and all material inventions, processes, designs, formulae, trade
secrets and know-how necessary for the operation of the Company Business without
the payment of any royalty or similar payment.
(b) To the knowledge of the Company, the Company has not in its
operation of the Company Business infringed upon, and the operation of the
Company Business as currently conducted does not infringe upon, any patents,
copyrights, trade names, trademarks or service marks of third parties, except to
the extent any such infringement would not have a Material Adverse Effect on the
Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents and the Company has
not received any charge, complaint, claim, demand or notice alleging such
infringement. To the knowledge of the Company, no third party has infringed upon
any Company Intellectual Property Rights.
3.8 Compliance with Legal Requirements. Except as described in Section 3.8
----------------------------------
of the Company Disclosure Statement, the Company has operated the Company
Business in compliance with all Legal Requirements applicable to the Company
except to the extent the failure to operate in compliance with all material
Legal Requirements would not have a Material Adverse Effect on the Company.
Except as described in Section 3.8 of the Company Disclosure Statement, no
action, suit, proceeding, hearing or investigation has been commenced or, to the
Company's knowledge, threatened, and no charge, complaint, claim, demand or
notice has been filed, against the Company alleging any failure to so comply.
3.9 Financial and Other Information.
-------------------------------
The Company has provided Inforetech with (a) an audited balance sheet
of the Company as of December 31, 1998 and audited statement of operations and
cash flow for the year then ended; (b) unaudited balance sheet of the Company as
of December 31, 1999 and July 31, 2000 and the related statements of operations
and cash flows for the periods then ended. Except as set forth on Section 3.9
of the Company Disclosure Statement, all such financial statements (including
the notes thereto) ("Company Financial Statements") have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated in the notes thereto) and present
fairly in all material respects the financial condition of the Company and its
results of operations as of the dates and for the periods indicated (except as
may be indicated in the notes thereto), subject in the case of the interim
unaudited financial statements only to normal year-end adjustments (none of
which will be material in amount) and the omission of footnotes.
3.10 Subsequent Events. Except as set forth in Section 3.10 of the Company
-----------------
Disclosure Statement, or to the extent consented to in writing by Inforetech,
since July 31, 2000: (i) the Company has not sold, leased, transferred or
assigned any of its material Company Assets outside of the Ordinary Course; (ii)
no third party has accelerated, terminated, modified or canceled any material
agreement, contract, lease or license (or series of related agreements,
15
contracts, leases and licenses) relating to the Company or the Company Business;
(iii) the Company has not imposed or permitted the imposition of any Encumbrance
(other than Permitted Liens) upon any of the rights of the Company in its
material Assets outside of the Ordinary Course; (iv) the Company has not made
any material capital investment in, any loan to, or any Acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans or Acquisitions; (v) the Company has not delayed or postponed
the payment of accounts payable and other Liabilities outside the Ordinary
Course in excess of $25,000 (exclusive of matters being contested in good
faith); (vi) the Company has not canceled, compromised, waived or released any
rights or claims outside the Ordinary Course involving more than the reasonable
approximation of $25,000 in the aggregate; and (vii) the Company has not
committed to any of the foregoing. From July 31, 2000 through the date of this
Agreement, there has not been any other occurrence, event, incident, action,
failure to act or transaction involving the Company which is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company.
3.11 Undisclosed Liabilities.
-----------------------
(a) As of the date of this Agreement, the Company has no Liability,
except for (i) Liabilities reflected, accrued or reserved against in the Company
Financial Statements as of July 31, 2000 or the notes thereto, (ii) Liabilities
incurred after July 31, 2000 in the Ordinary Course, (iii) Liabilities incurred
after July 31, 2000 to finance the leasing of product not prohibited by this
Agreement, (iv) Liabilities disclosed in Section 3.11 of the Company Disclosure
Statement and (v) Liabilities incurred in connection with this Agreement; and
(vi) Liabilities not required to be reflected on a balance sheet under GAAP.
(b) As of the Closing Date, the Company will have no Liability, except
for (i) Liabilities reflected, accrued or reserved against in the Company
Financial Statements as of July 31, 2000, or the notes thereto, (ii) current
Liabilities incurred after July 31, 2000, in the Ordinary Course, (iii)
Liabilities incurred after July 31, 2000, to finance leasing of product not
prohibited by this Agreement, (iv) Liabilities disclosed in Section 3.11 of the
Company Disclosure Statement; and (v) Liabilities not required to be disclosed
on a balance sheet under GAAP.
3.12 Legal Proceedings. Except as set forth in Section 3.12 of the
-----------------
Company Disclosure Statement, as of the date of this Agreement (i) there are no
outstanding judgments or orders against or otherwise affecting or related to the
Company, the Company Business or the Company Assets; (ii) there is no action,
suit, complaint, proceeding or investigation, judicial, administrative or
otherwise, that is pending or, to the Company's knowledge, threatened that, if
adversely determined, would have a Material Adverse Effect on the Company or a
material adverse effect on the validity, binding effect or enforceability of
this Agreement or the Collateral Documents.
3.13 Taxes. The Company has duly and timely filed in proper form all Tax
-----
Returns for all Taxes required to be filed with the appropriate Regulatory
Authority, except where such failure would not have a Material Adverse Effect on
the Company. All Taxes due and payable by the Company (or claimed to be due and
payable) have been paid (regardless whether Tax Returns relating to such Taxes
have been duly and timely filed or, if filed, regardless whether
16
such Tax Returns are deficient), except such amounts as (i) are not in the
aggregate material or (ii) are being contested diligently and in good faith by
appropriate proceedings and for which there are adequate reserves in the Company
Financial Statements. The Company has furnished to Inforetech true and correct
copies of all income Tax Returns filed by it in the past three years, all of
which are accurate and complete in all material respects. Except as set forth in
Section 3.13 of the Company Disclosure Statement, there are no pending Tax
audits, claims or proceedings relating to the Company, the Company Assets or the
Company Business or income therefrom. The Company has not agreed to any waiver
or extension of any statute of limitations relating to any Tax. The Company has
no outstanding power of attorney authorizing any Person to act on its behalf in
connection with any Tax or Tax Return. The Company has no outstanding closing
agreement, request for a ruling or determination, request for a change in method
of accounting, subpoena or request for information with or by any Regulatory
Authority with respect to any Tax or Tax return.
3.14 Employee Benefits; Employees. All Employee Benefit Plans maintained
----------------------------
or contributed to by the Company are set forth in Section 3.14 of the Company
Disclosure Statement. Except as set forth in Section 3.14 of the Company
Disclosure Statement:
(a) To the extent applicable, all such Employee Benefit Plans are,
and have been at all times since their establishment, qualified for federal
income tax purposes under Code Section 401(a) and the related trusts are, and
have been at all times since their establishment, exempt from federal income tax
under Code Section 501(a). All such Employee Benefit Plans are in compliance in
all material respects with all applicable provisions of ERISA, including, but
not limited to, the applicable reporting and disclosure requirements, as they
relate to such plans, and the Company is not subject to any Liabilities based on
past non-compliance, if any except to the extent such Liabilities would not have
a Material Adverse Effect on the Company. The Company is not presently required
under ERISA, the Code, any collective bargaining agreement or any other
agreement to maintain or to continue to contribute to any Employee Benefit Plan
maintained or contributed to by the Company.
(b) The Company has made all required contributions under each
Employee Benefit Plan listed in Section 3.14 of the Company Disclosure Statement
for all periods through and including the fiscal year ended December 31, 1999,
and has made all required contributions for subsequent periods or has provided
adequate accruals therefor in the Company Financial Statements, except to the
extent the failure to make such contributions or accruals would not have a
Material Adverse Effect on the Company.
(c) There is not now, and has not been, any violation of the Code or
ERISA with respect to the filing of applicable reports, documents, and notices
regarding the Employee Benefit Plans maintained or contributed to by the Company
with the Secretary of Labor and the Secretary of the Treasury or the furnishing
of such documents to the participants or beneficiaries of the Employee Benefit
Plans, except to the extent such violation would not have a Material Adverse
Effect on the Company.
(d) No fiduciary or other party in interest with respect to any of
the Employee Benefit Plans maintained or contributed to by the Company has
caused any of such plans to engage in a "prohibited transaction," as defined in
ERISA Section 406 .
17
(e) The Company has never been obligated to contribute to any
Multiemployer Plan to any benefit or pension plan or arrangement involving
employees or service providers who do not ordinarily report for work within the
United States, other than plans established by unions, guilds or similar Persons
in connection with the motion picture industry.
(f) There has been no violation of the "continuation coverage
requirements" of "group health plans" as set forth in Code Section 4980B and
Part 6 of Subtitle B of Title I of ERISA or the "HIPAA" requirements as set
forth in Code Sections 9801 and 9802 and Part 7 of Subtitle B of ERISA with
respect to any Employee Benefit Plan maintained by the Company to which such
requirements apply.
(g) The Company does not maintain retiree life and retiree
health insurance plans which are Employee Welfare Benefit Plans providing for
continuing benefits or coverage for any employee or any beneficiary of any
employee after such employee's termination of employment (except to the extent
such continued coverage is required by Code Section 4980B and Part 6 of Subtitle
B of Title I of ERISA).
(h) Prior to the Closing, the Company will not establish or
create any new Employee Benefit Plan, except with the consent of Inforetech, nor
will the Company amend or modify as to any benefit or in any other way any
existing Employee Benefit Plan, except with the consent of Inforetech.
(i) The Company does not maintain and is not obligated to
contribute to any Employee Benefit Plan that is a defined benefit plan, and has
not maintained and has not been obligated to contribute to such a plan within
the last six years.
(j) "Company," as used in subsections (a) through (i) of this
Section 3.14 shall include any other entity required to be aggregated with the
Company under Sections 414(b), 414(c), 414(m), or 414(o) of the Code and the
regulations thereunder.
(k) Except as set forth in Section 3.14 of the Company
Disclosure Statement, there are no collective bargaining agreements applicable
to any Persons employed by the Company, and to the knowledge of the Company, the
Company has no duty to bargain with any labor organization with respect to any
such Person. There are not pending any unfair labor practice charges against the
Company, nor is there any demand for recognition, or any other request or demand
from a labor organization for representative status with respect to any Person
employed by the Company.
(l) The Company is in substantial compliance with all applicable
Legal Requirements respecting employment conditions and practices, have withheld
all amounts required by any applicable Legal Requirements or Contracts to be
withheld from the wages or salaries of their employees, and are not liable for
any arrears of wages or any Taxes or penalties for failure to comply with any of
the foregoing, except to the extent the failure to withhold any such amounts
would not have a Material Adverse Effect on the Company.
(m) The Company has not engaged in any unfair labor practice
within the meaning of the National Labor Relations Act and have not violated any
Legal Requirement prohibiting discrimination on the basis of race, color,
national origin, sex, religion, age, marital status, or
18
handicap in their employment conditions or practices, except where such
violations would not have a Material Adverse Effect on the Company. There is not
pending or, to the best of the Company's knowledge, threatened any
discrimination complaint relating to race, color, national origin, sex,
religion, age, marital status, or handicap against the Company before any
Regulatory Authority.
3.15 Material Company Contracts. Section 3.15 of the Company
--------------------------
Disclosure Schedule sets forth a true and complete list of all Material Company
Contracts. Except as set forth in Section 3.15 of the Company Disclosure
Statement:
(a) Each Material Company Contract is legal, valid, binding,
enforceable and in full force and effect ;
(b) Subject to obtaining any consent referred to in Section 3.5
or disclosed in Section 3.5 of the Company Disclosure Schedule, the transactions
contemplated by this Agreement will not prevent the Material Company Contract
from continuing to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; and
(c) Neither the Company, nor to the knowledge of the Company,
any other party thereto, is in material breach or default, and no event has
occurred which with notice or lapse of time would constitute a material breach
or default, or permit termination, modification or acceleration, under the
Material Company Contract .
3.16 Books and Records. The books and records of the Company
-----------------
accurately and fairly represent the Company Business and its results of
operations in all material respects. All accounts receivable and inventory of
the Company Business are reflected properly on such books and records in all
material respects.
3.17 Insurance. Except as set forth in Section 3.17 of the Company
---------
Disclosure Statement, the Company has policies of insurance and bonds of the
type and in amounts customarily carried by persons conducting businesses or
owning assets similar to those of the Company. As of the date of this Agreement,
there is no material claim pending under any of such policies or bonds as to
which coverage has been denied or disputed by the underwriters of such policies
or bonds. All premiums due and payable under all such policies and bonds have
been paid and the Company is otherwise in compliance in all material respects
with the terms of such policies and bonds. Except as set forth in Section 3.17
of the Company Disclosure Statement, the Company has no knowledge of any
threatened termination of any such policies.
3.18 Environmental Matters. Except as set forth in Section 3.18 of
---------------------
the Company Disclosure Statement, the Company has not violated any
environmental, safety or similar law or regulation applicable to its business or
property relating to the protection of human health and safety, the environment
or hazardous or toxic substances or waste, pollutants or contaminants
("Environmental Laws"), lacks any permits, licenses or other approvals required
of them under applicable Environmental Laws or is violating any term or
condition of any such permit, license or approval, except in each case as would
not, individually or in the aggregate, result in a Material Adverse Effect on
the Company.
19
3.19 Brokers or Finders. Except as disclosed in Section 3.19 of the
------------------
Company Disclosure Statement, no broker or finder has acted directly or
indirectly for the Company, the Company or any of its Affiliates in connection
with the transactions contemplated by this Agreement, and neither the Company,
nor any of its Affiliates has incurred any obligation to pay any brokerage or
finder's fee or other commission in connection with the transaction contemplated
by this Agreement.
3.20 Proxies. Company management holds, or prior to the Closing will
-------
hold, irrevocable proxies from the Company Shareholders adequate to ensure
Company Shareholder approval of the Merger as required by applicable law.
3.21 Disclosure. No representation or warranty of the Company in this
----------
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by the Company pursuant to this Agreement
contained, contains or will contain on the date such agreement or certificate
was or is delivered, or on the Closing Date, any untrue statement of a material
fact, or omitted, omits or will omit on such date to state any material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INFORETECH
Each of Inforetech and Merger Sub, jointly and severally, represents
and warrants to the Company that the statements contained in this ARTICLE IV are
correct and complete as of the date of this Agreement and, except as provided in
Section 10.1, 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 ARTICLE IV, except in the case of representations and
warranties stated to be made as of the date of this Agreement or as of another
date).
4.1 Organization and Qualification. Each of Inforetech and Merger
------------------------------
Sub is a corporation duly organized, validly existing and in good standing under
the laws of Nevada and California, respectively, and each Subsidiary of
Inforetech is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or formation. Inforetech has, and each
Subsidiary of Inforetech (including Merger Sub) has all requisite power and
authority to own, lease and use its assets as they are currently owned, leased
and used and to conduct its business as it is currently conducted. Inforetech
is, and each of its Subsidiaries (including Merger Sub) is, duly qualified or
licensed to do business in and is in good standing in each jurisdiction in which
the character of the properties owned, leased or used by it or the nature of the
activities conducted by it makes such qualification necessary, except any such
jurisdiction where the failure to be so qualified or licensed and in good
standing would not have a Material Adverse Effect on Inforetech or a material
adverse effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of the Company or any of
the Inforetech Parties to perform its obligations under this Agreement or any of
the Collateral Documents.
4.2 Capitalization.
--------------
20
(a) Inforetech's authorized capital stock consists of (a) 100,000,000
shares of Class A Common Stock and 10,000,000 shares of Class B Special Voting
Stock, of which 11,298,745 shares and 7,002,030 shares, respectively, are issued
and outstanding as of October 15, 2000. Subject to Section 7.2, the issuance by
Inforetech of additional capital stock or other securities between the date of
this Agreement and the Closing Date shall not be deemed to cause the
representations and warranties in this Section to be untrue or breached as of
the Closing Date. The shares of Inforetech Common Stock included in the Merger
Consideration, when issued in accordance with this Agreement, will have been
duly authorized, validly issued and outstanding and will be fully paid and
nonassessable.
(b) All of the issued and outstanding ownership interests in each
Subsidiary of Inforetech are owned, beneficially and of record, by the Persons
set forth in Section 4.2(b) of the Inforetech Disclosure Statement, as set forth
therein, and no other Person has any right, title or interest, whether legal or
equitable, in said ownership interests (except to the extent the Shareholders'
ownership of Inforetech could be deemed to constitute beneficial ownership of
the Inforetech's Subsidiaries). The restructuring involving Inforetech Golf
Technology 2000 Inc. ("Inforetech Golf") referred to in Section 4.2(b) of the
Inforetech Disclosure Statement will (a) be completed no later than June 30,
2001, (b) not require the issuance of additional securities of Inforetech
(except for the conversion of the outstanding Class B Special Voting Stock of
Inforetech into Class A Common Stock on a one for one basis) or the payment of
any amount to any shareholder of Inforetech Golf, (c) result in all of the
assets of Inforetech Golf being owned by Inforetech Golf, Inforetech or a wholly
owned direct or indirect subsidiary of Inforetech, and (d) result in Inforetech
Golf being a wholly owned subsidiary of Inforetech or being merged into
Inforetech after the continuation.
(c) Section 4.2(c) of the Inforetech Disclosure Statement lists all
outstanding or authorized options, warrants, purchase rights, preemptive rights
or other contracts or commitments that could require Inforetech or any of its
Subsidiaries to issue, sell, or otherwise cause to become outstanding any of its
capital stock or other ownership interests (collectively "Options"). Except as
described in Section 4.2(c) of the Inforetech Disclosure Statement, there are no
authorized or outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to Inforetech or any of its
Subsidiaries.
(d) All of the issued and outstanding shares of Inforetech Capital
Stock, and all outstanding ownership interests of each of Inforetech's
Subsidiaries have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable (with respect to Subsidiaries that are
corporations) and have been issued in compliance with applicable securities laws
and other applicable Legal Requirements. The securities of the Inforetech
Subsidiaries are subject to no Encumbrances or transfer restrictions under
applicable securities laws except as described in Section 4.2(d) of the
Inforetech Disclosure Statement. The Merger Shares, when issued, will have been
duly authorized, validly issued and outstanding, fully paid and nonassessable
and, subject to the accuracy of the information provided by the Company
Shareholders on a questionnaire distributed to them, will have been issued in
compliance with applicable securities laws and other applicable Legal
Requirements. The Guaranty Escrow Shares, if and when issued and delivered to
the Guarantors, will have been duly authorized, validly issued and outstanding,
fully paid and nonassessable and, subject to the accuracy of the information
provided by the
21
Guarantors on a questionnaire distributed to them, will have been issued in
compliance with applicable securities laws and other applicable Legal
Requirements.
(e) Section 4.2(e) of the Inforetech Disclosure Statement sets forth
the number of shares in the Public Float.
4.3 Authority and Validity. Each Inforetech Party has all requisite power
----------------------
to execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Collateral Documents. The
execution and delivery by each Inforetech Party of, the performance by each
Inforetech Party of its respective obligations under, and the consummation by
the Inforetech Parties of the transactions contemplated by, this Agreement and
the Collateral Documents have been duly authorized by all requisite action of
each Inforetech Party. This Agreement has been duly executed and delivered by
each of the Inforetech Parties and (assuming due execution and delivery by the
Company) is the legal, valid and binding obligation of each Inforetech Party,
enforceable against each of them in accordance with its terms. Upon the
execution and delivery by each of the Inforetech Parties of the Collateral
Documents to which each of them is a party, and assuming due execution and
delivery thereof by the other parties thereto, the Collateral Documents will be
the legal, valid and binding obligations of each such Person, as the case may
be, enforceable against each of them in accordance with their respective terms.
4.4 No Breach or Violation. Subject to obtaining the consents, approvals,
----------------------
authorizations, and orders of and making the registrations or filings with or
giving notices to Regulatory Authorities and Persons identified in the
exceptions to Section 4.5, the execution, delivery and performance by the
Inforetech Parties of this Agreement and the Collateral Documents to which each
is a party and the consummation of the transactions contemplated hereby and
thereby in accordance with the terms and conditions hereof and thereof, do not
and will not conflict with, constitute a violation or breach of, constitute a
default or give rise to any right of termination or acceleration of any right or
obligation of any Inforetech Party under, or result in the creation or
imposition of any Encumbrance upon the property of Inforetech or Merger Sub by
reason of the terms of (i) the articles of incorporation, by-laws or other
charter or organizational document of any Inforetech Party, (ii) any contract,
agreement, lease, indenture or other instrument to which any Inforetech Party is
a party or by or to which any Inforetech Party or its property may be bound or
subject and a violation of which would result in a Material Adverse Effect on
the Company taken as a whole ("Material Inforetech Contract"), (iii) any order,
judgment, injunction, award or decree of any arbitrator or Regulatory Authority
or any statute, law, rule or regulation applicable to any Inforetech Party or
(iv) any Permit of Inforetech or Merger Sub, which in the case of (ii), (iii) or
(iv) above would have a Material Adverse Effect on Inforetech or a material
adverse effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of any Inforetech Party to
perform its obligations hereunder or thereunder.
4.5 Consents and Approvals. Except for requirements under applicable U.S.
----------------------
or state securities laws, no consent, approval, authorization or order of,
registration or filing with, or notice to, any Regulatory Authority or any other
Person is necessary to be obtained, made or given by any Inforetech Party in
connection with the execution, delivery and performance by them of this
Agreement or any Collateral Documents or for the consummation by them of the
22
transactions contemplated hereby or thereby, except to the extent the failure to
obtain such consent, approval, authorization or order or to make such
registration or filings or to give such notice would not have a Material Adverse
Effect on Inforetech or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Collateral Documents or the
ability of the Company or any of the Inforetech Parties to perform its
obligations under this Agreement or any of the Collateral Documents.
4.6 Assets.
------
(a) Inforetech and its Subsidiaries have good title to their material
Inforetech Assets, free and clear of any and all Encumbrances, except (A) the
matters described in Section 4.6 of the Inforetech Disclosure Statement, (B)
Permitted Liens, and (C) Encumbrances on property that would not have a Material
Adverse Effect on Inforetech.
(b) Except as provided by this Agreement, and except as described in
Section 4.2 or 4.6 of the Inforetech Disclosure Statement, no Person has any
right to acquire, directly or indirectly, any interest in any of Inforetech's
Subsidiaries or any material Inforetech Assets, and there is no agreement to
which any Inforetech Party, any Subsidiary of Inforetech or any of their
Affiliates is a party or is otherwise bound relating to the foregoing.
(c) As of the Closing, Inforetech or its wholly owned subsidiaries
will own or otherwise have rights to all of the Assets necessary to the
operation of the Inforetech Business without the issuance of additional
securities of Inforetech.
4.7 Intellectual Property. Section 4.7 of the Inforetech Disclosure
---------------------
Statement sets forth a true and complete list of all registered patents,
trademarks, service marks, trade names, copyrights and applications therefor
relating to assets and properties of Inforetech owned by or registered in the
name of Inforetech or any of its Subsidiaries, or in which Inforetech or any of
its Subsidiaries has any right, license or interest (the "Inforetech
Intellectual Property Rights"). Except as set forth in Section 4.7 of the
Inforetech Disclosure Statement, Inforetech is not a party to any material
license agreement, either as licensor or licensee, with respect to any
Inforetech Intellectual Property Rights. To the knowledge of Inforetech,
Inforetech or one of its subsidiaries has good title to or the right to use all
material Inforetech Intellectual Property Rights and material all inventions,
processes, designs, formulae, trade secrets and know-how necessary for the
operation of Inforetech Business without the payment of any royalty or similar
payment.
4.8 Compliance with Legal Requirements. Inforetech and its Subsidiaries
----------------------------------
have operated Inforetech Business in compliance with all material Legal
Requirements applicable to Inforetech and its Subsidiaries, except to the extent
the failure to operate in compliance with all material Legal Requirements would
not have a Material Adverse Effect on Inforetech or a material adverse effect on
the validity, binding effect or enforceability of this Agreement or the
Collateral Documents.
4.9 Legal Proceedings. Except as set forth in Section 4.9 of the
-----------------
Inforetech Disclosure Statement or in the Inforetech Securities Filings filed
through the date hereof, (i) there are no outstanding judgments or orders
against or otherwise affecting or related to Inforetech, any of its
23
Subsidiaries, or their business or assets; and (ii) there is no action, suit,
complaint, proceeding or investigation, judicial, administrative or otherwise,
that is pending or, to the best knowledge of any Inforetech Party, threatened
that, if adversely determined, would have a Material Adverse Effect on
Inforetech or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents.
4.10 Subsequent Events. Since the date of the balance sheet included in
-----------------
the most recent Inforetech Securities Filings filed through the date hereof,
there has not been any occurrence, event, incident, action, failure to act or
transaction involving Inforetech or any of its Subsidiaries which is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
Inforetech.
4.11 Undisclosed Liabilities.
-----------------------
(a) As of the date of this Agreement, neither Inforetech nor any of
its Subsidiaries has any Liability, except for (i) Liabilities disclosed in the
Inforetech Securities Filings filed through the date hereof, (ii) Liabilities
incurred after the date of the balance sheet included in the most recent
Inforetech Securities Filings filed through the date hereof in the Ordinary
Course, (iii) Liabilities disclosed in Section 4.11 of the Inforetech Disclosure
Statement, (iv) Liabilities incurred in connection with this Agreement; and (v)
Liabilities not required to be reflected on a balance sheet under GAAP.
(b) As of the Closing Date, neither Inforetech nor any of its
Subsidiaries has any Liability, except for (i) Liabilities disclosed in the
Inforetech Securities Filings filed through the date hereof, (ii) Liabilities
incurred after the date of the balance sheet included in the Inforetech
Securities Filings filed through the date hereof in the Ordinary Course, (iii)
Liabilities disclosed in Section 4.11 of the Inforetech Disclosure Statement,
(iv) Liabilities incurred in connection with this Agreement; and (v) Liabilities
not required to be reflected on a balance sheet under GAAP.
4.12 Taxes.
-----
(a) Inforetech has, and each of its Subsidiaries has, duly and
timely filed in proper form all Tax Returns for all Taxes required to be filed
with the appropriate Governmental Authority, except where such failure to file
would not have a Material Adverse Effect on Inforetech. All Taxes due and
payable by Inforetech and any of its Subsidiaries (or claimed to be due and
payable) have been paid (regardless whether Tax Returns relating to such Taxes
have been duly and timely filed or, if filed, regardless whether such Tax
Returns are deficient), except such amounts as (i) are not in the aggregate
material or (ii) are being contested diligently and in good faith by appropriate
proceedings and for which there are adequate reserves in the Inforetech
Financial Statements. Inforetech has furnished to the Company true and correct
copies of all income Tax Returns filed by it or any of its Subsidiaries in the
past three years, all of which are accurate and complete in all material
respects. There are no pending Tax audits, claims or proceedings relating to
Inforetech any of its Subsidiaries, the Inforetech Assets or the Inforetech
Business or income therefrom. Neither Inforetech nor any of its Subsidiaries has
agreed to any waiver or extension of any statute of limitations relating to any
Tax. Neither Inforetech nor any of its Subsidiaries has an outstanding power of
attorney authorizing any Person to act on its
24
behalf in connection with any Tax or Tax Return. Neither Inforetech nor any of
its Subsidiaries has an outstanding closing agreement, request for a ruling or
determination, request for a change in method of accounting, subpoena or request
for information with or by any Regulatory Authority with respect to any Tax or
Tax Return.
4.13 Employee Benefits; Employees. All Employee Benefit Plans maintained
----------------------------
or contributed to by Inforetech are set forth in Section 4.13 of the Inforetech
Disclosure Statement. Except as set forth in Section 4.13 of the Inforetech
Disclosure Statement:
(a) All such Employee Benefit Plans are in substantial compliance
with all applicable Legal Requirements.
(b) There are not pending any unfair labor practice charges against
Inforetech or any of its Subsidiaries, nor is there any demand for recognition,
or any other request or demand from a labor organization for representative
status with respect to any Person employed by Inforetech or any of its
Subsidiaries.
(c) Inforetech and its Subsidiaries are in substantial compliance
with all applicable Legal Requirements respecting employment conditions and
practices, have withheld all amounts required by any applicable Legal
Requirements or Inforetech to be withheld from the wages or salaries of their
employees, and are not liable for any of arrears of wages or any Taxes or
penalties for failure to comply with any of the foregoing, except to the extent
the failure to withhold any amounts would not have a Material Adverse Effect.
(d) To the knowledge of Inforetech, Inforetech and its Subsidiaries
have not engaged in any unfair labor practice within the meaning of the National
Labor Relations Act and have not violated any Legal Requirement prohibiting
discrimination on the basis of race, color, national origin, sex, religion, age,
marital status, or handicap in their employment conditions or practices, except
where such violations would not have a Material Adverse Effect on Inforetech.
There is not pending or to the best of Inforetech's knowledge, threatened, any
discrimination complaint relating to race, color, national origin, sex,
religion, age, marital status or handicap against Inforetech or any of its
Subsidiaries before any Regulatory Authority.
4.14 Material Inforetech Contracts. Section 4.14 of the Inforetech
-----------------------------
Disclosure Schedule sets forth a true and complete list of Material Inforetech
Contracts. Except as set forth in Section 3.14 of the Inforetech Disclosure
Schedule.
(a) Each Material Inforetech Contract is legal, valid, binding,
enforceable and in full force and effect;
(b) Subject to obtaining any consent referred to in Section 4.5 or
disclosed in Section 4.5 of the Inforetech Disclosure Schedule, the transactions
contemplated by this Agreement will not prevent the Material Inforetech Contract
from continuing to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; and
(c) Neither Inforetech nor any of its Subsidiaries, nor, to the
knowledge of Inforetech, any other party thereto, is in material breach or
default, and no event has occurred
25
which with notice or lapse of time would constitute a material breach or
default, or permit termination, modification or acceleration, under the Material
Inforetech Contract.
4.15 Books and Records. The books and records of Inforetech and its
-----------------
Subsidiaries accurately and fairly represent the Inforetech Business and its
results of operations in all material respects. All accounts receivable and
inventory of the Inforetech Business are reflected properly on such books and
records in all material respects.
4.16 Insurance. Inforetech has policies of insurance and bonds of the type
---------
and in amounts customarily carried by persons conducting businesses or owning
assets similar to those of Inforetech and its Subsidiaries. As of the date of
this Agreement, there is no material claim pending under any of such policies or
bonds as to which coverage has been denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and Inforetech and the Inforetech Subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds. Inforetech has no knowledge of any threatened termination of any such
policies.
4.17 Environmental Matters. Neither Inforetech nor any of the Inforetech
---------------------
Subsidiaries has violated any Environmental Laws, lacks any permits, licenses or
other approvals required of them under applicable Environmental Laws or is
violating any term or condition of any such permit, license or approval, except
in each case as would not, individually or in the aggregate, result in a
Material Adverse Effect on Inforetech.
4.18 Financial and Other Information.
-------------------------------
(a) The historical financial statements (including the notes
thereto) ("Inforetech Financial Statements") contained (or incorporated by
reference) in the Inforetech Securities Filings have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered thereby
(except as may be indicated in the notes thereto), and present fairly the
financial condition of Inforetech and its results of operations as of the dates
and for the periods indicated, subject in the case of the unaudited financial
statements only to normal year-end adjustments (none of which will be material
in amount) and the omission of footnotes.
(b) The Inforetech Securities Filings did not, as of their filing
dates, contain (directly or by incorporation by reference) any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (or incorporated therein by
reference), in light of the circumstances under which they were or will be made,
not misleading.
4.19 No Orders. No order suspending the sale or ceasing the trading of the
---------
Inforetech Common Stock has been issued by any court, securities commission or
regulatory authority in Canada or the United States, and no proceedings for such
purpose are pending or, to the knowledge of Inforetech, after reasonable
inquiry, threatened.
4.20 Brokers or Finders. Except as disclosed in Section 4.20 of the
------------------
Inforetech Disclosure Statement, no broker or finder has acted directly or
indirectly for Inforetech, any Inforetech Party or any of their Affiliates in
connection with the transactions contemplated by this Agreement, and neither
Inforetech, any Inforetech Party nor any of their Affiliates has
26
incurred any obligation to pay any brokerage or finder's fee or other commission
in connection with the transaction contemplated by this Agreement.
4.21 Disclosure. No representation or warranty of Inforetech in this
----------
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by Inforetech pursuant to this Agreement contained,
contains or will contain on the date such agreement or certificate was or is
delivered, or on the Closing Date, any untrue statement of a material fact, or
omitted, omits or will omit on such date to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INFORETECH PARTIES
Each of Inforetech and Merger Sub, severally and jointly, represents and
warrants to the Company that the statements contained in ARTICLE V are correct
and complete as of the date of this Agreement and, except as provided in Section
10.1, 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 ARTICLE V), except in the case of representations and warranties
stated to be made as of the date of this Agreement or as of another date.
5.1 Organization and Qualification. Merger Sub is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
California. Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and is directly and wholly owned by
Inforetech.
5.2 Articles of Incorporation and Bylaws. Merger Sub has heretofore made
------------------------------------
available to the Company a complete and correct copy of the certificate of
incorporation and the bylaws of Merger Sub, each as amended to date. Such
articles of incorporation and bylaws are in full force and effect. Merger Sub is
not in violation of any of the provisions of its certificate of incorporation or
bylaws.
5.3 Authority. Merger Sub has the necessary corporate power and authority
---------
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Merger Sub and the consummation by Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Merger Sub, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
5.4 No Conflict; Required Filings and Consents.
------------------------------------------
27
(a) The execution and delivery of this Agreement by Merger Sub do
not, and the performance by Merger Sub of its obligations under this Agreement
will not (i) conflict with or violate the certificate of incorporation or bylaws
of Merger Sub, (ii) conflict with or violate any law, statute ordinance, rule,
regulation, order, judgment or decree applicable to Merger Sub or by which any
of its properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the properties or assets of Merger Sub pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Merger Sub is a party or by
which Merger Sub or any of its properties or assets is bound or affected,
except, in the case of clauses (ii) and (iii) above for any such conflicts,
violations, breaches, defaults or other alterations or occurrences that would
not prevent or delay consummation of the Merger in any material respect, or
otherwise prevent Merger Sub from performing its obligations under this
Agreement in any material respect.
(b) The execution and delivery of this Agreement by Merger Sub does
not, and the performance of this Agreement by Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for (A) applicable requirements, if any,
of the Securities Act, (B) filings and recordation of appropriate merger
documents as required by California law and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect.
5.5 Legal Proceedings. There are no outstanding judgments or orders
-----------------
against or otherwise affecting or related to Merger Sub or its business or
assets, and there is no action, suit, complaint, proceeding or investigation,
judicial, administrative or otherwise, that is pending or threatened against or
otherwise affecting or related to Merger Sub or its business or assets.
5.6 Vote Required. The affirmative vote of Inforetech, the sole
-------------
shareholder of Merger Sub, is the only vote of the holder of any class or series
of Merger Sub capital stock necessary to approve any of the transactions
contemplated hereby.
ARTICLE VI
PRE-CLOSING COVENANTS OF THE COMPANY
Between the date of this Agreement and the Closing Date:
6.1 Additional Information. The Company shall provide to Inforetech and
----------------------
its Representatives such financial, operating and other documents, data and
information relating to the Company, the Company Business and the Company Assets
and Liabilities of the Company, as Inforetech or its Representatives may
reasonably request. In addition, the Company shall take all action necessary to
enable Inforetech and its Representatives to review, inspect and audit the
Company Assets, the Company Business and Liabilities of the Company and discuss
them with the Company's officers, employees, independent accountants, customers,
licensees, and counsel. Notwithstanding any investigation that Inforetech may
conduct of the Company, the Company Business, the Company Assets and the
Liabilities of the Company, the Inforetech Parties may fully rely on the
Company's warranties, covenants and indemnities set forth in this Agreement,
28
the Collateral Documents and any documents or certificates delivered hereunder
and thereunder, which will not be waived or affected by or as a result of such
investigation.
6.2 No Solicitations.
----------------
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to ARTICLE XII, the Company will
not nor will it authorize or permit any of its officers, directors, affiliates
or employees or any investment banker, attorney or other advisor or
representative retained by it, directly or indirectly, (i) solicit or initiate
the making, submission or announcement of any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to any Acquisition Proposal,
(iii) engage in discussions with any Person with respect to any Acquisition
Proposal, except as to the existence of these provisions, (iv) approve, endorse
or recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any contract agreement or commitment contemplating or
otherwise relating to any Acquisition Proposal.
6.3 Continuity and Maintenance of Operations.
----------------------------------------
(a) The Company shall: (i) comply in all material respects with all
Legal Requirements applicable to the Company relating to the Company Business;
(ii) fulfill in all material respects all of its obligations under and use
commercially reasonable efforts to maintain in full force and effect all
Material Company Contracts (other than those that expire by their terms or as
otherwise consented to by Inforetech), and shall not, without the prior written
consent of Inforetech, seek to materially alter, modify or amend any of the
foregoing in a manner adverse to the Company (other than those Material Company
Contracts that expressly provide that they will be amended or modified upon the
happening of specified contingencies, and other than amendments or modifications
that are consented to by Inforetech); (iii) use its commercially reasonable
efforts to promote the financial success of the Company Business and promptly
notify Inforetech of any material adverse change in the condition (financial or
otherwise) of the Company Business; and (iv) use its commercially reasonable
efforts to promote, develop and preserve its relationships with its present
employees as well as the goodwill of its customers and promptly notify
Inforetech of any material adverse change in such relationships. Without
limiting the generality of the foregoing, the Company shall maintain the Company
Assets in materially good order, condition and repair, maintain insurance
relating to the Company Business in all material respects as in effect on the
date of this Agreement, operate the Company Business in the Ordinary Course, and
keep and maintain all of the books and records in the Ordinary Course. Other
than in the Ordinary Course, the Company shall not pay or credit in any way any
accounts receivable prior to the Closing Date, and shall not permit any of its
Representatives to do so either.
(b) The Company shall not, without the prior written consent of
Inforetech sell, lease, transfer, convey or assign any material Company Assets
other than in the Ordinary Course (or enter into any contract to do any of the
foregoing) or permit the creation of any Encumbrance on any of its Company
Assets except Permitted Liens or as otherwise contemplated by this Agreement.
29
(c) Unless the Company shall have obtained the prior written consent
of Inforetech or except as set forth in Section 6.3(c) of the Company Disclosure
Statement, the Company shall not:
(i) engage in any Acquisition;
(ii) declare or pay any dividends or make any other
distributions to the Company Shareholders;
(iii) redeem or repurchase any stock (other than stock of
employees in connection with termination of their employment on terms
consistent with the terms of any employment agreement described in Section
3.15 of the Company Disclosure Statement);
(iv) issue additional shares of Company Capital Stock
(except pursuant to options, warrants and convertible debt outstanding on
the date hereof) or additional Options or any stock appreciation, phantom
stock, profit participation or similar rights;
(v) incur any material debt except to finance expenditures
not prohibited by this Agreement, and other obligations incurred in the
Ordinary Course;
(vi) make any loans other than in the Ordinary Course; or
(vii) enter into any agreement to do any of the foregoing.
(d) The Company shall not take, and shall use commercially reasonable
efforts not to omit to take, any action that would cause any of its
representations or warranties in this Agreement or the Collateral Documents to
be untrue in any material respect as of the Closing Date, nor take or omit to
take any action that would cause it to be in breach in any material respect of
any of the covenants made by it in this Agreement or the Collateral Documents or
that would, if such action had been taken or omitted on or before the date of
this Agreement, have been required to be disclosed in Section 3.11 of the
Company Disclosure Statement.
6.4 Consents and Approvals. As soon as practicable after execution of this
----------------------
Agreement, the Company shall use commercially reasonable efforts to obtain any
necessary consent, approval, authorization or order of, make any registration or
filing with or give any notice to, any Regulatory Authority or Person as is
required to be obtained, made or given by the Company to consummate the
transactions contemplated by this Agreement and the Collateral Documents,
without giving rise to any prepayment, penalty or premium, and all of the
authorizations, consents, approvals, actions, filings or notices set forth in
Section 3.5 of this Agreement or Section 3.5 of the Company Disclosure
Statement.
6.5 Meeting of the Company Shareholders.
-----------------------------------
(a) Promptly after the date hereof, the Company will take all action
necessary in accordance with the CGCL and its Articles of Incorporation and by-
laws to convene a meeting of the Company's shareholders to consider adoption and
approval of this Agreement and approval of the Merger (the "Company
Shareholders' Meeting") to be held as promptly as practicable.
30
The Company will use its commercially reasonable efforts to solicit from its
shareholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger and will take all other action necessary or advisable
to secure the vote or consent of its shareholders required by the CGCL to obtain
such approvals. The Company shall ensure that the Company Shareholders' Meeting
is called, noticed, convened, held and conducted, and that all proxies solicited
by the Company in connection with the Company Shareholders' Meeting are
solicited, in compliance with the CGCL, the Company's Articles of Incorporation
and by-laws, and all other applicable laws.
(b) (i) the Board of Directors of the Company shall recommend
that the Company's shareholders vote in favor of and adopt and approve this
Agreement and approve the Merger at the Company Shareholders' Meeting; (ii) the
Company's proxy statement shall include a statement to the effect that the Board
of Directors of the Company has recommended that the Company's shareholders vote
in favor of and adopt and approve this Agreement and the Merger at the Company
Shareholders' Meeting; and (iii) neither the Board of Directors of the Company
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify in a manner adverse to Inforetech, the
recommendation of the Board of Directors of the Company that the Company's
shareholders vote in favor of and adopt and approve this Agreement and the
Merger.
6.6 Notification of Certain Matters. The Company shall promptly
-------------------------------
notify Inforetech of any fact, event, circumstance or action known to it that is
reasonably likely to cause the Company to be unable to perform any of its
covenants contained herein or any condition precedent in ARTICLE IX not to be
satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to Inforetech pursuant to this Agreement or the
existence or occurrence of which would cause any of the Company's
representations or warranties under this Agreement not to be correct and/or
complete. The Company shall give prompt written notice to Inforetech of any
adverse development causing a breach of any of the representations and
warranties in ARTICLE III. However, except as provided in Section 6.7, no
disclosure pursuant to this Section, shall be deemed to amend or supplement this
Agreement or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant by the Company.
6.7 Company Disclosure Statement. The Company shall, from time to
-----------------------------
time prior to Closing, supplement the Company Disclosure Statement with
additional information that, if existing or known to it on the date of delivery
of the Company Disclosure Statement to the Inforetech Parties, would have been
required to be included therein. For purposes of determining the satisfaction of
any of the conditions to the obligations of the Inforetech Parties in ARTICLE
IX, the Company Disclosure Statement shall be deemed to include only (a) the
information contained therein on the date of this Agreement and (b) information
added to the Company Disclosure Statement by written supplements delivered prior
to Closing by the Company that (i) are accepted in writing by Inforetech, or
(ii) reflect actions taken or events occurring after the date hereof prior to
Closing that (A) do not breach any covenant in this Agreement so as to cause the
condition precedent stated in Section 9.2 not to be fulfilled at or prior to the
Closing, and (B) do not in the aggregate have a Material Adverse Effect on the
Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral
31
Documents or the ability of the Company or any of the Inforetech Parties to
perform its obligations under this Agreement or any of the Collateral Documents.
6.8 State Statutes. The Company and its Board of Directors shall, if
--------------
any state takeover statute or similar law is or becomes applicable to the
Merger, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this Agreement
and the transactions contemplated hereby. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be deemed to require Inforetech or the
Company or any Subsidiary or Affiliate thereof to agree to any divestiture by
itself or any of its Affiliates of shares of capital stock or of any business,
assets or property, or the imposition of any material limitation on the ability
of any of them to conduct their businesses or to own or exercise control of such
assets, properties and stock.
6.9 Employee Matters. The Company shall, or shall cause the sponsor
----------------
of the 401(k) Qualified Retirement Plan (the "401(k) Plan") to, take the
following actions: (i) adopt resolutions, or take such other action as required
by the 401(k) Plan, to (A) terminate the 401(k) Plan effective immediately prior
to the Closing Date, subject to receipt of a ruling from the District Director
of Internal Revenue that the termination of the 401(k) Plan does not adversely
affect the tax qualified status of the 401(k) Plan, and (B) cease contributions
under the 401(k) Plan effective as of the Closing Date; and (ii) file Internal
Revenue Service Form 5310 (Application for Determination for Terminating Plan)
with respect to the 401(k) Plan termination with the District Director of
Internal Revenue, such Form fully disclosing the corporate transaction
contemplated by this Agreement and the status of 401(k) Plan participants after
the transaction. Such resolutions (or other action required by the 401(k) Plan)
and Form 5310 shall be in a form satisfactory to Inforetech. To the extent a
distribution from the 401(k) Plan is an eligible rollover distribution (as
defined in Section 402(c)(4) of the Code), Inforetech shall permit the direct
rollover of such distribution to the 401(k) Plan of Inforetech provided that the
individual requesting the rollover contribution is a participant in the 401(k)
Plan of Inforetech at the time of such rollover, and further provided that the
rollover contribution is in cash and/or other property acceptable to the trustee
of the Inforetech Plan.
6.10 Treatment of Promissory Notes.
-----------------------------
(a) The Company shall use its best efforts to cause Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx ("Xxxxxx") to agree to refrain from accelerating the
promissory note owed by the Company to Xxxxxx in the principal amount of
$1,338,322, together with accrued interest.
(b) The Company shall cause Xxxx Xxxxxxx to agree to the
conversion of the debt owed by the Company to Xxxx Xxxxxxx in the principal
amount of $235,000, with interest waived, to be converted into shares of
Inforetech Class A Common Shares calculated based on the Market Price as of the
Closing Date but no less than $6.00 per share nor more than $7.50 per share
(adjusted to reflect any stock split, reverse stock split or stock dividend on
the Inforetech Common Stock between the date hereof and the Closing Date).
32
(c) The Company shall use its best efforts to cause Xxxxxxx
Navigation Ltd. ("Trimble") and Xxxx XxXxxxxx ("XxXxxxxx") to refrain from
accelerating the promissory notes owed by ProShot to Trimble and XxXxxxxx in the
principal amount of approximately $258,000 and approximately $295,000,
respectively, together with accrued interest, provided, however, that (a) in
connection with the promissory note to Trimble, a letter of credit or other
credit enhancement reasonably acceptable to Trimble will be in place, and
Inforetech will agree to grant to Trimble piggyback registration rights with
respect to the Merger Shares issuable to Trimble at the Closing subject to
customary underwriter cutback provisions and provided that Trimble enters into a
customary lockup arrangement with the applicable underwriter; and (b) if
required by the issuee, Inforetech will issue replacement notes to Trimble
and/or XxXxxxxx on substantially the same terms as the existing notes.
(d) As to the promissory notes issued to Xxxxxx, Trimble and
XxXxxxxx, the Company shall use its best efforts to have each such issuee
convert such notes to shares of Inforetech Common Stock on the same basis as the
conversion of the Company Common Stock into Merger Shares, it being understood
that such best efforts do not require the payment of any amount to such issuee
by the Company.
ARTICLE VII
PRE-CLOSING COVENANTS OF THE INFORETECH PARTIES
Between the date of this Agreement and the Closing Date,
7.1 Additional Information. Inforetech shall provide to the Company and
----------------------
its Representatives such financial, operating and other documents, data and
information relating to Inforetech and its Subsidiaries, the Inforetech Business
and the Inforetech Assets and the Liabilities of Inforetech and its
Subsidiaries, as Company or its Representatives may reasonably request. In
addition, the Company shall take all action necessary to enable the Company and
its Representatives to review and inspect the Inforetech Assets, the Inforetech
Business and the Liabilities of Inforetech and its Subsidiaries and discuss them
with the Company's officers, employees, independent accountants and counsel.
Notwithstanding any investigation that the Company may conduct of Inforetech and
its Subsidiaries, the Inforetech Business, the Inforetech Assets and the
Liabilities of Inforetech and its Subsidiaries, the Company may fully rely on
the Inforetech Parties' warranties, covenants and indemnities set forth in this
Agreement, the Collateral Documents and any documents or certificates delivered
hereunder and thereunder, which will not be waived or affected by or as a result
of such investigation.
7.2 Continuity and Maintenance of Operations.
----------------------------------------
(a) Inforetech shall, and shall cause each of its Subsidiaries to use
its commercially reasonable efforts to promote the financial success of the
Inforetech Business and promptly notify the Company of any material adverse
change in the condition (financial or otherwise) of the Inforetech Business and
use its commercially reasonable efforts to promote, develop and preserve its
relationships with its present employees as well as the goodwill of its
customers and promptly notify the Company of any material adverse change in such
relationships.
33
(b) No Inforetech Party shall take or omit to take any action that
would cause any of them to be in material breach of any representations,
warranties or covenants made by them in this Agreement or the Collateral
Documents or that would, if such action had been taken or omitted on or before
the date of this Agreement, have been required to be disclosed in Section 4.10
of the Inforetech Disclosure Statement.
7.3 Consents and Approvals. As soon as practicable after execution of this
----------------------
Agreement, the Inforetech Parties shall use their commercially reasonable
efforts to obtain any necessary consent, approval, authorization or order of,
make any registration or filing with or give notice to, any Regulatory Authority
or Person as is required to be obtained, made or given by any of the Inforetech
Parties to consummate the transactions contemplated by this Agreement and the
Collateral Documents, including without limitation any authorizations, consents,
approvals, actions, filings or notices set forth in Section 4.5 of this
Agreement or Section 4.5 of the Inforetech Disclosure Statement.
7.4 Financial and Other Information. Inforetech shall, promptly after
-------------------------------
execution of this Agreement and from time to time thereafter, provide such
information and documents to the Company and its Affiliates concerning
Inforetech, its Subsidiaries and shareholders as may be required or appropriate
for inclusion in the Company Proxy Statement.
7.5 Notification of Certain Matters. Inforetech shall promptly notify the
-------------------------------
Company of any fact, event, circumstance or action known to it that is
reasonably likely to cause any Inforetech Party to be unable to perform any of
its covenants contained herein or any condition precedent in ARTICLE X not to be
satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to the Company pursuant to this Agreement or the
existence or occurrence of which would cause any of the Inforetech Parties'
representations or warranties under this Agreement not to be correct and/or
complete. The Inforetech Parties shall give prompt written notice to the Company
of any adverse development causing a breach of any of the representations and
warranties in ARTICLE IV or ARTICLE V as of the date made. However, except as
provided in Section 7.6, no disclosure by the Inforetech Parties pursuant to
this Section shall be deemed to amend or supplement this Agreement or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant by the
Inforetech Parties.
7.6 Inforetech Disclosure Statement. The Inforetech Parties shall, from
-------------------------------
time to time prior to Closing, supplement the Inforetech Disclosure Statement
with additional information that, if existing or known to it on the date of this
Agreement, would have been required to be included therein. For purposes of
determining the satisfaction of any of the conditions to the obligations of the
Company in ARTICLE X, the Inforetech Disclosure Statement shall be deemed to
include only (a) the information contained therein on the date of delivery of
the Inforetech Disclosure Statement to the Company and (b) information added to
the Inforetech Disclosure Statement by written supplements delivered prior to
Closing by the Inforetech Parties that (i) are accepted in writing by the
Company or (ii) reflect actions taken or events occurring after the date hereof
and prior to Closing that (A) do not breach any covenant in this Agreement so as
to cause the condition precedent stated in Section 10.2 not to be fulfilled at
or prior to the Closing, and (B) do not in the aggregate have a Material Adverse
Effect on Inforetech or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the
34
Collateral Documents or the ability of the Company or any of the Inforetech
Parties to perform its obligations under this Agreement or any of the Collateral
Documents.
7.7 State Statutes. Inforetech and its board of directors shall, if
--------------
any state takeover statute or similar law is or becomes applicable to the
Merger, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this Agreement
and the transactions contemplated hereby. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be deemed to require Inforetech or any
Subsidiary or Affiliate thereof to agree to any divestiture by itself or any of
its Affiliates of shares of capital stock or of any business, assets or
property, or the imposition of any material limitation on the ability of any of
them to conduct their businesses or to own or exercise control of such assets,
properties and stock.
7.8 Securities Filings. Prior to the Closing, Inforetech will timely
------------------
file all reports and other documents required to be filed with the Securities
and Exchange Commission, which reports and other documents do not and will not
contain any misstatement of a material fact, and do not and will not omit any
material fact necessary to make the statements therein not misleading.
7.9 Introductions. Inforetech will use its best efforts to introduce
-------------
to the Company its current leasing resources so that they may provide lease
financing for the Company's installed courses and process payments to vendors
for courses on order.
ARTICLE VIII
PRE-CLOSING COVENANTS OF ALL PARTIES
Inforetech and the Company shall use their best efforts to cause the
release of all shareholder guarantees of debt (the "Shareholder Guarantees") as
set forth on Section 8 of the Company Disclosure Schedule concurrently with the
Closing. In the event such guarantees have not been released at the Closing,
960,000 shares of Inforetech Class A Common Shares (the "Guaranty Escrow
Shares") shall be placed in escrow by Inforetech with a third party reasonably
acceptable to the Parties for the benefit of the shareholders of the Company who
have provided the Shareholder Guarantees (the "Guarantors"). Commencing ninety
days following the Closing, if the Shareholder Guarantees have not been released
in full, one-twelfth of the Guaranty Escrow Shares shall be released from escrow
each month, or portion thereof, and delivered into a second escrow to be held
pursuant to the terms of an escrow agreement among the Guarantors, until the
Shareholder Guarantees have been released in full. In the event that any call is
made on any of the Shareholder Guarantees after the Closing as a result of a
default of the underlying obligations, all of the Guaranty Escrow Shares shall
immediately be released from escrow and delivered into a second escrow to be
held pursuant to the terms of an escrow agreement among the Guarantors. The
Company has informed Inforetech that the Company and the Guarantors intend that,
if none of the Shareholder Guarantees are called, the Guaranty Escrow Shares
shall be distributed to all of the Company Shareholders pro rata.
35
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INFORETECH PARTIES
All obligations of the Inforetech Parties under this Agreement shall
be subject to the fulfillment at or prior to Closing of each of the following
conditions, it being understood that the Inforetech Parties may, in their sole
discretion, to the extent permitted by applicable Legal Requirements, waive any
or all of such conditions in whole or in part.
9.1 Accuracy of Representations. All representations and warranties of the
---------------------------
Company contained in this Agreement (giving effect to Section 6.7), the
Collateral Documents and any certificate delivered by any of the Company at or
prior to Closing shall be, if specifically qualified by materiality, true in all
respects and, if not so qualified, shall be true in all material respects, in
each case on and as of the Closing Date with the same effect as if made on and
as of the Closing Date, except for representations and warranties expressly
stated to be made as of the date of this Agreement or as of another date other
than the Closing Date and except for changes contemplated or permitted by this
Agreement. The Company shall have delivered to Inforetech and Merger Sub a
certificate dated the Closing Date to the foregoing effect.
9.2 Covenants. The Company shall, in all material respects, have performed
---------
and complied with each of the covenants, obligations and agreements contained in
this Agreement and the Collateral Documents that are to be performed or complied
with by them at or prior to Closing. The Company shall have delivered to
Inforetech and Merger Sub a certificate dated the Closing Date to the foregoing
effect.
9.3 Consents and Approvals.
----------------------
(a) All consents, approvals, authorizations and orders required to be
obtained from, and all registrations, filings and notices required to be made
with or given to, any Regulatory Authority or Person as provided in Sections 6.4
and 7.3 shall have been duly obtained, made or given, as the case may be, and
shall be in full force and effect, and any waiting period required by applicable
law or any Regulatory Authority in connection with such transactions shall have
expired or have been earlier terminated, unless the failure to obtain, make or
give any such consent, approval, authorization, order, registration, filing or
notice, or to allow any such waiting period to expire or terminate would not
have a Material Adverse Effect on the Company or a material adverse effect on
the validity, binding effect or enforceability of this Agreement or the
Collateral Documents or the ability of the Company to perform its obligations
under this Agreement or any of the Collateral Documents.
(b) This Agreement and the Merger shall have been approved by the
requisite vote of the Company's Shareholders in accordance with the CGCL and the
Company's Articles of Incorporation and by-laws.
(c) Inforetech and Merger Sub shall have been furnished with
appropriate evidence, reasonably satisfactory to it and its counsel, of the
granting of such consents, approvals, authorizations and orders, the making of
such registrations and filings and the giving of such notices referred to in
subsections (a) and (b).
36
9.4 Dissenters' Rights. Not more than 5% of the shares of Company
------------------
Common Stock shall have taken steps to perfect their dissenters' appraisal
rights under Section 1300 of the CGCL in connection with the Merger.
9.5 Delivery of Documents. The Company shall have delivered, or
---------------------
caused to be delivered, to Inforetech and Merger Sub the following documents:
(i) Certified copies of the Company's articles of
incorporation and by-laws and certified resolutions of the board of
directors and Shareholders of the Company authorizing the execution of
this Agreement and the Collateral Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby.
(ii) An opinion of Higham, XxXxxxxxx & Xxxxxxx LLP counsel
to the Company, dated the Closing Date, in form and substance
reasonably satisfactory to Inforetech.
(iii) All books and records of the Company.
(iv) Such other documents and instruments as Inforetech may
reasonably request: (A) to evidence the accuracy of the Company's
representations and warranties under this Agreement, the Collateral
Documents and any documents, instruments or certificates required to
be delivered thereunder; (B) to evidence the performance by the
Company of, or the compliance by the Company with, any covenant,
obligation, condition and agreement to be performed or complied with
by the Company under this Agreement and the Collateral Documents; or
(C) to otherwise facilitate the consummation or performance of any of
the transactions contemplated by this Agreement and the Collateral
Documents.
9.6 No Material Adverse Change. Since the date hereof, there shall
--------------------------
have been no material adverse change in the Company Assets, the Company Business
or the financial condition or operations of the Company, taken as a whole.
9.7 No Litigation.
-------------
(a) No action, suit or proceeding shall be pending or threatened
by or before any Regulatory Authority, and no Legal Requirement or policy of any
applicable regulatory authority, shall have been enacted, promulgated or issued
that would: (i) prohibit or adversely affect in any material respect
Inforetech's or the Surviving Corporation's and its Subsidiaries' ownership or
operation of all or a material portion of the Company Business or the Company
Assets or materially and adversely affect the value of the Company Assets; (ii)
materially restrict or limit or otherwise condition Inforetech's or the
Surviving Corporation's and its Subsidiaries' right to transfer and/or assign
the Company Business or the Company Assets in the future; (iii) compel
Inforetech or the Surviving Corporation or any of its Subsidiaries to dispose of
or hold separate all or a material portion of the Company Business or the
Company Assets as a result of any of the transactions contemplated by this
Agreement
37
and the Collateral Documents; or (v) cause any of the transactions contemplated
by this Agreement and the Collateral Documents to be rescinded following
consummation.
(b) Except as set forth in Section 3.12 of the Company Disclosure
Statement, (i) there shall be no outstanding judgments or orders against or
otherwise affecting or related to the Company, the Company Business or the
Company Assets; (ii) there shall be no action, suit, complaint, proceeding or
investigation, judicial, administrative or otherwise, that is pending or, to the
Company's knowledge, threatened that, if adversely determined, would have a
Material Adverse Effect on the Company or a material adverse affect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents.
9.8 Delivery of Financial Statements. There shall be delivered to
-------------------------------
Inforetech a balance sheet of the Company as of December 31, 1999 and related
statements of income and cash flow audited by Ernst & Young LLP and an unaudited
balance sheet as of July 31, 2000 and related statements of income and cash flow
for the seven months then ended reviewed by Ernst & Young LLP, which financial
statements shall not be materially different from the Company Financial
Statements referred to in Section 3.9 except only to the extent referred to in
Section 3.9 of the Company Disclosure Statement.
9.9 Fairness Opinion. Ladenburg Xxxxxxxx & Company, Inc. shall have
----------------
rendered an opinion to Inforetech that the Merger is fair to Inforetech and its
shareholders from a financial point of view.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
All obligations of the Company under this Agreement shall be subject to the
fulfillment at or prior to Closing of the following conditions, it being
understood that the Company may, in its sole discretion, to the extent permitted
by applicable Legal Requirements, waive any or all of such conditions in whole
or in part.
10.1 Accuracy of Representations. All representations and warranties of
---------------------------
the Inforetech Parties contained in this Agreement (giving effect to Section
7.6) and the Collateral Documents and any other document, instrument or
certificate delivered by any of the Inforetech Parties at or prior to the
Closing shall be, if specifically qualified by materiality, true and correct in
all respects and, if not so qualified, shall be true and correct in all material
respects, in each case on and as of the Closing Date with the same effect as if
made on and as of the Closing Date, except for representations and warranties
expressly stated to be made as of the date of this Agreement or as of another
date other than the Closing Date and except for changes contemplated or
permitted by this Agreement. The Inforetech Parties shall have delivered to the
Company a certificate dated the Closing Date to the foregoing effect.
10.2 Covenants. The Inforetech Parties shall, in all material respects,
---------
have performed and complied with each obligation, agreement, covenant and
condition contained in this Agreement and the Collateral Documents and required
by this Agreement and the Collateral Documents to be performed or complied with
by the Inforetech Parties at or prior to Closing.
38
The Inforetech Parties shall have delivered to the Company a certificate dated
the Closing Date to the foregoing effect.
10.3 Consents and Approvals.
----------------------
(a) All consents; approvals, authorizations and orders required to
be obtained from, and all registrations, filings and notices required to be made
with or given to, any Regulatory Authority or Person as provided in Section 6.4
and 7.3 shall have been duly obtained, made or given, as the case may be, and
shall be in full force and effect, and any waiting period required by applicable
law any Regulatory Authority in connection with such transactions shall have
expired or have been earlier terminated, unless the failure to obtain, make or
give any such consent, approval, authorization, order, registration, filing or
notice, or to allow any such waiting period to expire or terminate would not
have a Material Adverse Effect on Inforetech or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of the Company or any of the Inforetech Parties to
perform its obligations under this Agreement or any of the Collateral Documents.
(b) The Company shall have been furnished with the appropriate
evidence, reasonably satisfactory to them and their counsel, of the granting of
such consents, approvals, authorizations and orders, the making of such
registrations and filings and the giving of such notices referred to in
subsections (a), (b) and (c).
10.4 Delivery of Documents. The Inforetech Parties, as applicable, shall
---------------------
have executed and delivered, or caused to be executed and delivered, to the
Company the following documents:
(i) Certified copies of the articles of incorporation and by-
laws of Inforetech and certified resolutions by the board of directors
authorizing the execution of this Agreement and the Collateral Documents
and the consummation of the transactions contemplated hereby.
(ii) Such other documents and instruments as the Company may
reasonably request: (A) to evidence the accuracy of the representations and
warranties of the Inforetech Parties under this Agreement and the
Collateral Documents and any documents, instruments or certificates
required to be delivered thereunder; (B) to evidence the performance by the
Inforetech Parties of, or the compliance by the Inforetech Parties with,
any covenant, obligation, condition and agreement to be performed or
complied with by the Inforetech Parties under this Agreement and the
Collateral Documents; or (C) to otherwise facilitate the consummation or
performance of any of the transactions contemplated by this Agreement and
the Collateral Documents.
(iii) Opinion of Loeb & Loeb LLP, counsel to the Inforetech
Parties, dated the Closing Date, in form and substance reasonably
satisfactory to the Company.
10.5 No Material Adverse Change. There shall have been no material adverse
--------------------------
change in the business, financial condition or operations of Inforetech and its
Subsidiaries taken as a whole.
39
10.6 No Litigation. No action, suit or proceeding shall be pending or
-------------
threatened by or before any Regulatory Authority and no Legal Requirement shall
have been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement and the Collateral Documents that
would: (i) prevent consummation of any of the transactions contemplated by this
Agreement and the Collateral Documents; (ii) cause any of the transactions
contemplated by this Agreement and the Collateral Documents to be rescinded
following consummation; or (iii) have a Material Adverse Effect on Inforetech.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by the Company. The Company shall, prior to (but not
------------------------------
after) the Closing, indemnify, defend and hold harmless (i) Inforetech, (ii)
each of Inforetech's assigns and successors in interest to the Company Shares,
and (iii) each of their respective shareholders, members, partners, directors,
officers, managers, employees, agents, attorneys and representatives, from and
against any and all Losses which may be incurred or suffered by any such party
and which may arise out of or result from any breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement. At
the Closing, seventeen percent (17%) of the Merger Shares otherwise issuable to
the Company Shareholders under this Agreement (excluding those referred to in
Section 2.7(a)(ii)) shall be placed in escrow (the "Indemnification Escrow
Shares") with an independent escrow agent reasonably satisfactory to the parties
to cover on an exclusive basis (from and after the Closing) any and all Losses
which may be incurred or suffered by (I) Inforetech, (ii) each of Inforetech's
assigns and successors in interest to the Company Shares, (iii) the Company, and
(iv) each of their respective shareholders, members, partners, directors,
officers, managers, employees, agents, attorneys and representatives, and which
may arise out of or result from any breach of any representation, warranty,
covenant or agreement of the Company contained in this Agreement and/or claims
by dissenting shareholders. By way of clarification and without duplication, to
the extent such breach of representation, warranty, covenant or agreement
results in Losses to which the Company would not have been subjected had the
state of facts been as represented or warranted or had the covenant or agreement
been performed, Inforetech as the direct or indirect owner of the Company shall
also be deemed to have been damaged to the extent of such Losses.
Notwithstanding the foregoing, except as provided in the last sentence of this
Section 11.1, the parties entitled to such indemnification under this Section
11.1 shall be entitled to such indemnification only to the extent that the
aggregate amount of such Losses exceed $100,000, and such parties shall be
indemnified only for such Losses in excess of $100,000. For purposes of such
indemnification, the Indemnification Escrow Shares shall be deemed to have a
value equal to the Market Price per share of Inforetech Common Stock as of the
Closing Date; provided, however, that (A) if the Market Price per share of
Inforetech Common Stock as of the Closing Date is less than $6.00 (adjusted to
reflect any stock split, reverse stock split or stock dividend of or on the
Inforetech Common Stock between the date of this Agreement and the Closing
Date), the value per share shall be deemed to be $6.00 (adjusted to reflect any
stock split, reverse stock split or stock dividend of or on the Inforetech
Common Stock between the date of this Agreement and the Closing Date) and (B) if
the Market Price per share of Inforetech Common Stock as of the Closing Date is
greater than $7.50 (adjusted
40
to reflect any stock split, reverse stock split or stock dividend of or on the
Inforetech Common Stock between the date of this Agreement and the Closing
Date), the value per share shall be deemed to be $7.50 (adjusted to reflect any
stock split, reverse stock split or stock dividend of or on the Inforetech
Common Stock between the date of this Agreement and the Closing Date). The
Indemnification Escrow Shares shall remain in escrow for one year following the
Closing. After the expiration of that one year period, any remaining
Indemnification Escrow Shares will be distributed pro rata to the Company
Shareholders (excluding holders of Dissenting Shares) according to their
percentage ownership of the Company immediately preceding the Closing. The terms
of the Escrow shall be set forth in an escrow agreement, in form and substance
reasonably satisfactory to the Parties, to be executed and delivered at the
Closing. Notwithstanding anything herein to the contrary, any severance payments
heretofore made, to be made up to the Closing or prior to the Closing agreed to
be made by the Company to Xxxx Xxxx shall be deemed to constitute Losses
hereunder all of which shall be subject to the indemnification provisions
hereunder without regard to the $100,000 amount referred to above.
11.2 Indemnification by Inforetech. Inforetech shall indemnify, defend and
-----------------------------
hold harmless the Company (prior to and up to and including, but not after, the
Closing Date), and each of the Company Shareholders from and against any and all
Losses which may be incurred or suffered by any such party and which may arise
out of or result from any breach of any representation, warranty, covenant or
agreement of the Inforetech Parties contained in this Agreement. Notwithstanding
the foregoing, the parties entitled to such indemnification under this Section
11.2 shall be entitled to such indemnification (for matters other than: (i) a
breach of Inforetech's obligation to deliver Merger Shares, Guaranty Escrow
Shares and/or cash consideration for Company Common Shares, and (ii) a breach of
Inforetech's obligations under Section 2.11) only to the extent that the
aggregate amount of such Losses exceed $100,000, and such parties shall be
indemnified only for such Losses in excess of $100,000.
11.3 Notice to Indemnifying Party. If any party (the "Indemnified Party")
----------------------------
receives notice of any claim or other commencement of any action or proceeding
with respect to which any other party (or parties) (the "Indemnifying Party") is
obligated to provide indemnification pursuant to Sections 11.1 or 11.2, the
Indemnified Party shall promptly give the Indemnifying Party written notice
thereof, which notice shall specify in reasonable detail, if known, the amount
or an estimate of the amount of the liability arising therefrom and the basis of
the claim. Such notice shall be a condition precedent to any liability of the
Indemnifying Party for indemnification hereunder, but the failure of the
Indemnified Party to give prompt notice of a claim shall not adversely affect
the Indemnified Party's right to indemnification hereunder unless the defense of
that claim is materially prejudiced by such failure. The Indemnified Party shall
not settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless suit shall
have been instituted against it and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Section 11.4.
11.4 Defense by Indemnifying Party. In connection with any claim giving
-----------------------------
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a Person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding (i) if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim (subject to any
limitations on
41
such liability contained in this Agreement) and (ii) if it provides assurances,
reasonably satisfactory to the Indemnified Party, that it will be financially
able to satisfy such claims in full if the same are decided adversely. If the
Indemnifying Party assumes the defense of any such claim or legal proceeding, it
may use counsel of its choice to prosecute such defense, subject to the approval
of such counsel by the Indemnified Party, which approval shall not be
unreasonably withheld or delayed. In this regard, Loeb & Loeb LLP is hereby
approved by the Company as counsel to Inforetech (in its capacity as the
Indemnifying Party). The Indemnified Party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at its
own expense; provided, however, that if the Indemnified Party, in its sole
discretion, determines that there exists a conflict of interest between the
Indemnifying Party (or any constituent party thereof) and the Indemnified Party,
the Indemnified Party (or any constituent party thereof) shall have the right to
engage separate counsel, the reasonable costs and expenses of which shall be
paid by the Indemnified Party. If the Indemnifying Party assumes the defense of
any such claim or legal proceeding, the Indemnifying Party shall take all steps
necessary to pursue the resolution thereof in a prompt and diligent manner. The
Indemnifying Party shall be entitled to consent to a settlement of, or the
stipulation of any judgment arising from, any such claim or legal proceeding,
with the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that no such consent shall
be required from the Indemnified Party if (i) the Indemnifying Party pays or
causes to be paid all Losses arising out of such settlement or judgment
concurrently with the effectiveness thereof (as well as all other Losses
theretofore incurred by the Indemnified Party which then remain unpaid or
unreimbursed), (ii) in the case of a settlement, the settlement is conditioned
upon a complete release by the claimant of the Indemnified Party and (iii) such
settlement or judgment does not require the encumbrance of any asset of the
Indemnified Party or impose any restriction upon its conduct of business.
11.5 Survival of Representations and Covenants. Notwithstanding any right
-----------------------------------------
of the Inforetech Parties fully to investigate the affairs of the Company and
notwithstanding any Knowledge of facts determined or determinable by the
Inforetech Parties pursuant to such investigation or right of investigation, the
Inforetech Parties shall have the right to rely fully upon the representations,
warranties, covenants and agreements of the Company contained in this Agreement.
Each representation, warranty, covenant and agreement of the Company contained
herein shall survive the execution and delivery of this Agreement and the
Closing and shall thereafter terminate and expire on the first anniversary of
the Closing Date unless, prior to such date, Inforetech has delivered to the
Company Shareholders a written notice of a claim with respect to such
representation, warranty, covenant or agreement. Except as provided in Section
13.12, each representation, warranty, covenant and agreement of Inforetech shall
survive the execution and delivery of this Agreement and the Closing and shall
thereafter terminate and expire on the first anniversary of the Closing Date
unless, the Company Shareholders have delivered to Inforetech a written notice
of a claim prior to such date with respect to such representation, warranty,
covenant or agreement.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated, and the transactions
-----------
contemplated hereby may be abandoned, at any time prior to the Effective Time.
42
(a) by mutual written agreement of Inforetech and the Company hereto
duly authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) by either the Company or Inforetech upon notification to the non-
terminating party by the terminating party:
(i) at any time after November 15, 2000 if the Merger
shall not have been consummated on or prior to such date and such failure
to consummate the Merger is not caused by a material breach of this
Agreement by the terminating party;
(ii) if the terminating party is not in material breach of
its obligations under this Agreement and there has been a material breach
of any representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in this Agreement such that the conditions
in Sections 9.1, 9.2, 10.1 or 10.2 will not be satisfied; provided,
however, that if such breach is curable by the non-terminating party and
such cure is reasonably likely to be completed prior to the date specified
in Section 12.1(b)(i), then, for so long as the non-terminating party
continues to use commercially reasonable efforts to effect and cure, the
terminating party may not terminate pursuant to this Section 12.1(b)(ii);
(iii) if any court of competent jurisdiction or other
competent Governmental or Regulatory Authority shall have issued an order
making illegal or otherwise permanently restricting, preventing or
otherwise prohibiting the Merger and such order shall have become final and
nonappealable; or
(c) by Inforetech if the Company breaches Section 6.2 of this
Agreement and Inforetech is in substantial compliance with its obligations under
this Agreement.
12.2 Effect of Termination.
---------------------
(a) If this Agreement is validly terminated by either the Company or
Inforetech pursuant to Section 12.1, this Agreement will forthwith become null
and void and there will be no liability or obligation on the part of the parties
hereto, except (i) that nothing, other than Sections 12.2(b), contained herein
shall relieve any party hereto from liability for willful breach of its
representations, warranties, covenants or agreements contained in this
Agreement.
(b) In the event that Inforetech or the Company terminates this
Agreement pursuant to Section 12.1(b)(ii), then the non-terminating party shall,
within one Business Day after the effective date of termination, pay to the
terminating party in cash a termination fee of US$1,000,000 as liquidated
damages and not as a penalty (the "Termination Fee").
ARTICLE XIII
MISCELLANEOUS
13.1 Parties Obligated and Benefited. This Agreement shall be binding upon
-------------------------------
the Parties and their respective successors by operation of law and shall inure
solely to the benefit of the Parties and their respective successors by
operation of law, and no other Person shall be entitled to any of the benefits
conferred by this Agreement, except that the Company
43
Shareholders shall be third party beneficiaries of this Agreement. Without the
prior written consent of the other Party, no Party may assign this Agreement or
the Collateral Documents or any of its rights or interests or delegate any of
its duties under this Agreement or the Collateral Documents.
13.2 Notices. Any notices and other communications required or permitted
-------
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section as promptly as practicable thereafter). Notices shall be addressed
as follows:
(a) If to Inforetech, Merger Sub or the Surviving Corporation, to:
Inforetech Wireless Technology, Inc.
Xxxxx 000, 0000 - 000/xx/ Xxxxxx
Xxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx, Xx.
Facsimile No. (000) 000-0000
If to the Company before the Closing Date to:
00000 Xxxxx Xxxxxxxx
Xxx Xxxx Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile No. (000) 000-0000
If to the Company or the Company Shareholders after the Closing Date
to the address of the Company Shareholders immediately prior to the
Closing Date as appearing on the records of Inforetech.
Any Party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section.
13.3 Attorneys' Fees. In the event of any action or suit based upon or
---------------
arising out of any alleged breach by any Party of any representation, warranty,
covenant or agreement contained in this Agreement or the Collateral Documents,
the prevailing Party shall be entitled to recover reasonable attorneys' fees and
other costs of such action or suit from the other Party.
13.4 Headings. The Article and Section headings of this Agreement are for
--------
convenience only and shall not constitute a part of this Agreement or in any way
affect the meaning or interpretation thereof.
44
13.5 Choice of Law. This Agreement and the rights of the Parties under it
-------------
shall be governed by and construed in all respects in accordance with the laws
of the State of California, without giving effect to any choice of law provision
or rule (whether of the State of California or any other jurisdiction that would
cause the application of the laws of any jurisdiction other than the State of
California).
13.6 Rights Cumulative. All rights and remedies of each of the Parties
-----------------
under this Agreement shall be cumulative, and the exercise of one or more rights
or remedies shall not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
13.7 Further Actions. The Parties shall execute and deliver to each other,
---------------
from time to time at or after Closing, for no additional consideration and at no
additional cost to the requesting party, such further assignments, certificates,
instruments, records, or other documents, assurances or things as may be
reasonably necessary to give full effect to this Agreement and to allow each
party fully to enjoy and exercise the rights accorded and acquired by it under
this Agreement.
13.8 Time of the Essence. Time is of the essence under this Agreement. If
-------------------
the last day permitted for the giving of any notice or the performance of any
act required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act shall be extended to the next succeeding Business Day.
13.9 Late Payments. If either Party fails to pay the other any amounts
-------------
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the prime rate reported in the Wall Street
-----------
Journal from time to time.
-------
13.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.11 Entire Agreement. This Agreement (including the Exhibits, the Company
----------------
Disclosure Statement, the Inforetech Disclosure Statement and any other
documents, instruments and certificates referred to herein, which are
incorporated in and constitute a part of this Agreement) contains the entire
agreement of the Parties. Without limiting the generality of the foregoing, this
Agreement is intended to supercede the Letter of Intent dated August 21, 2000.
13.12 Securities Filings. For a period of two years following the Closing,
------------------
Inforetech shall timely file all reports required to be filed with the
Securities and Exchange Commission.
13.13 Expenses. Each party will be responsible for payment of its expenses
--------
in connection with the transactions contemplated by this Agreement except that
Inforetech will bear the cost of the audit and review of the Company financial
statements referred to in Section 9.8 above, provided, however, that in the
event that there is a material deviation between such financial statements and
the Company Financial Statements referred to in Section 3.9 (except only to the
extent referred to in Section 3.9 of the Company Disclosure Statement, the
parties shall share the cost of such audit and/or review as the case may be.
45
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as
of the day and year first above written.
INFORETECH WIRELESS TECHNOLOGY, INC., a
Nevada corporation
By: /s/ Xxxxxx Xxxxxx, Xx., President
------------------------------------------------
Xxxxxx Xxxxxx, Xx.
INFORETECH MERGER SUB, INC., a California
corporation
By: /s/ Xxxxxx Xxxxxx, Xx., President and Secretary
------------------------------------------------
Xxxxxx Xxxxxx, Xx.
PROSHOT GOLF, INC., a California corporation
By: /s/ Xxxx Xxxxxxx, President
------------------------------------------------
Xxxx Xxxxxxx
46
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS......................................................... 1
1.1 Certain Definitions...................................................... 1
1.2 Other Definitions........................................................ 6
ARTICLE II BASIC TRANSACTION................................................... 7
2.1 Merger; Surviving Corporation............................................ 7
2.2 Articles of Incorporation................................................ 7
2.3 By-Laws.................................................................. 7
2.4 Directors and Officers................................................... 7
2.5 Effective Time........................................................... 8
2.6 Surrender of Company Certificates........................................ 8
2.7 Merger Consideration; Conversion and Cancellation of Securities..........10
2.8 Stock Transfer Books.....................................................11
2.9 Dissenting Shares........................................................11
2.10 Closing..................................................................11
2.11 Treatment of Certain Outstanding Derivative Securities...................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................12
3.1 Organization and Qualification...........................................12
3.2 Capitalization...........................................................12
3.3 Authority and Validity...................................................13
3.4 No Breach or Violation...................................................13
3.5 Consents and Approvals...................................................14
3.6 Title to Assets..........................................................14
3.7 Intellectual Property....................................................14
3.8 Compliance with Legal Requirements.......................................15
3.9 Financial and Other Information..........................................15
3.10 Subsequent Events........................................................15
3.11 Undisclosed Liabilities..................................................16
3.12 Legal Proceedings........................................................16
3.13 Taxes....................................................................16
3.14 Employee Benefits; Employees.............................................17
3.15 Material Company Contracts...............................................19
3.16 Books and Records........................................................19
3.17 Insurance................................................................19
3.18 Environmental Matters....................................................19
3.19 Brokers or Finders.......................................................20
3.20 Proxies..................................................................20
3.21 Disclosure...............................................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INFORETECH........................20
4.1 Organization and Qualification...........................................20
i
Page(s)
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4.2 Capitalization...........................................................20
4.3 Authority and Validity...................................................22
4.4 No Breach or Violation...................................................22
4.5 Consents and Approvals...................................................22
4.6 Assets...................................................................23
4.7 Intellectual Property....................................................23
4.8 Compliance with Legal Requirements.......................................23
4.9 Legal Proceedings........................................................23
4.10 Subsequent Events........................................................24
4.11 Undisclosed Liabilities..................................................24
4.12 Taxes....................................................................24
4.13 Employee Benefits; Employees.............................................25
4.14 Material Inforetech Contracts............................................25
4.15 Books and Records........................................................26
4.16 Insurance................................................................26
4.17 Environmental Matters....................................................26
4.18 Financial and Other Information..........................................26
4.19 No Orders................................................................26
4.20 Brokers or Finders.......................................................26
4.21 Disclosure...............................................................27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INFORETECH PARTIES............27
5.1 Organization and Qualification...........................................27
5.2 Articles of Incorporation and Bylaws.....................................27
5.3 Authority................................................................27
5.4 No Conflict; Required Filings and Consents...............................27
5.5 Legal Proceedings........................................................28
5.6 Vote Required............................................................28
ARTICLE VI PRE-CLOSING COVENANTS OF THE COMPANY................................28
6.1 Additional Information...................................................28
6.2 No Solicitations.........................................................29
6.3 Continuity and Maintenance of Operations.................................29
6.4 Consents and Approvals...................................................30
6.5 Meeting of the Company Shareholders......................................30
6.6 Notification of Certain Matters..........................................31
6.7 Company Disclosure Statement.............................................31
6.8 State Statutes...........................................................32
6.9 Employee Matters.........................................................32
6.10 Treatment of Promissory Notes............................................32
ARTICLE VII PRE-CLOSING COVENANTS OF THE INFORETECH PARTIES.....................33
7.1 Additional Information...................................................33
7.2 Continuity and Maintenance of Operations.................................33
ii
Page(s)
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7.3 Consents and Approvals...................................................34
7.4 Financial and Other Information..........................................34
7.5 Notification of Certain Matters..........................................34
7.6 Inforetech Disclosure Statement..........................................34
7.7 State Statutes...........................................................35
7.8 Securities Filings.......................................................35
7.9 Introductions............................................................35
ARTICLE VIII PRE-CLOSING COVENANTS OF ALL PARTIES................................35
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INFORETECH PARTIES.......36
9.1 Accuracy of Representations..............................................36
9.2 Covenants................................................................36
9.3 Consents and Approvals...................................................36
9.4 Dissenters' Rights.......................................................37
9.5 Delivery of Documents....................................................37
9.6 No Material Adverse Change...............................................37
9.7 No Litigation............................................................37
9.8 Delivery of Financial Statements.........................................38
9.9 Fairness Opinion.........................................................38
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY..................38
10.1 Accuracy of Representations..............................................38
10.2 Covenants................................................................38
10.3 Consents and Approvals...................................................39
10.4 Delivery of Documents....................................................39
10.5 No Material Adverse Change...............................................39
10.6 No Litigation............................................................40
ARTICLE XI INDEMNIFICATION.....................................................40
11.1 Indemnification by the Company...........................................40
11.2 Indemnification by Inforetech............................................41
11.3 Notice to Indemnifying Party.............................................41
11.4 Defense by Indemnifying Party............................................41
11.5 Survival of Representations and Covenants................................42
ARTICLE XII TERMINATION.........................................................42
12.1 Termination..............................................................42
12.2 Effect of Termination....................................................43
ARTICLE XIII MISCELLANEOUS.......................................................43
13.1 Parties Obligated and Benefited..........................................43
13.2 Notices..................................................................44
13.3 Attorneys' Fees..........................................................44
iii
Page(s)
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13.4 Headings.................................................................44
13.5 Choice of Law............................................................45
13.6 Rights Cumulative........................................................45
13.7 Further Actions..........................................................45
13.8 Time of the Essence......................................................45
13.9 Late Payments............................................................45
13.10 Counterparts.............................................................45
13.11 Entire Agreement.........................................................45
13.12 Securities Filings.......................................................45
13.13 Expenses.................................................................45
iv