EXHIBIT 8(D)
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AGREEMENT AND PLAN OF REORGANIZATION
Between and Among
OnCOURSE TECHNOLOGIES, INC.
(a Nevada business corporation)
as the Parent
TEKSOFT, INC.
(an Arizona business corporation)
as the Subsidiary
and
XXXX X. XXXXXX
(an individual resident of Arizona),
XXXXX X. XXXXXX
(an individual resident of Arizona),
XXXXXXX XXXX
(an individual resident of Arizona),
and
SKY XXXXXX
(an individual resident of Alaska)
as the Subsidiary Shareholders
Dated: January 10th, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
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AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement"), dated as
of January 10th, 2000, between and among OnCOURSE TECHNOLOGIES, INC., a Nevada
corporation ("Parent"), TEKSOFT, INC., an Arizona corporation ("Subsidiary"),
and XXXX X. XXXXXX, XXXXX X. XXXXXX, and XXXXXXX XXXX, individual residents of
Arizona, and SKY XXXXXX, an individual resident of Alaska, being all of the
shareholders of Subsidiary (the "Subsidiary Shareholders").
RECITALS
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A. OnCOURSE TECHNOLOGIES, INC., the acquiring corporation, is a Nevada
business corporation incorporated under and in accordance with the provisions of
the Nevada Private Corporations Law (NRS SectionSection 78.010 et seq.). The
address of its current registered office in Nevada is Resident Agents of Nevada,
Inc., 000 X. Xxxxxx, Xxxxx 0, Xxxxxx Xxxx, Xxxxxx, 00000.
B. TEKSOFT, INC., the acquired corporation, is an Arizona business
corporation incorporated under and in accordance with the provisions of the
Arizona Business Corporation Act (ARS SectionSection 10-101 et seq.). The
address of its current registered office in Arizona is 00000 X 00xx Xxxxxx,
#000, Xxxxxxxxxx, Xxxxxxx, 00000.
C. Parent, Subsidiary and Subsidiary Shareholders desire that Parent
acquire Subsidiary by the exchange of some of the stock of Parent for all of the
outstanding shares of stock of Subsidiary (the "Exchange").
D. The Boards of Directors of Parent and Subsidiary have approved the
Exchange and recommended it to their respective shareholders upon the terms and
subject to the conditions set forth herein and in the Plan of Exchange, Exhibit
"A" attached hereto and made a part hereof (the "Plan of Exchange").
E. For federal income tax purposes, it is intended that the Exchange
shall qualify as a tax free reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
F. The parties to this Reorganization Agreement desire to establish the
manner and basis of exchanging the shares of Subsidiary for the shares of
Parent, and each of the parties hereto desires to make certain representations,
warranties and agreements in connection with the Exchange and also to prescribe
various conditions thereto.
AGREEMENT
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE EXCHANGE
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Section 1.01 The Exchange
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(a) At the Effective Time (as defined in Section 1.02) and subject to the
terms and conditions of this Reorganization Agreement and the Plan of Exchange,
Subsidiary Shareholders shall endorse and deliver to Parent Seven Thousand Five
Hundred and Eighty-three (7,583) shares of voting common stock of Subsidiary,
representing all of its then issued and outstanding shares (the "Subsidiary
Common Stock"). On the same date, Parent shall issue and deliver to Subsidiary
Shareholders, in the same proportion as their holdings in Subsidiary immediately
prior to the Effective Time, Four Million Five Hundred Thousand (4,500,000)
shares of voting common stock of Parent (the "Parent Common Stock").
(b) On and after the Effective Time, Subsidiary will continue to be
governed by the laws of the State of Arizona, and the separate corporate
existence of Subsidiary and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and liabilities as a
corporation organized under the Arizona Business Corporation Act, will continue
unaffected by the Exchange.
(c) The Exchange will have the effects specified by the Arizona Business
Corporation Act and the Nevada Private Corporations Law.
Section 1.02 Effective Time. As soon as practicable following fulfillment
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of the conditions specified in Sections 4.05 and 5.05 hereof (relating to
shareholder approval of the Exchange) and provided that this Reorganization
Agreement has not been terminated or abandoned pursuant to Section 7.01 hereof
or the Plan of Exchange has not been terminated or abandoned pursuant to Section
3.01 thereof, Parent and Subsidiary will execute and cause Articles of Exchange
substantially in the form of Exhibit "B" attached hereto and made a part hereof
(the "Articles of Exchange"), to be filed with the Secretary of State of Nevada
as provided in Section 200 of Chapter 92A of the Nevada Private Corporations Law
(NRS Section92A.200) and with the Arizona Corporation Commission as provided in
Section 10-122 of the Arizona Business Corporation Act (ARS Section10-122). The
Articles of Exchange and the Plan of Exchange shall become effective on January
31, 2000 at 11:59:59 PM Pacific Standard Time (the "Effective Time") unless
otherwise agreed by the parties hereto in writing prior to such Effective Time.
Section 1.03 Restricted Securities. The Parent Common Stock to be issued
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hereunder, upon issuance and transfer to the Subsidiary Shareholders, will not
have been "registered" and therefore will be "restricted securities", as those
terms are used under the Securities Act of 1933, as amended (the "1933 Act"),
and the rules and regulations thereunder. By execution of this Reorganization
Agreement, each of the Subsidiary Shareholders agrees, represents and warrants
that (a) his acquisition of the Parent Common Stock hereunder is for investment
only, for his own account (both of record and beneficially) and not with a view
to "distribution" as that term is used under the 1933 Act; (b) that his Parent
Common Stock may not be transferred or disposed of unless the Parent receives an
opinion of Subsidiary Shareholders' counsel, at the request of the President of
Parent, satisfactory to Parent and its counsel, that such transfer or other
disposition can be made without registration under the 1933 Act and all
applicable federal and state securities laws; and (c) that he or she will not
sell or otherwise dispose of any of his Parent Common Stock without compliance
with this Reorganization Agreement and either registration under or other
compliance with the aforesaid Act, all other applicable federal and state
securities laws, and the rules and regulations thereunder. Parent Common Stock
to be issued hereunder shall bear a legend substantially as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE TRANSFERRED UNLESS THE CORPORATION RECEIVES
AN OPINION OF COUNSEL, AT THE REQUEST OF THE PRESIDENT, SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH TRANSFER OR OTHER DISPOSITION CAN BE
MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ALL
APPLICABLE FEDERAL AND STATE SECURITIES LAWS. BY ACQUIRING THE SHARES OF
STOCK REPRESENTED BY THIS CERTIFICATE, THE STOCKHOLDER REPRESENTS THAT HE
HAS ACQUIRED SUCH SHARES OF STOCK FOR INVESTMENT AND THAT HE WILL NOT SELL
OR OTHERWISE DISPOSE OF THE SHARES OF STOCK WITHOUT REGISTRATION OR OTHER
COMPLIANCE WITH THE AFORESAID ACT AND THE RULES AND REGULATIONS THEREUNDER.
Section 1.04 Registration. Parent agrees that it shall use good faith
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efforts to cause the stock of Parent to be listed with the NASDAQ Small Cap
Market or the Over The Counter Bulletin Board.
ARTICLE II
THE SUBSIDIARY
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Section 2.01 Articles of Incorporation. The Articles of Incorporation of
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Subsidiary as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of Subsidiary immediately after the Effective Time
until amended in accordance with the Arizona Business Corporation Act.
Section 2.02 Bylaws. The Bylaws of Subsidiary as in effect immediately
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prior to the Effective Time shall be the Bylaws of the Subsidiary immediately
after the Effective Time until amended in accordance with the provisions of said
Bylaws and the Articles of Incorporation of the Subsidiary.
Section 2.03 Board of Directors. The Directors of Subsidiary immediately
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prior to the Effective Time shall continue to be the Directors of Subsidiary
immediately after the Effective Time until their successor or successors shall
be elected and duly qualified, or until their deaths, resignations or removals.
For so long as Subsidiary Shareholder Xxxx X. Xxxxxx is employed by Subsidiary
and desires to serve as a Director of Subsidiary, Parent agrees, in its capacity
as a shareholder of Subsidiary, to nominate him as a Director of Subsidiary and
to vote its stock in Subsidiary to elect him as a Director. Notwithstanding the
foregoing, Parent shall not be required to nominate and/or vote for the election
of Xxxx X. Xxxxxx as a Director of Subsidiary, and shall be free to remove him
as a Director of Subsidiary, if he fails to qualify or continue to qualify as a
Director, or has committed any act which would be cause for his removal as a
Director, under the Arizona Business Corporation Act or the Articles of
Incorporation or Bylaws of Subsidiary.
ARTICLE III
CONTINGENT CONSIDERATION
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Section 3.01 Contingent Consideration. Within ninety (90) days following
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the end of each of the five (5) calendar years after the Effective Time (the
"Contingent Consideration Period"), if the Net Revenues of Subsidiary shall have
increased for such calendar year over the highest annual Net Revenues of
Subsidiary for the prior calendar years of the Contingent Consideration Period
plus the calendar year 1999, an additional one (1) share of Parent Common Stock
for each Two Dollars and Forty-six Cents ($2.46) of such increased Net Revenues
shall be issued by Parent and delivered to Subsidiary Shareholders in the same
proportion as their holdings in Parent relative to each other as of the
Effective Time (the "Contingent Consideration"). In the event there is no such
increase in Net Revenues, no shares of Contingent Consideration shall be issued
for such calendar year (and there shall be no reduction in the number of shares
of Contingent Consideration issued in prior years or to be issued in future
years of the Contingent Consideration Period). The maximum number of shares of
Parent Common Stock which may be issued as Contingent Consideration hereunder
shall be One Million Five Hundred Thousand (1,500,000) shares. Any shares not
earned by application of this calculation by the end of the Contingent
Consideration Period shall not be delivered. The rights of Subsidiary
Shareholders to receive such Contingent Consideration shall not be assignable.
If at any time during the Contingent Consideration Period the United States
experiences an economic recession as declared by the federal government, the
Contingent Consideration Period and the applicable annual period(s) therein
shall be extended by the period of such economic recession and calculations of
Net Revenues and Contingent Consideration shall not include the period(s) of
such recession(s). By way of example, if a six (6) month economic recession
occurs during the third year of Contingent Consideration Period, the third year
of the Contingent Consideration Period would be extended for an additional six
(6) months, financial calculations for the third year for purposes of
determining the Net Revenues for the third year would include the two quarters
of the calendar year not subject to the recessions and the next six (6) months
following the end of the third year, and thereafter, the remaining years under
the Contingent Consideration Period would be calculated starting with the date
immediately following the end of the extended third year.
Section 3.02 Sale of Business Contingency. If at any time during the
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Contingent Consideration Period, Parent or Subsidiary sell or in any other
manner transfer or convey all or a substantial part of Parent's interest in
Subsidiary, substantially all of the assets of Subsidiary, or substantially all
of the Subsidiary business, at a time when the number of additional shares of
Parent Common Stock issued to Subsidiary Shareholders pursuant to Section 3.01
above aggregates less than One Million Five Hundred Thousand (1,500,000) shares,
Parent shall forthwith, and prior to or contemporaneous with any such transfer
or conveyance, issue and deliver to Subsidiary Shareholders, in the same
proportion as their holdings in Parent relative to each other as of the
Effective Time, such additional shares of Parent Common Stock as shall be
required to aggregate One Million Five Hundred Thousand (1,500,000) shares of
Contingent Consideration to Subsidiary Shareholders.
Section 3.03 "Net Revenues" Defined. For the purpose of this
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Reorganization Agreement, "Net Revenues" for each calendar year shall be the
"Total Revenue" less the "Total Deductions from Revenue" as historically defined
and as computed for the Subsidiary in its financial statements prepared for the
twelve months ended October 31, 1999; provided, however, that Total Deductions
from Revenue shall in no event include extraordinary expenses. By way of
example, the parties acknowledge that, for the twelve months ended October 31,
1999 (the most recent available financial statement), Subsidiary had
$3,165,614.28 of "Total Revenue" and $465,382.82 of "Total Deductions from
Revenue" yielding $2,700,231.46 of "Net Revenues" ($3,165,614.28 - $465,382.82 =
$2,700,231.46). The determination of Net Revenues for each year of the
Contingent Consideration Period and the computation of Contingent Consideration
shall be made in accordance with the method described above by independent
certified public accountants regularly employed by Parent for the purpose of
preparing the financial reports of Parent. The term "Net Revenues" shall include
the Net Revenues of Subsidiary and the Net Revenues of such other subsidiary or
subsidiaries and such division or divisions of Parent as are then carrying on
any part of the business formerly carried on by Subsidiary (herein referred to
as the Subsidiary Business) to the extent such Net Revenues of such subsidiary
or subsidiaries and such division or divisions of Parent derived from the
Subsidiary Business. If Parent or any division, subsidiary, or affiliate of
Parent or Subsidiary in any manner directly or indirectly sells, deals in or
manufactures software or performs services which were not previously sold, dealt
in, manufactured or performed by Parent or such division, subsidiary, or
affiliate of Parent or Subsidiary but which were previously sold, dealt in,
manufactured or performed by Subsidiary, or which are marketed under the trade
name "Teksoft", or any product or service trade name utilized by Subsidiary, but
not utilized by Parent or any division, subsidiary, or affiliate of Parent or
Subsidiary, prior to the Effective Time, or any variant thereof, Parent or such
division, subsidiary, or affiliate shall be conclusively presumed to be carrying
on a part of Subsidiary Business for the purposes of calculating Contingent
Consideration.
Section 3.04 Additions to "Net Revenues". The parties acknowledge that it
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would be desirable for Subsidiary to obtain additional equity investment of One
Million Five Hundred Thousand ($1,500,000) Dollars in order to improve product
development, distribution, and marketing and to reduce its debt, and that the
lack of such equity investment would adversely affect Subsidiary's ability to
increase its Net Revenues. Notwithstanding anything herein to the contrary, in
the event that Parent fails to invest Five Hundred Thousand ($500,000) Dollars
in Subsidiary on or after the Effective Time and on or before September 30,
2000, for the purposes of the calculation of Contingent Consideration only,
Subsidiary shall be deemed to have received Two Dollars and Forty-six Cents
($2.46) of additional Net Revenues during such period for each One ($1.00)
Dollar of the difference between Five Hundred Thousand ($500,000) Dollars and
the actual amount invested by Parent in Subsidiary during such period. In the
event that Parent fails to invest an additional Five Hundred Thousand ($500,000)
Dollars in Subsidiary on or after October 1, 2000 and on or before March 31,
2001, for the purposes of the calculation of Contingent Consideration only,
Subsidiary shall be deemed to have received Two Dollars and Forty-six Cents
($2.46) of additional Net Revenues during such period for each One ($1.00)
Dollar of the difference between Five Hundred Thousand ($500,000) Dollars and
the actual amount invested by Parent in Subsidiary during such period. In the
event that Parent fails to invest an additional Five Hundred Thousand ($500,000)
Dollars in Subsidiary on or after April 1, 2001 and on or before September 30,
2001, for the purposes of the calculation of Contingent Consideration only,
Subsidiary shall be deemed to have received Two Dollars and Forty-six Cents
($2.46) of additional Net Revenues during such period for each One ($1.00)
Dollar of the difference between Five Hundred Thousand ($500,000) Dollars and
the actual amount invested by Parent in Subsidiary during such period.
Section 3.05 Reports; Arbitration of Disputes. The Subsidiary
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Shareholders shall be entitled to receive on or before April 15 of each year of
the Contingent Consideration Period and the next calendar year following the end
of the Contingent Consideration Period, or until Parent shall have issued and
delivered to Subsidiary Shareholders the maximum Contingent Consideration,
whichever is the earlier, (a) financial statements of Subsidiary, including at
least a balance sheet and an income statement as of the end of each calendar
year, prepared on the basis of generally accepted accounting principles
consistently applied, which may be consolidated statements of Parent,
Subsidiary, and any other subsidiaries of Parent provided that such financial
statements include a balance sheet and income statement for the Subsidiary; and
(b) an appropriate written report prepared by the independent certified public
accountants of Parent, which report shall show the Net Revenues of Subsidiary
for the calendar year then ended computed in accordance with Section 3.01
hereof, as well as a statement of the Net Revenues for calendar year 1999 and
each prior calendar year of the Contingent Consideration Period, the number of
shares of Parent Common Stock previously issued to Subsidiary Shareholders each
year as Contingent Consideration and the number of shares of Parent Common Stock
to be issued to Subsidiary Shareholders for the immediately preceding calendar
year. The computations made by such independent certified public accountants
shall be final and conclusive unless one or more of the Subsidiary Shareholders
shall, by written notice to Parent, within ninety (90) days after receipt of any
such statement, have made objection thereto. In the event the objecting
Subsidiary Shareholder(s) and Parent are unable to resolve any disputes as to
the proper amount of Net Revenues and/or Contingent Consideration for any one
year, within ninety (90) days after receipt by Parent of the written objection
by the objecting Subsidiary Shareholder(s), the objecting Subsidiary
Shareholder(s) and/or Parent may submit such dispute to arbitration in Carson
City, Nevada (or such other place as Parent and the objecting Subsidiary
Shareholder(s) may mutually agree) under the rules then obtaining of the
American Arbitration Association, and judgment upon any award in such
arbitration may be entered in any court having jurisdiction thereof.
Section 3.06 Changes in Capital Structure. In the event there is any
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change in the Parent Common Stock by reason of a stock dividend issued with
respect to Parent Common Stock, or a recapitalization, reclassification, stock
split, or combination of shares with respect to such Parent Common Stock, or if
the outstanding Parent Common Stock should, by reason of a merger,
consolidation, liquidation or other reorganization, be exchanged for other
shares of Parent or of another corporation which is a party to such transaction,
the shares to be issued and delivered to Subsidiary Shareholders as Contingent
Consideration under Sections 3.01 and 3.02 of this Reorganization Agreement
shall be the shares into or for which the Parent Common Stock to be issued and
delivered under this Reorganization Agreement would have been changed or
exchanged had such shares already been issued and delivered to Subsidiary
Shareholders and become outstanding at the time of such event.
Section 3.07 Termination of Contingent Consideration. In the event of
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termination of either or both of the Employment Agreements (as defined in
Section 6.02 below) either due to termination by Employee or due to termination
by Parent for material breach of the Employment Agreement by Employee/Subsidiary
Shareholder, the Contingent Consideration Period as to the terminated
Employee/Subsidiary Shareholder shall automatically terminate as of the first
(1st) day of the calendar year of the termination of the Employment Agreement(s)
(or if the Contingent Consideration Period has been extended due to a recession,
the first day of such extended period prior to such termination), and any
Contingent Consideration not earned by such terminated Employee/Subsidiary
Shareholder(s) prior to such date shall terminate. In the event of any such
termination, the Contingent Consideration which would otherwise have been earned
by such terminated Employee/Subsidiary Shareholder(s) shall not be re-allocated
to the remaining Subsidiary Shareholder(s). For the purposes of this Section,
"material breach of the Employment Agreement by Employee/Subsidiary Shareholder"
shall mean any event described in Paragraphs (a), (b), (d) and/or (g) of Section
6.02 of such Employee/Subsidiary Shareholder's Employment Agreement (after the
giving of such notice and the expiration of such cure periods as may be provided
therein).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
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Parent represents and warrants to Subsidiary, as of the date hereof and the
Effective Time, which representations and warranties shall survive the Exchange,
as follows:
Section 4.01 Organization. Parent is duly organized and validly exists as
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a business corporation under the laws of the State of Nevada, and it is duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted. Parent currently has three wholly-
owned subsidiaries, Micro Estimating Systems, Inc., a Wisconsin business
corporation, CAM Solutions, Inc., a Minnesota business corporation, and
Cimtronics, Inc., an Arizona business corporation. Each of the current
subsidiaries of Parent is duly organized and validly exists as a business
corporation under the laws of the state of its incorporation, and it is duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted. The character and location of the
assets now owned or regularly leased by Parent and its current subsidiaries in
the conduct of their businesses and the nature of the businesses as now
transacted by them do not require qualification as a foreign corporation in any
jurisdiction in which they are not so registered. As soon as practicable after
the execution of this Reorganization Agreement, but in any event within five (5)
days after execution hereof, Parent will deliver to Subsidiary true and correct
copies of its Articles of Incorporation and Bylaws, which Articles of
Incorporation and Bylaws shall not be amended prior to the Effective Time
without the prior written consent of Subsidiary and Subsidiary Shareholders.
Section 4.02 Capital Stock. The authorized capital stock of Parent
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consists of fifty million (50,000,000) shares of common stock, par value one
tenth of a cent ($0.001) per share, of which approximately eleven million, five
hundred thousand (11,500,000) shares are validly issued, fully paid, non-
assessable and outstanding and none of which are issued in violation of the
preemptive rights of any shareholder. In addition, Parent has issued and
outstanding four hundred thousand (400,000) Redeemable Common Stock Purchase
Warrants entitling each Warrant Holder to purchase, on or before March 31, 2000,
one (1) share of Parent common stock per Purchase Warrant for the sum of one and
50/100's dollars ($1.50). Secondly, pursuant to Article IV of an Agreement and
Plan of Reorganization dated July 23, 1998, Parent granted, after taking into
account the effect of a recent reverse two-for-one stock split, two million
(2,000,000) shares of its voting common stock as contingent consideration to the
Majority Subsidiary Shareholder and Minority Subsidiary Shareholder defined
therein. Thirdly, pursuant to Article III of an Agreement and Plan of
Reorganization dated December 30, 1998, Parent granted, after taking into
account the effect of a recent reverse two-for-one stock split, one hundred and
fifty thousand (150,000) shares of its voting common stock as contingent
consideration to the Subsidiary Shareholder defined therein. Lastly, pursuant to
Article III of an Agreement and Plan of Reorganization dated September 30, 1999,
Parent granted, after taking into account the effect of a recent reverse two-
for-one stock split, one hundred fifty thousand eight hundred and forty-six
(153,846) shares of its voting common stock as contingent consideration to the
Subsidiary Shareholders defined therein. There are no other securities,
subscriptive rights, warrants, options, contracts, understandings or commitments
providing for issuance of, or granting rights to acquire any capital stock of
Parent or securities convertible into or exchangeable for capital stock of
Parent.
Section 4.03 Financial Statements. Parent has delivered to Subsidiary
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copies of its financial statements for the period(s) indicated therein
("Parent's Financial Statements"). Parent's Financial Statements present fairly
the financial condition of Parent as of the dates indicated thereon.
Section 4.04 Assets and Business. The business of Parent is substantially
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as described in Parent's Financial Statements. To the knowledge and belief of
Parent, Parent has good and marketable title to all properties, assets and
leasehold estates, real, personal and mixed, tangible and intangible (including
by way of example and not limitation all patents, copyrights and other
intellectual property), owned by or used in its business, and which is material
to the operation of that business including those reflected on Parent's
Financial Statements (except as since sold or otherwise disposed of in the
ordinary course of business), subject to no mortgage, pledge, lien, conditional
sales agreement, encumbrance or charge, except for: (a) liens reflected on
Parent's Financial Statements as securing specified liabilities (with respect to
which no default exists); (b) liens for current taxes and assessments not in
default; and (c) liens arising by operation of law of which, except to the
extent disclosed on Parent's Financial Statements, Parent has no knowledge of
any such liens existing.
Section 4.05 Authority. On or before the Effective Time, Parent will have
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taken all necessary legal action to approve the execution and delivery of this
Reorganization Agreement and the performance of its obligations hereunder and
all transactions contemplated hereby will have been duly authorized by all
requisite corporate action on the part of Parent and the Directors and
Shareholders of Parent, and no further authorization, approval or consent is or
shall be necessary.
Section 4.06 Legal Actions. There are no legal actions, suits,
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arbitrations, or other legal, administrative or other governmental proceedings
pending or threatened against Parent, its properties, assets or business, and
Parent is unaware of any fact which might result in such action, suit,
arbitration or other proceeding.
Section 4.07 Operation Pending Closing. On and after execution hereof and
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until the Effective Time, Parent will not enter into any transaction or perform
any act that would constitute a material adverse breach of the representations,
warranties or agreements contained herein and Parent and its officers and
employees, will comply with all applicable material provisions of this
Reorganization Agreement. On and after execution hereof and until the Effective
Time:
(a) Parent will afford to the officers and authorized representatives of
Subsidiary access to the plants, properties, books and records of Parent
and will furnish Subsidiary with such additional financial and operating
data and other information as to the business and properties of the Parent
as Subsidiary may from time to time reasonably request.
(b) Parent will cooperate with Subsidiary, its representatives and counsel
in the preparation and execution of any documents or other material which
may be required in connection with the Exchange.
(c) Parent will: (1) carry on its business in substantially the same manner
as it has heretofore and not introduce any material new method of
management, operation or accounting; (2) maintain its properties and
facilities in as good working order and condition as at present, ordinary
wear and tear excepted; (3) perform all its material obligations under
agreements relating to or affecting its assets, properties and rights; (4)
keep in full force and effect present insurance policies or other
comparable insurance coverage; and (5) use its best efforts to maintain and
preserve its business organization intact, retain its present employees and
maintain its relationships with suppliers, customers and others having
business relations with it.
(d) Without the prior written consent of Subsidiary and Subsidiary
Shareholders, Parent will not: (1) make any change in its Articles of
Incorporation or Bylaws; (2) issue any securities; (3) declare or pay any
dividend or make any distribution in respect of its stock whether now or
hereafter outstanding, or purchase, redeem or otherwise acquire or retire
for value any shares of its stock; (4) enter into any contract or
commitment or incur any liability or make any capital expenditures except
in the normal course of business; (5) increase the compensation payable or
to become payable to any officer, employee or agent, or make any bonus
payment to any such person; (6) create, assume or permit to exist any
mortgage, pledge or other lien or encumbrance upon any assets or properties
whether now owned or hereafter acquired; (7) sell, assign, lease, license
or otherwise transfer or dispose of any property or equipment except in the
normal course of business; or (8) merge, consolidate or otherwise
reorganize or agree to merge or consolidate or otherwise reorganize with or
into any other corporation or entity.
Section 4.08 Subsidiary Loans. Parent agrees to cooperate with and assist
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Subsidiary in removing any Subsidiary Shareholder personal guarantee(s) of
presently-existing Subsidiary loans, including but not limited to by providing
Parent guarantees of any such Subsidiary loans and/or using good faith efforts,
subject to available funds of Parent, to either replace any such Subsidiary
loans with loans from third parties and/or Parent without such Subsidiary
Shareholder personal guarantees or to contribute sufficient equity capital to
satisfy such Subsidiary loans. In addition, Parent agrees to cooperate with and
assist Subsidiary in replacing any presently-existing Subsidiary Shareholder
loans to Subsidiary with either third-party or Parent financing (subject to
available funds of Parent), including but not limited to by providing Parent
guarantees of any such replacement loans and/or using good faith efforts,
subject to available funds of Parent, to either replace any such Subsidiary
Shareholder loans with loans from Parent or to contribute sufficient equity
capital to satisfy such Subsidiary Shareholder loans. Subsidiary shall fully
indemnify the Subsidiary Shareholders from any losses or expenses incurred by
them as a result of their guarantees of any Subsidiary loans.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUBSIDIARY AND SUBSIDIARY SHAREHOLDERS
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Subsidiary and each of the Subsidiary Shareholders jointly and severally
represent and warrant to Parent, as of the date hereof and the Effective Time,
which representations and warranties shall survive the Exchange, as follows:
Section 5.01 Organization. Subsidiary is duly organized and validly
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exists as a business corporation under the laws of the State of Arizona, and it
is duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted. The character and
location of the assets now owned or regularly leased by Subsidiary in the
conduct of its business and the nature of the business as now transacted by it
do not require qualification as a foreign corporation in any jurisdiction in
which it is not so registered. As soon as practicable after the execution of
this Reorganization Agreement, but in any event within five (5) days after
execution hereof, Subsidiary will deliver to Parent true and correct copies of
its Articles of Incorporation and Bylaws, which Articles of Incorporation and
Bylaws shall not be amended prior to the Effective Time without the prior
written consent of Parent. Subsidiary Shareholders are all of the shareholders,
officers and directors of Subsidiary.
Section 5.02 Capital Stock. The authorized capital stock of Subsidiary
------------ -------------
consists of Ten Thousand (10,000) shares of voting common stock, no par value,
of which Seven Thousand Five Hundred and Eighty-three (7,583) shares are validly
issued, fully paid, non-assessable and outstanding and none of which are issued
in violation of the preemptive rights of any shareholder and Ten Thousand
(10,000) shares of non-voting common stock, no par value, none of which are
outstanding. There are no other securities, subscriptive rights, warrants,
options, contracts, understandings or commitments providing for issuance of, or
granting rights to acquire any capital stock of Subsidiary or securities
convertible into or exchangeable for capital stock of Subsidiary. Subsidiary
Shareholders are all of the shareholders of Subsidiary, owning Seven Thousand
Five Hundred and Eighty-three (7,583) shares.
Section 5.03 Financial Statements. Subsidiary has delivered to Parent
------------ --------------------
copies of its financial statements for the period(s) indicated therein
("Subsidiary's Financial Statements"). Subsidiary's Financial Statements present
fairly the financial condition of Subsidiary as of the dates indicated thereon.
Section 5.04 Assets and Business. The business of Subsidiary is
------------ -------------------
substantially as described in Subsidiary's Financial Statements. To the
knowledge and belief of Subsidiary and Subsidiary Shareholders, except as
disclosed in writing to Parent prior to execution hereof, Subsidiary has good
and marketable title to all properties, assets and leasehold estates, real,
personal and mixed, tangible and intangible (including by way of example and not
limitation all patents, copyrights and other intellectual property), owned by or
used in its business, and which is material to the operation of that business
including those reflected on Subsidiary's Financial Statements (except as since
sold or otherwise disposed of in the ordinary course of business), subject to no
mortgage, pledge, lien, conditional sales agreement, encumbrance or charge,
except for: (1) liens reflected on Subsidiary's Financial Statements as securing
specified liabilities (with respect to which no default exists); (2) liens for
current taxes and assessments not in default; and (3) liens arising by operation
of law of which, except to the extent disclosed on Subsidiary's Financial
Statements, the Subsidiary and Subsidiary Shareholders have no knowledge of any
such liens existing. By way of example and not limitation, except as disclosed
in writing to Parent prior to execution hereof, Subsidiary is the exclusive
owner of any and all copyrights, patents, trade secrets and know how and other
proprietary rights relating to all software and computer products it produces
and sells. The parties acknowledge that Subsidiary has disclosed in writing that
CAMWorks is jointly owned by TekSoft and GSSL, an Indian company; that
Solidworks owns the marketing rights to the initial version of CAMWorks; and
that the name "CAMWorks" is copyrighted by GSSL.
Section 5.05 Authority. On or before the Effective Time, Subsidiary and
------------ ---------
Subsidiary Shareholders will have taken all necessary legal action to approve
the execution and delivery of this Reorganization Agreement and the performance
of their obligations hereunder and all transactions contemplated hereby will
have been duly authorized by all requisite corporate action on the part of
Subsidiary and the Directors and Shareholders of Subsidiary, and no further
authorization, approval or consent is or shall be necessary. Each of Subsidiary
Shareholders agrees to vote all of his Subsidiary Common Stock in favor of the
Plan of Exchange.
Section 5.06 Legal Actions. There are no legal actions, suits,
------------ -------------
arbitrations, or other legal, administrative or other governmental proceedings
pending or threatened against Subsidiary, its properties, assets or business,
and neither Subsidiary nor Subsidiary Shareholders is aware of any fact which
might result in such action, suit, arbitration or other proceeding.
Section 5.07 Operation Pending Closing. On and after execution hereof and
------------ -------------------------
until the Effective Time, Subsidiary will not, Subsidiary Shareholders will not,
and Subsidiary Shareholders will not cause Subsidiary to, enter into any
transaction or perform any act that would constitute a material adverse breach
of the representations, warranties or agreements contained herein and Subsidiary
Shareholders and Subsidiary and its officers and employees will comply, and
Subsidiary Shareholders will cause Subsidiary to comply, with all applicable
material provisions of this Reorganization Agreement. On and after execution
hereof and until the Effective Time:
(a) Subsidiary and Subsidiary Shareholders will afford to the officers and
authorized representatives of Parent access to the plants, properties,
books and records of Subsidiary and will furnish Parent with such
additional financial and operating data and other information as to the
business and properties of the Subsidiary as Parent may from time to time
reasonably request.
(b) Subsidiary and Subsidiary Shareholders will cooperate with Parent, its
representatives and counsel in the preparation and execution of any
documents or other material which may be required in connection with the
Exchange.
(c) Subsidiary will, and Subsidiary Shareholders will cause Subsidiary, to:
(1) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management,
operation or accounting; (2) maintain its properties and facilities in as
good working order and condition as at present, ordinary wear and tear
excepted; (3) perform all its material obligations under agreements
relating to or affecting its assets, properties and rights; (4) keep in
full force and effect present insurance policies or other comparable
insurance coverage; and (5) use its best efforts to maintain and preserve
its business organization intact, retain its present employees and maintain
its relationships with suppliers, customers and others having business
relations with it.
(d) Without the prior written consent of Parent, Subsidiary will not, and
Subsidiary Shareholders will not cause or permit Subsidiary to: (1) make
any change in its Articles of Incorporation or Bylaws; (2) issue any
securities; (3) declare or pay any dividend or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its stock;
(4) enter into any contract or commitment or incur any liability or make
any capital expenditures except in the normal course of business; (5)
increase the compensation payable or to become payable to any officer,
employee or agent, or make any bonus payment to any such person; (6)
create, assume or permit to exist any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired; (7) sell, assign, lease, license or otherwise transfer or dispose
of any property or equipment except in the normal course of business; or
(8) merge, consolidate or otherwise reorganize or agree to merge or
consolidate or otherwise reorganize with or into any other corporation or
entity.
ARTICLE VI
FURTHER AGREEMENTS
------------------
Section 6.01 Continuity of Interest Agreement. On the date hereof,
------------ --------------------------------
Subsidiary Shareholders, Subsidiary and Parent shall execute a continuity of
interest agreement (the "Continuity of Interest Agreement") substantially in the
form of Exhibit "C" attached hereto and made a part hereof.
Section 6.02 Employment Agreements. On the date hereof, each of the
------------ ---------------------
Subsidiary Shareholders XXXX X. XXXXXX and XXXXX X. XXXXXX, as Employee, and
Subsidiary, as Employer shall execute employment agreements (the "Employment
Agreements") substantially in the form of Exhibits "D" and "E" attached hereto
and made a part hereof.
ARTICLE VII
TERMINATION AND AMENDMENT
-------------------------
Section 7.01 Termination. This Reorganization Agreement shall terminate
------------ -----------
in the event of and upon termination of the Plan of Exchange. Notwithstanding
shareholder approval of this Reorganization Agreement, this Reorganization
Agreement may be terminated at any time prior to the Effective Time by any party
by written notice to the other parties prior to the Effective Time. In the event
of termination of this Reorganization Agreement and the Plan of Exchange, the
Continuity of Interest Agreement and the Employment Agreements shall
automatically terminate. Each party agrees that, in the event this
Reorganization Agreement is terminated, it will not disclose to any individual,
corporation, partnership, joint venture, sole proprietorship, association,
syndicate, trust or other person or entity any confidential or proprietary
information (including but not limited to any software, customer lists, pricing
policies, profit margins, training and instruction manuals, reports,
recommendations, work-product, and other information) heretofore or hereafter
acquired by it concerning or relating to the operations, business or affairs of
the other parties. The purpose of this Section is to protect a party from the
disclosure of or use by another party of proprietary or other confidential
business information of a party obtained through this Reorganization Agreement,
but not to prevent any party from using, in connection with its future business
ventures, information which it previously knew or which is generally known in
the industry. The parties have examined in detail the restrictive covenants and
agreements contained in this Section and agree that the restraints imposed upon
the parties herein are not unduly harsh or oppressive, are a material inducement
to each of the parties to execute this Reorganization Agreement, and are
reasonable in order to protect the parties and their legitimate business
interests. Any breach or evasion of any term or provision of this Section shall
be deemed to have caused immediate and irreparable injury to the affected party
and will authorize recourse by such affected party to injunctive relief and/or
specific performance, as well as to any and all other legal or equitable
remedies to which such affected party may be entitled.
Section 7.02 Amendment. This Reorganization Agreement may be amended by
------------ ---------
the parties hereto, at any time before or after approval hereof by the
Subsidiary Shareholders, but only by an instrument in writing signed on behalf
of each of the parties hereto.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
Section 8.01 Waiver. At any time prior to the Effective Time, the parties
------------ ------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 8.02 Notices. All notices required or permitted to be given
------------ -------
hereunder shall be in writing and shall be deemed given when delivered in person
or sent by confirmed facsimile, or when received if given by Federal Express or
other nationally recognized overnight courier service, or five (5) business days
after being deposited in the United States mail, postage prepaid, registered or
certified mail, addressed to the applicable party as follows:
OnCOURSE TECHNOLOGIES, INC.
Attention: Xxxxxxx X. Xxxxx, President
0000 Xxxxx 000xx Xxxxxx
Xxx Xxxxxx, XX 00000
TEKSOFT, INC.
Attention: Xxxx X. Xxxxxx, President
00000 X 00xx Xxxxxx
#000
Xxxxxxxxxx, XX 00000
XXXX X. XXXXXX
0000 X. Xxxxx
Xxxxxxxxxx, XX 00000
XXXXX X. XXXXXX
0000 X. Xxxxx Xxxx
Xxxxxx, XX 00000
XXXXXXX XXXX
0000 X. Xxxxxx
Xxxxxxx, XX 00000
SKY XXXXXX
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Section 8.03 Entire Agreement. This Reorganization Agreement, the Plan of
------------ ----------------
Exchange, the Articles of Exchange, the Continuity of Interest Agreement and the
Employment Agreements constitute the entire agreement between the parties as to
the Exchange and shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, successors and permitted
assigns. The parties and their respective affiliates make no representations or
warranties to each other, except as contained in this Reorganization Agreement,
and any and all prior representations and statements made by any party or its
representatives, whether verbally or in writing, are deemed to have been merged
into this Reorganization Agreement and the Plan of Exchange, it being intended
that no such prior representations or statements shall survive the execution and
delivery of this Reorganization Agreement and the Plan of Exchange.
Section 8.04 Non-Waiver. The failure in any one or more instances of a
------------ ----------
party to insist upon performance of any of the terms, covenants or conditions of
this Reorganization Agreement, to exercise any right or privilege conferred in
this Reorganization Agreement, or the waiver by said party of any breach of any
of the terms, covenants or conditions of this Reorganization Agreement, shall
not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred. No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving party.
Section 8.05 Counterparts. This Reorganization Agreement may be executed
------------ ------------
in counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
Section 8.06 Severability. The invalidity of any provision of this
------------ ------------
Reorganization Agreement or portion of a provision shall not affect the validity
of any other provision of this Reorganization Agreement or the remaining portion
of the applicable provision.
Section 8.07 Governing Law. This Reorganization Agreement and the Plan of
------------ -------------
Exchange shall be construed in accordance with the laws of the State of Nevada
applicable to contracts entered into and to be performed entirely therein,
excluding any conflict-of-laws rule or principle that might refer the governance
or the construction hereof or thereof to the law of another jurisdiction, and,
as applicable, in accordance with the laws of the United States of America.
Section 8.08 Binding Effect; Benefit. This Reorganization Agreement shall
------------ -----------------------
inure to the benefit of and be binding upon the parties hereto and their
successors and permitted assigns. Nothing in this Reorganization Agreement,
express or implied, is intended to confer on any person other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Reorganization
Agreement, including, without limitation, third party beneficiary rights.
Section 8.09 Assignability. This Reorganization Agreement shall not be
------------ -------------
assignable by any party without the prior written consent of the other parties;
provided, however, that Parent shall have the right at the Effective Time or
subsequently thereto, to cause the stock of Subsidiary to be transferred to a
wholly-owned subsidiary of Parent.
Section 8.10 Headings. The description headings in this Reorganization
------------ --------
Agreement are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Reorganization
Agreement. Words used in this Reorganization Agreement, regardless of the gender
or number specifically used, shall be deemed to include any other gender,
masculine, feminine or neuter, and any other number, singular or plural, as the
context may require.
Section 8.11 Further Assurances. Subsidiary and Subsidiary Shareholders
------------ ------------------
shall at any time, or from time to time, as and when requested by Parent, or its
successors and assigns, execute and deliver, or cause to be executed and
delivered, all such conveyances, assignments, transfers, deeds or other
instruments, and shall take or cause to be taken such further action as Parent,
or its successors and assigns, may deem necessary or desirable in order to
evidence the Exchange contemplated herein and otherwise to carry out the intent
and purposes of this Reorganization Agreement.
Section 8.12 Contract Interpretation. This Reorganization Agreement shall
------------ -----------------------
not be more strictly construed against any party regardless of who was
responsible for the preparation hereof. For purposes of contract interpretation
and for the purpose of resolving any ambiguity herein and therein, the parties
agree that this Reorganization Agreement and the other Exchange documents were
prepared jointly by their respective attorneys.
Section 8.13 No Brokers. Parent represents, warrants and covenants with
------------ ----------
Subsidiary and Subsidiary Shareholders, and Subsidiary and Subsidiary
Shareholders jointly and severally represent, warrant and covenant with Parent,
that no brokerage fees or commissions or finders' fees have been incurred by any
of them or are payable, to the best of their respective knowledge, in connection
with the transactions contemplated by this Reorganization Agreement. Each of
Parent, Subsidiary and Subsidiary Shareholders shall bear their own legal,
accounting and other costs and expenses incurred in connection with this
Reorganization Agreement; provided, however, that Parent shall pay the first
Thirty Thousand ($30,000) Dollars of legal and accounting costs and expenses of
Subsidiary.
Section 8.14 Submission of Agreement. The submission of this
------------ -----------------------
Reorganization Agreement for examination does not constitute a reservation of or
option to the Exchange described herein, and this Reorganization Agreement shall
become effective only upon the execution hereof by all of Parent, Subsidiary and
Subsidiary Shareholders.
IN WITNESS WHEREOF, the Parent has caused this Reorganization Agreement to
be executed by its duly authorized officers on January 10th, 2000 with the
intent to be legally bound.
PARENT:
------
ATTEST: OnCOURSE TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxx, III By: /s/ Xxxxxxx X. Xxxxx
(Corporate Seal) Its: President
IN WITNESS WHEREOF, the Subsidiary has caused this Reorganization Agreement
to be executed by its duly authorized officers on January 10th, 2000 with the
intent to be legally bound.
SUBSIDIARY:
----------
ATTEST: TEKSOFT, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
(Corporate Seal) Its: President
IN WITNESS WHEREOF, the Subsidiary Shareholders have executed this
Reorganization Agreement on January 10th, 2000 with the intent to be legally
bound.
SUBSIDIARY SHAREHOLDERS:
-----------------------
WITNESS: XXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxx
WITNESS: XXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
WITNESS: XXXXXXX XXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx Xxxx
WITNESS: SKY XXXXXX
/s/ Xxxxx X. Ziekler /s/ Sky Xxxxxx
ACKNOWLEDGMENT
--------------
STATE OF ARIZONA )
) SS:
COUNTY OF MARICOPA )
On this, the Tenth (10th) day of January, 2000, before me, a Notary
Public, personally appeared XXXXXXX X. XXXXX and XXXXXXX X. XXXXX III, who
acknowledged themselves to be the President and Secretary, respectively, of
OnCOURSE TECHNOLOGIES, INC., and that as such President and Secretary, being
duly authorized to do so, executed the foregoing Agreement and Plan of
Reorganization for and on behalf of OnCOURSE TECHNOLOGIES, INC. for the purposes
therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
/s/ Xxxxxxx X. Xxxxxx
Notary Public
ACKNOWLEDGMENT
--------------
STATE OF ARIZONA )
) SS:
COUNTY OF MARICOPA )
On this, the Tenth (10th) day of January, 2000, before me, a Notary
Public, personally appeared XXXX X. XXXXXX and XXXXX X. XXXXXX, who acknowledged
themselves to be two of the three Subsidiary Shareholders and the President and
Secretary, respectively, of TEKSOFT, INC., and that as such Subsidiary
Shareholders and President and Secretary, being duly authorized to do so,
executed the foregoing Agreement and Plan of Reorganization for and on behalf of
themselves and TEKSOFT, INC. for the purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
/s/ Xxxxxxx X. Xxxxxx
Notary Public
STATE OF ARIZONA )
) SS:
COUNTY OF MARICOPA )
On this, the Seventeenth (17th) day of January, 2000, before me, a
Notary Public, personally appeared XXXXXXX XXXX, who acknowledged himself to be
a Subsidiary Shareholder of TEKSOFT, INC., and that as such Subsidiary
Shareholder, executed the foregoing Agreement and Plan of Reorganization for the
purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
/s/ Xxxxxxx X. Xxxxxx
Notary Public
STATE OF ALASKA )
) SS:
COUNTY OF Third Judicial District)
On this, the Twelfth (12th) day of January, 2000, before me, a Notary
Public, personally appeared SKY XXXXXX, who acknowledged himself to be a
Subsidiary Shareholder of TEKSOFT, INC., and that as such Subsidiary
Shareholder, executed the foregoing Agreement and Plan of Reorganization for the
purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
/s/ Xxxxx X. Ziekler
Notary Public
